If you use tax payment postponement under the exit tax system, you must submit a notification of a tax administrator before leaving the country, and prepare your tax return and collateral by the final tax return filing deadline. Even after receiving the postponement, annual notifications and management of asset movements will continue. It is not a system where taxes are automatically exempted after 5 or 10 years.

Previously publishedBasics of tax payment postponementBased on this, this paper organizes the discussion in the order of "starting, continuing, and ending." The focus is on the grace period associated with the individual's emigration abroad. The grace period associated with gifts and inheritances from residents to non-residents is explained separately at the end. This is a general explanation based on the National Tax Agency's laws and regulations as of April 1, 2026, and published materials.

First, check what taxes are eligible for postponement.

The Exit Tax is a system that, when a certain resident moves abroad, treats taxable assets as having been sold or settled and levies income tax on the unrealized gains. Conditions include that the value of the taxable assets is 100 million yen or more, and, in principle, the total period of domestic residence within the 10 years prior to departure exceeds 5 years. There are also exceptions for period calculations based on residency status, so it is not determined solely by nationality or asset value. It applies to departures abroad on or after July 1, 2015.

Tax deferral is a mechanism that postpones the payment of income tax resulting from this taxation for a certain period. It does not defer taxes on other income for the year of departure all at once. The basic scope isNational Tax Agency: "Special Provisions for Capital Gains, etc. when Moving Overseas"Please check this.

There are separate procedures before leaving the country and by the filing deadline.

In cases where the taxpayer moves abroad, a notification of a tax accountant (tax representative) must be filed by the time of departure. Furthermore, the final tax return must state that a grace period is being claimed, accompanied by details of the subject assets and a calculation sheet for the tax amount eligible for the grace period. Collateral must also be provided by the filing deadline for the final tax return. The timing for deciding on a tax representative and the timing for providing collateral are not the same.

Security is required in an amount equivalent to the income tax and tax on interest to be deferred. Potential options include real estate, government or local bonds, and securities or guarantees deemed reliable by the district director of the tax office. Although there are prescribed procedures for unlisted shares of non-share-certificate issuing companies, simply holding your own company's shares does not automatically fulfill the security provision. The rights relationships of the shares, necessary documents, and evaluation as security must be confirmed in advance.

The asset value and the amount recognized as collateral are not necessarily the same. You need to decide what to offer as collateral, along with a plan to secure funds for tax payment. What are the types of collateral and procedures?FAQs 67 to 71 of the National Tax Agencyis explained in. The format used will be the one current at the time of submission.

Distinguish between the five-year grace period and the extension to ten years.

The standard grace period is five years from the date of departure from the country, and can be extended to a maximum of ten years by submitting an extension notification. The extension notification must be submitted by the day on which five years have passed since the date of departure. Even if you submit a continuous application form every year, that alone does not extend the period to ten years.Explanation of the National Tax Agency's systemandNotification of Deadline ExtensionAnd you can confirm that it is a separate procedure.

Here, the "expiration date of the grace period" and the "due date for payment" are distinguished. In the current National Tax Agency commentary, the payment due date is specified as the day on which four months have elapsed from the day following the expiration date. Since some old materials simply state a 5-year or 10-year limit, it is important not to determine the current payment due date based on that expression alone.

Annual notifications and management of tax agents and collateral

During the grace period, for applicable assets owned as of December 31 of each year, a continued application notification must be submitted by March 15 of the following year. The handling of deadlines due to holidays or similar days will also be confirmed. Even if the assets are transferred to an overseas securities account, ensure that their subsequent holding status can be tracked.

If not submitted, as a rule, the due date for the remaining deferred tax amount will be finalized on the day that marks four months from the submission deadline. While there are relief provisions for unavoidable circumstances, administration cannot be based on the assumption that a simple oversight will always be granted relief.

If the collateral value decreases and the taxpayer fails to comply with an order for additional collateral, or if facts differing from the reported contents are discovered, acceleration of the statutory due date by the district director of the tax office becomes an issue. Other applicable cases include failing to submit a new notification within four months after the dismissal of a tax agent. Regarding the death or other events concerning a tax agent, there is a separate timeframe of within six months from the date the fact became known. Continuous management encompasses not only changes to the taxpayer's own address, but also the status of the person entrusted with the management.

When you sell midway, the deadline for the corresponding tax amount arrives.

If you sell, settle, or gift an applicable asset, as a general rule, the payment due date for the deferred tax amount corresponding to that asset will be finalized on the day that 4 months have elapsed from the date the event occurred. Documents containing details such as the type and name of the asset must also be submitted within 4 months from the date the event occurred. Selling only a part of the asset does not always result in the entire deferral ending for the remainder as well.

The amount to be paid is not calculated as a fixed percentage of the sales proceeds. It is calculated based on the income tax for the year of departure and the deferred tax amount, also taking into account the portion that has already been finalized. Tax amounts that have reached their due date are also accompanied by interest tax corresponding to the deferral period. Including which day of the transaction to use as a reference,Income Tax Basic Directive 137-2-2 and 137-2-3It is available.

Meanwhile, certain prescribed share exchanges, share transfers, and the like may be treated as continued holding. We cannot determine that the grace period has ended simply because a stock name or the number of shares has changed in a securities account.National Tax Agency Q&A on Share Exchanges, etc.I will also check and inform them of the details of the corporate reorganization for their decision.

If you voluntarily revoke the deferral before its expiration, it is handled by submitting a written request and paying the entire deferred tax amount in full. Because this may affect recalculation in the event of a price drop or cancellation upon leaving the country, we confirm your subsequent plans before you revoke it simply for the purpose of ending administration. Income Tax Basic Directive 137-2-4 sets forth this treatment.

For returning to your home country or relocating your family, consider the cancellation of taxation separately.

If you return to Japan within 5 years of moving abroad, or within 10 years if your grace period has been extended, and continue to hold the target assets until your return, you may be eligible to have the exit tax canceled for those assets. A request for reassessment or an amended tax return must be filed within 4 months from the date of your return. "Returning to Japan" in this context refers to the restoration of your residency status under tax law, and a short, temporary return is not sufficient.

There is also a cancellation system for gifts to residents, as well as inheritance or testamentary gifts upon the death of the individual. However, in the case of inheritance, the residential status of all heirs and legatees who acquired the target assets becomes an issue, and there are exclusions such as qualified acceptance. There are also restrictions on cancellation for income based on concealment or falsification. Detailed target requirements areArticle regarding the cancellation of taxationI am organizing with.

Even if the person concerned dies, the deferred tax amount does not automatically disappear. The tax payment obligation is inherited by the heirs, which also concerns heirs who have not acquired the target assets. For non-resident heirs who succeed to the deferral, as a rule, a notification of a tax accountant must be filed within four months from the day following the start of the inheritance. This is why it is important to inform family members of the storage locations for the departure tax return, collateral, and notification copies.

Deferrals associated with gifts to and inheritances from non-residents involve different commencement procedures.

In cases where a person in Japan is taxed for gifting assets to a non-resident, the filer of the income tax return is the donor. A statement requesting a deferral and the necessary documents must be included with and attached to the tax return, and collateral must be provided by the deadline. This is not a mechanism where the Notification of Tax Agent Prior to Departure, which is required when an individual moves abroad, is simply applied as is.National Tax Agency - Exit Tax (on Gifts)I have requirements.

In the case of inheritance, by the deadline for the decedent's final tax return (quasi-final tax return), all non-resident heirs and other persons who acquired the subject assets must, in principle, jointly sign a single document to notify the appointment of a tax agent. It is also necessary to provide entries and attachments in the quasi-final tax return as well as provide security, and the continuation notice must also, in principle, be jointly signed.National Tax Agency - Exit Tax (Inheritance)This is the procedure for.

Emigration, gifts, and inheritance all involve the transfer of assets internationally, but who bears the tax burden and who must file reports by what deadlines differ. When choosing a deferral, in addition to the tax amount at the start, deciding on the person in charge of management while holding the assets and the contact information in the event of a sale, return to Japan, or inheritance makes it easier to connect to the necessary procedures.