Frequently Asked Questions

I am a foreign resident in Japan. Do I need to include my overseas assets in the Statement of Assets and Liabilities?

Yes, in many cases. If you are a resident of Japan, including a non-permanent resident, and you meet the income and asset thresholds, your overseas assets are generally included when determining whether you must file a Statement of Assets and Liabilities. Since the filing requirements depend on your residency status, income, and the value of your worldwide assets, it is important to review your situation carefully. For more details, please read the following blog.

Can a non-permanent resident claim a foreign tax credit in Japan?

Yes, but it depends on your circumstances. A non-permanent resident in Japan may be able to claim a foreign tax credit if foreign-source income becomes taxable in Japan under the remittance-based taxation rules and the foreign tax has actually been paid. The calculation can be complicated because it also depends on the amount of remittances, the type of foreign-source income, and the timing of the foreign tax payment.

What tax and accounting procedures should I complete after incorporating a company in Japan?

After incorporating a company in Japan, there are several important tax and accounting procedures that should be completed as early as possible.

The most important include submitting the Blue Form (Aoiro Shinkoku) application, determining your director’s compensation, and deciding whether to register for Japan’s Qualified Invoice System.

Missing these procedures may result in higher corporate taxes or the loss of valuable tax benefits. Proper accounting from the beginning is also important for tax filing and future corporate tax planning in Japan.

Do U.S. non-permanent residents need to file a Japanese tax return?

It depends on your circumstances. If you are a U.S. non-permanent resident living in Japan, you may need to file a Japanese tax return if you have Japanese-source income or foreign-source income that becomes taxable under Japan’s remittance-based taxation rules. Preparing the return often requires calculating remittances, identifying each category of U.S.-source income, determining the cost basis of your investments under Japanese tax rules, and claiming foreign tax credits where applicable.

How do you write a business email in Japan?

Japanese business emails usually begin with a polite greeting such as “Thank you for your continued support” and end with a respectful closing like “I look forward to your cooperation.” Using the correct honorifics and business expressions helps build trust and demonstrates professionalism when communicating with Japanese companies.

Do I need to report overseas assets in Japan?

You may need to file a Statement of Overseas Assets if you are a tax resident of Japan and the total value of your overseas assets exceeds 50 million yen as of December 31. Reportable assets may include foreign bank accounts, real estate, securities, and retirement accounts such as IRAs and 401(k)s. Even if no Japanese tax is due, failing to file the statement properly may result in penalties.

Can I operate my U.S. LLC while living in Japan?

Yes. However, if you manage your U.S. LLC from Japan, your business may become subject to Japanese tax rules. Depending on your circumstances, your LLC could create a Permanent Establishment (PE) in Japan, distributions may be taxed differently from the United States, and non-permanent residents may also need to consider Japan’s remittance taxation rules. Because these issues depend on your business structure and residency status, obtaining professional advice before moving to Japan or starting operations is highly recommended.

Should I consult a Japanese tax accountant before moving to Japan from the United States?

Yes. In many cases, tax planning before becoming a Japanese tax resident is much easier than correcting tax issues afterward. Reviewing your investments, retirement accounts, remittance plans, and tax residency status before relocating can often reduce future tax risks.

Do I need to keep records of my U.S. investments before moving to Japan?

Yes. Japan generally uses the moving-average method to calculate capital gains, while the United States often uses the FIFO method. Keeping detailed records of your purchases, sales, and retirement account contributions before moving to Japan can make future Japanese tax reporting much easier.

How are Roth IRAs and Traditional IRAs taxed in Japan?

Japan applies its own tax rules to retirement accounts. Distributions from both Traditional IRAs and Roth IRAs may be taxable in Japan, although the cost basis may generally be deductible. The tax treatment can differ significantly from U.S. tax rules.

Does transferring my savings from the United States to Japan create taxable income?

Not by itself. Under Japan’s remittance-based taxation rules, the source of the remitted funds does not matter. Instead, the taxable amount generally depends on the relationship between your foreign-source income and the total amount remitted to Japan during the same calendar year.

I am moving to Japan from the United States. Will all of my U.S. income automatically become taxable in Japan?

Not necessarily. During your non-permanent resident period, certain foreign-source income may be subject to Japan’s remittance-based taxation rules rather than being fully taxable in Japan. The tax treatment depends on your tax residency status, the type of income, and whether you remit funds to Japan.

I wonder if I start a business in Japan. What industries are there most among foreign people?

The wholesale business is the most much when foreign people start businesses in Japan.

I started a business in Japan and heard there is a simplified consumption tax system. What is it like?

A simplified consumption tax system in Japan is convenient, but you have to be careful on some points.

I started a business in Japan. This summer, I am going out for a drink with my friend during the Bon festival. Is not this cost considered an expense for tax purposes?

If your friend becomes your client or the reverse happens, you might claim it as an expense in Japan.

I started a business in Japan and will spend the Bon season there for the first time this year. How do most Japanese spend it?

Japanese enjoy the Bon season respectively.

I started a business in Japan and heard about the culture of gifting such as お中元 and お歳暮. Should I do them?

This custom of gifting something to business-related people remains even now in Japan.

I started a business in Japan. Can I claim expenditures to start a business as expenses for tax purposes there?

You can claim them as expenses. In addition, You can deduct them whenever you like.

I run a business as a web engineer in Japan, and I sometimes outsource overseas. Is this transaction taxed with Japanese consumption taxes?

Japanese consumption taxes do not tax overseas outsourcing expenses.

Do Working Holiday Visa holders pay tax in Japan?

Yes. The tax rules depend on whether you are considered a tax resident or non-resident of Japan. Most Working Holiday Visa holders are initially treated as non-residents, but your tax status may change if you stay in Japan for more than one year. Understanding these rules is particularly important if you earn overseas income or remit money to Japan.

I started a business in Japan, but I do not know the etiquette for exchanging business cards there well.

The etiquette for exchanging business cards in Japan expresses Japanese culture well.

I started a business in Japan but need to learn how to call companies properly. Do you have simple tips?

You can call a Japanese company properly after reading the following.

Can You Claim Business Expenses Without a Receipt in Japan?

In practice, you may still be able to claim the expense by preparing a written memo that includes the same information normally shown on a receipt, such as the date, amount, name of the store or person paid, purpose of the expense, and payment method.

You should also keep any other supporting documents, such as credit card statements, bank records, invoices, or order confirmation emails. However, a memo does not automatically guarantee that the expense will be accepted for tax purposes, so it is always best to obtain and keep original receipts whenever possible.

I started a business in Japan and am going to visit a Japanese company. Is there anything I should know beforehand about Japanese business manners?

When you run a business in Japan, you are likely to see the unique manners of Japan, such as bows and business cards.

I wonder if I should start a business in Osaka. What is Osaka's uniqueness?

Osaka people have had a rivalry against Tokyo.

I am trying to start a business in Japan. How different between Tokyo and Osaka?

Tokyo is the capital city of Japan. It leads to many differences.

I established a company in Japan and started running a business there. However, I do not know how to deal with foreign exchange transactions in an accounting book. Could you teach me?

Companies must adequately recognize profit or loss from foreign exchange transactions for tax purposes in Japan.

I heard about a fixed-amount tax cut in Japan in 2024. What is it like?

A fixed-amount tax cut in 2024 is a one-time treatment.

I am planning to start a business in Japan, but I don't know how to send emails there. Please tell me how to do this simply.

This Japanese business email style is fixed forms, so it is easy to use.

I run a business in Japan as a sole proprietor. Can I deduct part of my home rent and car expenses?

Yes, in some cases.

If your home or car is used for both business and personal purposes, you generally cannot treat the entire amount as a business expense. However, the portion reasonably attributable to business use may be deductible.

The important point is to use a reasonable basis for allocating the business and personal portions.

I started a business in Japan but don't know how to build deep relationships with Japanese businesspeople. Would you happen to have any suggestions?

In Japan, there are several unique ways to build deep relationships in the business world.

I have started a business in Japan and want to know which companies are more likely to be targeted by tax audits.

There are certain tendencies in companies where tax audits are conducted in Japan.

I have started a business in Japan and need to decide on a term of office for a director. Do you have good suggestions?

In most cases, it is ten years in small companies, which is the most extended term.

I run a business in Japan. I sometimes visit my home country. Is the cost of the trip considered a business expense for tax purposes?

There is room to be allowed an expense partly for tax purposes if you do business during your trip.

I heard the expenditure for suits is not considered an expense in Japan. Why?

The main reason is that you can use it for personal use when you are off.

I heard tax audits are likely conducted when a sole proprietor incorporates a business in Japan. Is it true?

In Japan, tax audits are likely conducted when a sole proprietor incorporates a business. This is because the subject of tax responsibility changes from an individual to a corporation when incorporation occurs.

I am planning to start a business in Japan and want to obtain business networking there. Do you happen to know suitable opportunities, such as business meetups?

When I started this office, I became a member of JCI.

I am planning to start a business in Japan. However, it is challenging to understand seals related to Japanese companies. Could you explain it easily?

The especially complex part is the difference between an individual seal and a representative seal of a corporation.

I started a business in Japan. What are the key points in preparing an accounting book in Japan?

In Japan, at least several conditions are required for tax purposes when preparing an accounting book. You may be subject to tax penalties if your accounting book does not meet these conditions.

I live in Japan and run a business. Most of my clients are overseas. Are my sales taxed with consumption tax?

The conclusion is that your sales are considered export sales, which means they are taxed by 0 %.

I want to know the actual conditions of tax audits by the National Tax Agency in Japan.

This report from the Japanese National Tax Agency is interesting to know the trends and interests of the agency.

I live and run a business in Japan. I am curious to know if I am within the range of Japanese inheritance taxation or not.

If you live in Japan, you are basically within the Japanese inheritance taxation range for all of your properties, including those abroad. However, there are exceptions.

Should my business register with the Japanese Invoice System for consumption tax? Do you have any suggestions?

There are several factors you should know when deciding to register with the Japanese Invoice System.

I am planning to start a private lodge business 民泊, Minpaku, in Japan. I heard I should be careful about VAT, consumption tax when starting Minpaku.

If you want to refund consumption tax, Japanese VAT when starting a private lodge business, Minpaku, you should know this limitation.

I heard the Japanese inheritance tax is rather severe. What is it like?

If you live in Japan, you may have to pay inheritance tax because its non-taxed range is pretty low.

I have heard that Japan has launched a digital nomad visa recently. What is it like?

This visa was specially made for digital nomads who visit Japan.

I am planning on establishing a company in Japan. I would like to know how to calculate my Japanese taxes on the director's fee.

In Japan, income taxes on salary are calculated considering many factors, such as salary deductions and income deductions.

I run a business in Japan as a sole proprietor. What tools can I use to pay taxes?

In Japan, You, as a sole proprietor, can pay taxes in cash at the bank counter, by credit card, through internet banking, or in other ways.

I heard about the per-capital levy against companies in Japan. What is it like?

In Japan, even if your company does not make a profit, per-capital levies are incurred according to the amount of capital.

I plan to get a Japanese management visa and run a business in Japan. What do you think I should know in preparing to renew the visa?

One of the most important terms for renewing a management visa in Japan is the financial health of your business.

I am planning on establishing a company in Japan. Can you advise me on determining the capital amount?

You have to consider several aspects when determining the capital amount in Japan.

I am planning on starting a business in Japan as a sole proprietor. Are there effective tax-saving ways?

Though the number of effective tax-saving ways for sole proprietors is fewer than that for companies, Japan has a few practical tax-saving ways for them.

I am planning on establishing a company in Japan. Are there effective ways to save taxes?

There are a few practical ways to save taxes in Japan, even though they do not become huge. In a way, they are simple, accumulating roads.

I heard about the year-end tax adjustment in Japan. What is it like?

In Japan, employees are withheld income taxes from their monthly salaries. These tax amounts are temporary, so businesses that employ them conclude and settle income taxes when they pay their last wages at the end of the year. This is the year-end tax adjustment in Japan. In light of that, employees do not need to file tax returns unless they get other incomes.

I heard about remittance taxation in Japan. What is it like?

Remittance taxation may occur when your status for tax purposes is a non-permanent resident in Japan. It happens only when you get overseas income in the same year.

I plan to establish a corporation in Japan. Must the corporation enroll in social insurance even though it does not have employees?

Basically, all companies in Japan must enroll in social insurance. However, when all employees’ labor time is shorter than a certain level, such as a part-time job, there is no need to enroll in it. On the other hand, even the company that pays only the director’s fee must enroll in social insurance.

I run a business as a sole proprietor in Japan. When I should incorporate it?

Incorporation has several advantages for tax purposes in Japan.

I need help determining when I must start paying taxes and what income is taxed in Japan.

If you are not a resident of Japan, you must pay taxes on only domestic income in Japan. On the other hand, if you are a permanent resident of Japan, you must pay taxes on worldwide income.

I heard about the Invoice System in Japan. What is it like?

In Japan, businesses must pay VAT, consumption tax. It is calculated that paid tax minus received tax. The Invoice System rules how to deduct this paid tax.

I heard about withholding tax in Japan. What is it like?

In Japan, when a business pays salaries and fees to specialists, it temporarily keeps a certain presumed income tax and pays it to the government later.

I hear about the Blue-Form Tax Return system, 青色申告制度, in Japan. What is it like?

Applying for the Blue-Form Tax Return system in Japan can give you some tax advantages, but you must prepare a proper accounting book.

What are the record-keeping requirements for businesses in Japan?

When tax audits are conducted, taxpayers must present all documents related to tax and accounting to tax officers. In addition, the Electronic Record-Keeping Law started in 2024 in Japan.

What are the penalties for late tax payments in Japan?

If you voluntarily correct and pay the tax before a tax audit, the penalty is generally 5%.

If the underreporting is identified during a tax audit, the penalty increases to 10% or 15%, depending on the situation.

In addition, interest will be charged based on the statutory rate applicable at the time.

For more detailed information, please see below.