Demystifying Japanese Inheritance Tax: AI Legalese Decoder Simplifies Domicile in Japan for Japanese/US Citizens
- October 25, 2023
- Posted by: legaleseblogger
- Category: Related News
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**Introduction**
Hello, fellow members. I hope this message finds you well. I wanted to share a situation I have found myself in regarding my time spent in Japan and the potential implications it may have on my inheritance tax obligations. Moreover, I would also like to introduce a potential solution that can assist in decoding the legal aspects of this scenario – the AI Legalese Decoder.
**Background**
Approximately six years ago, I had the opportunity to visit Japan for a duration of five months, utilizing my US passport. During this time, I adhered to the permitted 90-day stay and later returned to the United States. However, my recent stay in Japan for 17 days has uncovered an important issue regarding the establishment of domicile, which may result in significant inheritance tax liabilities if my mother passes away within ten years of my domicile period in Japan.
**Research and Findings**
Upon conducting some research on various platforms, particularly on a thread shared by u/Shale-Flintgrove in a Reddit post titled “Financial Negative Effects of Moving to Japan,” I discovered that several lawyers suggest limiting the duration of stay in Japan to minimize the chances of establishing domicile. According to their recommendations, spending less than two weeks to four months per year in Japan is advised. However, after consulting with a tax accountant and an official from the local kokuzeicho branch, it seems that I may have already unintentionally established a domicile in Japan. This determination is based on the actions I have taken that are typically beyond the scope of a tourist’s activities, such as:
– Using my Japanese passport to enter Japan
– Requesting and receiving a copy of the juminhyo (resident registry) from the ward office
– Enrolling in national health insurance
Additionally, I have obtained a Japanese phone number, registered an inkan (personal seal), and submitted waivers to avoid contributing to the national pension. Although I did not discuss these particular actions with the tax professionals, they further contribute to the potential establishment of domicile.
**The Need for Professional Advice and Possible Solutions**
Given the circumstances, it appears crucial to seek additional professional advice to ascertain whether I have indeed established a domicile in Japan. If this is the case, renouncing my Japanese citizenship might prove to be the most effective method to avoid the tax liability. By doing so, the local tax authorities would still have the ability to assess my residency status in Japan following my mother’s passing. However, renouncing my citizenship would remove the automatic categorization of being an unlimited taxpayer for the next ten years.
**Introducing AI Legalese Decoder**
In tackling this complex legal situation, an invaluable tool that can assist in comprehending and deciphering the intricacies of legalese is the AI Legalese Decoder. This artificial intelligence-powered platform can provide valuable insights, explanations, and recommendations based on a wide range of legal scenarios. By utilizing the AI Legalese Decoder, individuals can gain a clearer understanding of their legal standing, potential risks, and devise informed strategies to overcome or navigate through legal challenges.
**Seeking Advice and Sharing Experiences**
Considering the complexity of the situation, I would greatly appreciate any advice, insights, or similar experiences you might have encountered in a similar context. Your guidance can prove beneficial in making well-informed decisions and taking appropriate measures to address potential complications. Together, we can navigate the complexities of legal matters and strive towards achieving favorable outcomes.
Thank you all for your attention, and I eagerly await your valuable input.
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FREE Legal Document translation
****** just grabbed a
My Japanese wife and I have been in Japan for almost a year and are about to return to Australia (where we live permanently).
We came here temporarily to live with and look after sick parents, and due to lack of foresight and preparation, we did many things that look like a permanent move… Spouse visa, kid in school, registered for everything.
We did some good things too though – rent a car instead of buy, stay with family instead of rent a place, prepare everything back home for a return, etc. Actions that backed up our assertion that we were just here temporarily.
We have since had paid consultations with two different Japanese accountants and a long phone call with the NTA advice line with them giving us a follow-up call back. The advice we received has been different from that of the others on this forum.
In our case, according to all three parties, as long as we continue with our original plans of being here temporarily, and going back to Australia within the year, we have only had a kyosho Õ▒àµëÇ here and have never established a j┼½sho õ¢ÅµëÇ. We are not residents for tax purposes, and this period will not be considered for gift/inheritance tax purposes.
The problem is that there is just a fairly fuzzy definition of what a jūsho is, and no definitive statement on how you get to have one. Probably to make it more difficult to game the system. Many parts of the tax system depend on you having jūsho though.
Our advice from the NTA help line, and the reason they had to call us back after conferring with a colleague, is that the gift/inheritance tax jūsho follows the income tax decision. So if you have a jūsho for income tax, then you have one for gift/inheritance tax.
I’m not sure if any of this is helpful. Your situation is different from ours, and everything depends on your personal circumstances.
Definitely get professional advice. I just trawled the Internet for links to English speaking accountants and contacted them all. Some were too busy or not working in our area, but you’ll get someone.
Unfortunately, even with professional advice, it’s still just a considered opinion. If, for example, my wife dies within 10 years and the NTA decides to audit us, the advice from my accountant or their help line isnÔÇÖt binding. The auditor may come to a different conclusion.
The lack of a concrete binding answer kills me, but in the end, it’s all we have.
You are not allowed to be on the resident register (have a õ¢Åµ░æþÑ¿, etc.) unless you have a domicile (õ¢ÅµëÇ) in Japan. You are also not allowed to enrol in national health insurance unless you have a domicile in Japan.
That is likely the basis on which you are being advised that you currently have a domicile in Japan. If you are telling your municipal government “I have a domicile in Japan” (by being on the resident register and enrolling in national health insurance, etc.), then it’s difficult to simultaneously tell the NTA “I don’t have a domicile in Japan”.
That said, being on the resident register (and enrolling in NHI, etc.) doesn’t *automatically* mean you have a domicile. It just means that, if you don’t have a domicile, you are breaking the law by being on the resident register.
The question of whether or not someone has a domicile is ultimately a matter of civil law, not tax law, so neither tax accountants nor the NTA are experts on the topic. (The most appropriate professional would be a lawyer.) But in most cases the NTA will, of course, err on the side of assuming that people have a domicile. So if they accuse you of having a domicile and you disagree, it would be up to you and your lawyer to convince them (or, ultimately, a judge) that they are wrong.
And the answer to whether someone has a domicile in Japan is always extremely fact-dependent. There is no single action or combination of actions that *always* means someone does or does not have a domicile. It is necessary to consider a person’s actions and circumstances in their entirety.
This is why anecdotal references to “two weeks” or “four months” in Japan are of very limited use. In some cases, a person will have a domicile in Japan without ever being present in Japan. In other cases, a person will be in Japan for an entire year without acquiring a domicile. The period of time you spend in the country is only a small factor, among a huge array of factors that must be considered.
I believe the 10 year rule for Japanese citizens exists even if the citizenship is renounced. So there is nothing you can do other than leave Japan and pretend to be ignorant of the law.
My understanding is that as long as I don’t submit a õ¢Åµ░æÕ▒è (resident notification), I won’t have a õ¢ÅµëÇ (address) in Japan, which means I am not a tax resident.
I also make sure to never stay in Japan for more than 6 months out of the year because that would make me a de facto tax resident. This is more so that the company I work for won’t be liable to pay Japanese taxes. Not sure what the consequences would be on my personal tax situation.
I don’t think your point about using Japanese passport to enter Japan is true because there are plenty of Japanese nationals with US green cards traveling with their Japanese passports all the time.
> Requested and received copy of juminhyo from ward office
With yourself on it? Did you have to submit a document to them for that to happen?
Mate you might be in trouble already having a juminho. You are then legally a resident and beneficiaries tax ropes in residents of Japan even after they have left Japan. Its insidious. My sons Japanese and a resident. I lived in Japan for 13 years but left in 2002. Because hes a resident and I die he would have to pay 55% of what I intended to leave himI had to change my will. Take a look at the pwc websitel Its detailed. Also organise a meeting with an English speaking tax lawyer for confirmation. I did this and was able to restructure my finances so that when the inevitable happens my Japanese Рbut non-resident Рwife and my son are not smashed by the beneficiaries tax.