when considering moving abroad, alongside income tax, what must be checked isInheritance taxis. Japanese inheritance tax,Not only the location of the assets, but also the addresses and nationalities of the deceased person and the person receiving the assets change the scope of taxation.

It is not a system where you can simply say, "If you emigrate, inheritance tax will not be levied on overseas assets."

Structure of provisions

Paragraph 1 of Article 1-3 of the Inheritance Tax Act defines the taxpayers in five items, and Article 2 defines the scope of taxable property.

Article 2Article 1-3, Paragraph 1Item (1) or Item (2)Regarding those who fall under the provisions of, the property acquired by them through inheritance or legacyAllsubject to inheritance tax.

2 Article 1-3, Paragraph 1Item 3 or Item 4For those who fall under the provisions of, regarding the property acquired by them through inheritance or legacy,Those located in the place where this Act comes into forcesubject to inheritance tax.

If you hit No. 1 or No. 2, it's worldwide property; if No. 3 or No. 4, it's only domestic property.A person who has acquired property through inheritance or legacy falls under one of items 1 through 4, and whichever side that is serves as the branching point (Item 5 applies to persons who acquired property subject to the settlement-at-inheritance tax system and is provided for separately).

Number 1 and Number 2

Although it is called the "10-year rule," the basis on the heir's side is Article 2, Item (ii), Sub-item (a), (1).The 10 years on the decedent's side appear in the definition of "non-resident decedent" in paragraph 3.

Even if a person with Japanese nationality moves their address abroad,If you had an address in Japan at any time within the 10 years before the start of the inheritance, worldwide assets will be subject to taxation.

The structure of the provision is twofold.First, assign item numbers based on the address and nationality of the person who acquired the property,Furthermore, regarding Item 1(ro), Item 2(i)(b), and Item 2(ro),(Check in parentheses whether the decedent falls under the category of a foreign decedent or a non-resident decedent.)

Item 1(a) and Item 2(a)(1) do not have this parenthetical text.For Japanese nationals who had an address in Japan within the last 10 years, worldwide assets are subject to inheritance tax regardless of the decedent's status.

Definition of terms

Paragraph 3 of the same article defines three terms.

• temporary resident ── Persons who possess a status of residence at the time of the commencement of the inheritance and who, prior to the commencement of the inheritance,Within 15 yearsthe total period during which he/she had a domicile in JapanLess than 10 yearsthat which is
• foreign decedent ── A decedent who possessed a status of residence at the time of the commencement of inheritance and had an address in Japan
• non-resident decedent Among decedents who did not have a domicile in Japan at the time of the commencement of the inheritance, but who had a domicile in Japan at some time within 10 years prior to the commencement of the inheritance,Those who did not possess Japanese nationality at any of those timesor had no domicile in Japan at any time within the past 10 years

Without checking the definitions of these three terms, I cannot read the meaning of the parenthetical text in Item 1(ro), Item 2(i)(2), and Item 2(ro).

And in the "status of residence," in the parentheses of the statutory provisionstatus of residence in the upper column of Appended Table 1 of the Immigration Control Actcomes with the restriction that.Permanent residents and other status of residence in Appended Table 2 are not included in this "status of residence."

Points that can lead to accidents if overlooked

Paragraph 2 of the same ArticleWhen the tax deferral under Articles 137-2 and 137-3 of the Income Tax Act applies, provides provisions concerning the application of the regulations in Article 1, Item (b) and Article 2, Item (a)(2) and (b).

Article 137-2 (Exit taxIf an individual who is subject to the tax deferral for ) dies, in the determination of their inheritance tax,deemed to have had an address in Japan at any time within 10 years prior to the start of the inheritanceIt is stipulated that Items 2 and 3 provide for similar deemed provisions in cases where the recipient of a gift or an heir dies (with a proviso).

Exit tax and inheritance tax cannot be separated as independent systems.

Points that require care in practice

• From when to when does a 10-year period count?This is phrased as "at any time within 10 years prior to the start of the inheritance"
• Whose address should be looked at, the heir's or the decedent's?The allocation is on the acquirer's side, and the parenthetical exclusion is on the decedent's side.
• What happens if you renounce your nationality?The requirements for exclusion under Article 2, Item (b) are questioned.
• Is gift tax determined in the same way?There is another provision in Article 1-4 of the Inheritance Tax Act.
• What happens if inheritance tax or estate tax also applies in the other country?We need to check the adjustment for double taxation and the presence of any tax treaties regarding inheritance tax.
• What if only a part of the family migrated ahead?We will make a determination for each acquirer.

The 10-year rule for inheritance tax is not a system that can be used for tax planning after emigrating.Because time itself is the requirement. Please consult with us regarding income tax, resident tax, inheritance tax, and exit tax all at once as soon as you begin considering relocation.

Legal basis

• Article 1-3 of the Inheritance Tax Act (Persons liable to pay inheritance tax)
• Article 1-4 of the Inheritance Tax Act (Taxpayer of Gift Tax)
• Inheritance Tax Act Article 2 (Scope of Inherited Property Subject to Inheritance Tax)
• Article 137-2 of the Income Tax Act (Tax Deferral in Cases Where Special Provisions for Capital Gains, etc. upon Overseas Transfer Apply)
• Article 137-3 of the Income Tax Act (due to gift, etc.)Non-residentTax deferral in cases where special provisions for capital gains, etc., apply when assets are transferred to
• Treaty on inheritance tax (limited to contracting states)

To make an individual judgment, it is necessary to check the address, nationality, and period of stay for all family members.