Capital Gains, Inheritance and Gift Tax

Find out about the taxes due on capital gains, inheritance and gifts in Japan...

Capital Gains Tax

As with income tax, a non-resident or non-permanent resident is only required to pay capital gains tax on income received in Japan. A resident must pay capital gains tax on all income received, either in Japan or abroad. The rate paid by residents and non-residents differs because of the local inhabitant tax component.

In Japan, capital gains are added to regular income and should be declared in a tax return. The rate of tax is therefore the same as on regular income. However, gains on stocks and property are taxed separately as follows:

  • Capital gains from the sale of property: If the asset has been held for more than five years, any capital gains are taxed at 20 percent (15 percent national income tax and a five percent local inhabitant tax). For properties held for a shorter period of time, capital gains are taxed at 39 percent (30 percent national income tax and nine percent local inhabitant tax). Capital losses from property sales can only be deducted from capital gains on property. Losses made on a principal residence may be carried forward for three years
  • Capital gains from the sale of shares: Capital gains from foreign-listed shares or unlisted stock are taxed at 20 percent (15 percent national income tax and five percent local inhabitant tax). Any losses can be deducted from gains made on shares in the same calendar year

Inheritance Tax

The Japanese Inheritance Tax (IHT) system is based on the residency status of an individual and the location of the assets. Non-residents and non-permanent residents are subject to IHT on inherited assets located in Japan; residents are subject to IHT on assets inherited anywhere in the world.

IHT rates are progressive based on the market value of the asset, minus expenses. Other deductions are available depending on the status of the beneficiary. There is a special tax allowance for spouses.

Gift and Wealth Taxes

In Japan, the payment of gift tax is the responsibility of the recipient of property. The tax rate is between 10 and 50 percent, depending on the value of the gift after a basic deduction has been made. There is no wealth tax in Japan.

Further Information