Japan

{"ftc_utility":"high","fbar_trigger_notes":"Japan requires foreign residents to open local bank accounts for payroll and utility purposes. Most Japan-based expats will quickly exceed the USD 10,000 FBAR threshold across Japanese bank accounts. FATCA compliance is relevant as Japan signed an IGA with the US - Japanese financial institutions report US person account data to the NTA, which shares it with the IRS.","ftc_utility_reason":"Japan taxes residents on worldwide income at combined rates reaching approximately 55.945% (45% national + 2.1% surtax on national tax + 10% inhabitant tax). Japan income taxes generally exceed US tax liability for expats in mid-to-high income brackets, making Foreign Tax Credits highly valuable and often eliminating US tax owed. Most US expats in Japan choose the FTC over the FEIE because Japanese taxes paid provide sufficient credit to eliminate US liability on Japan-source income without the FEIE's earned income cap complications.","presence_day_count_notes":"Japan uses multiple visa categories. Most work visa holders are on employer-sponsored status visas (Engineer/Specialist in Humanities, Highly Skilled Professional, etc.), which require continuous residence. The 330-day physical presence test is achievable but frequent US travel reduces qualifying days. Expats on spouse visas or permanent resident status face no specific visa-side restriction. The FEIE exclusion amount for 2025 is USD 130,000. Note that Japan's own tax system counts an individual as a resident if they have a domicile in Japan or have resided in Japan for one year or more - this is separate from the US FEIE determination.","typical_qualifying_method":"either","housing_exclusion_available":true,"physical_presence_test_applies":true,"estimated_housing_exclusion_usd":32000,"local_tax_rate_on_earned_income":0.5594,"bona_fide_residence_test_applies":true}

{"pension_income":{"notes":"Foreign pension income is taxed in Japan at progressive rates (5% to 45% national plus 10% flat inhabitant tax, plus 2.1% reconstruction surtax on national tax). A pension income deduction applies: for taxpayers under 65, the deduction starts at JPY 600,000 for pensions under JPY 1,300,000; for taxpayers 65 and over, the deduction threshold is higher. The effective tax burden depends heavily on total income and applicable deductions.","tax_rate":null,"locally_taxed":true},"social_security":{"notes":"US Social Security benefits received by Japan residents are generally taxable only in the US under Article 17 of the US-Japan tax treaty, meaning Japan does not tax them. The US-Japan Totalization Agreement also coordinates social security contributions to avoid dual coverage.","locally_taxed":false,"treaty_protection":true},"roth_distributions":{"notes":"Japan does not recognize the US Roth IRA structure. Qualified Roth distributions that are tax-free in the US may still be treated as taxable income in Japan depending on characterization. Japan-resident US expats should obtain professional advice, as the treaty's pension article may or may not apply depending on how the NTA characterizes the distribution. This is an unresolved area - Japan tax authorities have not issued clear published guidance specifically addressing Roth IRA qualified distributions.","locally_taxed":true},"us_401k_ira_distributions":{"notes":"The US-Japan tax treaty (Article 17) covers pension income. Distributions from US 401(k) and IRA accounts are generally treated as pension income under the treaty and taxed only in the country of residence. Japan-resident US expats receiving these distributions would owe Japanese income tax on them at progressive rates, with a pension income deduction (nenkin shotoku koujyo) potentially reducing taxable amounts. The treaty eliminates US taxation for Japan residents in most cases, but US citizens remain subject to US tax on worldwide income regardless. Deduction amounts vary by age and total pension income.","tax_rate":null,"locally_taxed":true,"treaty_protection":true}}

{"rate":0.20315,"notes":"Listed stock and equity fund gains are taxed at a flat 20.315% (15% national income tax + 2.1% reconstruction surtax on that 15% + 5% local inhabitant tax). Gains on unlisted shares and real property follow different rules.","details":{"tax_type":"Capital Gains Tax","country_name":"Japan","country_iso_code":"JPN","source_references":["PwC Worldwide Tax Summaries - Japan","NTA Japan (National Tax Agency)","Deloitte Japan Tax Guide"],"last_verified_date":"2026-06-03","general_description":"Japan taxes capital gains on listed securities at a flat rate of 20.315% (15% national + 0.315% reconstruction surtax + 5% local inhabitant tax). Gains on unlisted shares are taxed as miscellaneous or business income at progressive rates up to 55.945% including surtax and inhabitant tax. Real property gains are subject to separate regimes depending on holding period: short-term (under 5 years) at approximately 39.63% and long-term (5 years or more) at approximately 20.315% effective combined rate. A 10-year holding exemption applies in limited cases for self-occupied homes.","corporate_capital_gains":{"rate":0.3062,"tax_treatment":"Gains are included in ordinary corporate income and taxed at the standard corporate tax rate. No separate CGT regime exists for corporations. Effective combined national and local rate is approximately 30.62% for standard corporations."},"individual_capital_gains":{"rate":0.20315,"tax_treatment":"Listed securities gains taxed at flat 20.315%. Unlisted share gains taxed as ordinary income at progressive rates. Real property gains taxed at 20.315% (long-term) or 39.63% (short-term). Reconstruction surtax of 2.1% on national income tax component applies through 2037."}}}

{"notes":"Dividends from listed companies are taxed at 20.315% flat (15% national + 0.315% reconstruction surtax + 5% local inhabitant tax) under the separate self-assessment taxation option, which is the most common election. Taxpayers may alternatively include dividends in aggregate income and apply progressive rates up to 55.945%, with a dividend tax credit available. Non-residents face a 20.42% withholding rate (15.315% under treaties with many countries). A special small-lot dividend exemption (100 shares or less) exists for listed stock.","rates":[{"rate":0.20315,"type":"flat","notes":"Flat rate for listed company dividends under separate self-assessment election (residents). Includes reconstruction surtax and 5% inhabitant tax."},{"rate":0.2042,"type":"withholding","notes":"Withholding rate for non-residents absent a tax treaty. Many treaties reduce this to 10% or 15%."},{"rate":0.1,"type":"withholding","notes":"Common treaty withholding rate (e.g. US-Japan treaty), applicable where ownership is below 10% threshold."},{"rate":0.05,"type":"withholding","notes":"Reduced treaty withholding rate under US-Japan treaty for corporate shareholders owning 10% or more of voting shares."}]}