We are Murata Sogo Tax Accounting Office, specializing in inheritance and international taxation, with an office in Miyakojima-ku, Osaka City.
In this issue, we would like to describe some points to keep in mind when a foreign national or a person who has lived abroad for many years remits money accumulated abroad to Japan.

1. When you fall under the category of “non-permanent resident” under the Income Tax Law

Foreign nationals residing in Japan who have had a domicile or residence in Japan for less than 5 years within the past 10 years are treated as “non-permanent residents”.

If you are a non-permanent resident, you will be taxed in Japan on income generated in Japan as well as on income generated abroad (foreign source income), as long as the remittance is taxable in Japan.
In this regard, specific examples are as follows.

(1) If overseas income is 1,000 and the amount remitted to Japan is 800
　⇒The taxable amount is 800.

(2) In the case where the overseas income is 600 and the amount remitted to Japan is 800
　⇒The taxable amount is 600.

(3) When overseas income is 1,000 and the amount of remittance to Japan is 0
　⇒There is no taxable amount.

Therefore, those who sell or rent real estate abroad need to consider the possibility of taxation when remitting income to Japan and decide whether or not to remit income.

2. When the yen tends to depreciate

Care should also be taken when the yen tends to depreciate.
For example, the following is a case in point.

(1) The yen is weaker at the time of remittance than when the real estate was sold overseas.
　(e.g., 1USD=100 yen at the time of real estate sale, 1USD=150 yen at the time of remittance)

(2) You work remotely from Japan for an overseas company and remit your salary to Japan in one lump sum.
　(e.g. 1USD=¥80 at the time of salary payment, 1USD=¥140 at the time of remittance)

In the above case, the foreign exchange gains resulting from the depreciation of the yen should be reported as “miscellaneous income” on the tax return.
Therefore, if you are considering remittance, you need to consider the source of your income and the exchange rate situation compared to the time of income.

For remittances of 1,000,000 yen or more made through a financial institution, the financial institution will submit a report to the tax office that includes the sender, recipient, account number, amount, and purpose of remittance. It is important to note that the tax office may send an “Inquiry Concerning Overseas Remittances, etc.” or conduct a tax audit based on this report of overseas remittances, etc.

In this article, we have described the points to keep in mind when a Japanese resident remits money from overseas to Japan.
If you have any further questions about remittances, please feel free to contact us anytime via the “Contact Us” form.

Translated with DeepL.com (free version)