By not registering in any country resident as a resident and moving between countries, a person avoids taxation in every country.Perpetual Traveler（PT）This is the idea known as the perpetual traveler.

Japanese tax law contains no provision corresponding to “PT.”The starting point is the factual determination of whether the personhas a domicile or residence in Japan.However, depending on the tax, nationality, past periods of residence, and asset ownership may also be relevant conditions.

Terms Used in Japanese Tax Law

Article 2(1)(iii) of the Income Tax Act.

(iii)residentIn Japan,Has a domicileor has continuouslymaintained a residence for at least one yearas an individual.

Item (v) defines a “Non-resident nonresident” as an individual other than a resident.This provision contains no category for a person who is not resident in any country.

Japan's determination is independent of other countries' determinations.Not becoming resident in any other country does not mean becoming a nonresident of Japan.Conversely, a person can be treated as resident in several countries simultaneously.

The Enforcement Order Contains Presumptions

Neither the Income Tax Act nor its Enforcement Order defines domicile itself. The core determination concerns the actual circumstances of a person's life; the Order provides only for limitedpresumptions.It is.

Article 15(1) of the Income Tax Order (Cases Where a Person Is Presumed Not to Have a Domicile in Japan) states in its opening language:“An individual who comes to reside overseas... is presumed not to have a domicile in Japan.”

(i) The person hasan occupation abroad ordinarily requiring continuous residence there for at least one year.That occupation satisfies the condition.

(ii) The person has foreign nationality or permission to reside permanently in that country under its laws, and has no spouse or other relatives sharing a livelihood in Japan...

The provision says “overseas” and is not limited to a particular country.The question is whether a continuously mobile lifestyle falls within an occupation that ordinarily requires continuous residence overseas for at least one year.

A presumption can also be rebutted by evidence to the contrary.

Japan Has Taxes Other Than Income Tax

Each tax has different criteria.

Inheritance tax requires particular care. Article 1-3(1)(ii)(a)(2) of the Inheritance Tax Act refers to Japanese nationals who had no domicile in Japan at any time during the ten years before the inheritance began, but includes the parenthetical wording:“excluding cases where the decedent is a foreign decedent or nonresident decedent.”That qualification is part of the provision.Even if you have been overseas for ten years, worldwide assets remain taxable unless the conditions on the decedent's side are also satisfied—for example, where a parent has continued living in Japan.

Points that can lead to accidents if overlooked

If the tax authorities find that you have a domicile in Japan, rebutting that finding requiresan accumulation of evidence about your actual living circumstances.A plan to “belong nowhere” also means assuming that evidential burden yourself.

There is alsothe concept of residence.Article 2(1)(iii) of the Income Tax Act also treats as resident an individual who “has continuously maintained for at least one year up to the present”the concept of residence.a residence in Japan. The provision therefore allows a person to become resident through residence even without a domicile.

Points that require care in practice

• Does dividing days of stay among countries make a person a nonresident?The Income Tax Act contains no provision using the number of days itself as the test, although days of stay can be evidence in the factual determination.
• Is removing your resident registration and terminating your lease enough?In addition to occupation, nationality, and the location of relatives, Article 15 of the Order refers tothe presence of assets in Japanand other factors.
• What if your family remains in Japan?Articles 14(1)(ii) and 15(1)(ii) of the Order refer to relatives sharing a livelihood.
• What happens if several countries treat you as resident?tax treaty Tax treaties contain tie-breaker rules, but they do not operate between countries without an applicable treaty.
• How is residence information for bank accounts handled?There is a framework for automatic exchange of financial account information.
• What happens when an inheritance occurs?Moving yourself does not alone remove you from the conditions in Article 1-3 of the Inheritance Tax Act.

Japanese tax law has no category for the PT lifestyle.It instead requires factual determinations of domicile and residence, with conditions that differ by tax.

Please consult us before starting.

Legal basis

• Income Tax Act, Article 2(1)(iii) (Residents) and (v) (Nonresidents)
• Income Tax Order, Article 14 (Presumption of Domicile in Japan) and Article 15 (Presumption of No Domicile in Japan)
• Article 60-2 of the Income Tax Act (Special Provisions for Capital Gains, etc., in the Case of Departure from Japan)
• Inheritance Tax Act, Article 1-3 (Persons Liable for Inheritance Tax and Article 1-4 (Persons Liable for Gift Tax)
• Local Tax Act, Article 24 (Persons Liable for Prefectural Resident Tax), Article 294 (Persons Liable for Municipal Resident Tax), and Articles 39 and 318 (Assessment Dates)
• Provisions on residence and dual residence in the applicable tax treaties

Individual determinations require confirmation of actual living circumstances.