Japan’s Statement of Assets and Liabilities: Reporting Worldwide Assets
【Koshida Accounting Firm Column Date:】
Hello, my name is Taisei Koshida, and I am a certified public accountant and licensed tax accountant in Japan.
I operate my own accounting firm and mainly assist non-Japanese individuals and business owners with Japanese tax matters. I aim to help foreign residents and entrepreneurs understand Japan’s tax system in plain English.
If you have substantial assets in Japan or overseas, you may be required to submit a Statement of Assets and Liabilities to the Japanese tax office.
In this article, I will explain who is required to file this statement, what information must be reported, and the filing deadline.
1. Who Must Submit the Statement of Assets and Liabilities?
Residents of Japan
This requirement applies to residents of Japan, including non-permanent residents.
Income and Asset Requirements
You must file the Statement of Assets and Liabilities if either of the following conditions applies.
Condition 1
Your total net income, excluding retirement income, exceeds 20 million yen, and either:
-
- The total fair market value of your financial assets, such as stocks, investment funds, bonds, and derivatives, exceeds 100 million yen as of December 31; or
- The total fair market value of all your assets exceeds 300 million yen as of December 31.
Condition 2
Regardless of your income, you must also file the statement if the total fair market value of all your assets exceeds 1 billion yen.
2. What Assets Must Be Reported?
The statement covers both assets and liabilities.
Examples include:
- ・Land
- ・Buildings
- ・Cash
- ・Bank deposits
- ・Securities
- ・Works of art and antiques
- ・Jewelry
- ・Other valuable assets
- ・Loans and other liabilities
3. What Information Must Be Reported?
Generally, you must report:
- ・The type of asset
- ・Its location (where applicable)
- ・Its fair market value
Land and Buildings
For real estate, you generally report:
- ・Location
- ・Size or area
- ・Purpose of use
- ・Building structure
- ・Type of land
Securities
For securities, you generally report:
- ・Type of security
- ・Name of the issuer or investment
- ・Number of shares or units
- ・Acquisition cost
- ・Fair market value as of December 31
4. How Is Fair Market Value Determined?
Assets with Market Prices
For assets that have a market price, such as listed stocks, the fair market value is generally the market price as of December 31.
Other Assets
For assets without a readily available market price, an appropriate valuation method must be used.
For example, land and buildings are generally valued based on their assessed value for fixed asset tax purposes or another reasonable valuation method.
5. Penalties
If you fail to submit the Statement of Assets and Liabilities and later underreport income related to those assets, the underreporting penalty may be increased by 5%.
On the other hand, if you properly submit the statement, the underreporting penalty may be reduced by 5%, provided the legal requirements are satisfied.
6. Filing Deadline
The Statement of Assets and Liabilities must generally be submitted by June 30 of the following year.
The Statement of Assets and Liabilities is a reporting requirement that applies only to certain high-net-worth individuals. However, if you meet the filing requirements, it is important to prepare the statement carefully and submit it on time.
If you are unsure whether you are required to file this statement or need assistance with Japanese tax compliance, please feel free to contact us. We are happy to assist foreign residents and international business owners with their Japanese tax matters.
If you own substantial overseas assets, it is a good idea to confirm whether you are required to file this statement before the deadline.