“If you do not spend 183 days a year in Japan, you become a nonresident.” People considering an overseas move may encounter this explanation. However, domicile under Japan's Income Tax Act is not determined by such a uniform threshold. Some people have been found domiciled in Japan despite spending more time abroad. Conversely, others have been found not domiciled in Japan despite spending more days there than in their destination country.

Courts consider not only how many days a person was present, but how they lived and what work they did there.Day counts are important evidence, but cannot determine the outcome in isolation from housing, occupation, family, assets, and other facts.

This article compares seven cases for which the published full judgments were available, together with published National Tax Tribunal decisions. It includes the Takefuji case and the 2023 Singapore relocation case, in which our firm provided tax support, distinguishing taxpayers' arguments from the courts' findings.

First, identify the tax and the date for which domicile must be determined

For income tax, a person domiciled in Japan or continuously residing there for at least 1 year up to the present is a resident; others are nonresidents. “Domicile” and “residence for at least 1 year” are separate criteria. This does not mean a person must wait 1 year after departure to become a nonresident. Domicile is the principal base of life, determined from objective facts. The NTA's explanation of resident and nonresident status should also be consulted.

Gift tax cases examine domicile at the time of the gift, while income tax cases examine living circumstances during the relevant year or period. For withholding from real estate purchase payments, the seller's status at payment determines the buyer's obligations. Domestic-law residence and tax-treaty resolution of dual residence are also separate analyses.

“A case finding nonresident status” is not the same as “a taxpayer victory.” Nonresident status can change eligibility for deductions and loss offsets or create withholding obligations for the payer.

1. Living in the United States and returning temporarily to a home in Japan

In the Kobe District Court judgment of October 7, 2002, the individual argued that she was a Japanese resident, but the court found her principal base of life in the United States and dismissed the claim. She retained a home and household belongings in Japan and used them during temporary visits. Even so, owning a home was distinguished from maintaining one's principal base of life there.

These day counts were found on page 4 of the judgment. Even the longest temporary visit was 18 days, and the claim of having a residence in Japan was also rejected. The husband's substantial time in Japan did not overturn the findings concerning her actual life in the United States.

Keeping a home in Japan does not immediately make someone a resident. However, merely owning a home differs from using it as a daily base of life.This distinction recurs in later cases. Arguments under the then-applicable Japan–U.S. tax treaty also could not bypass the initial question of residence under domestic law. Page 5 of the judgment Please refer to.

2. The Takefuji case: A tax-avoidance purpose does not erase actual living circumstances

The Supreme Court judgment of February 18, 2011 determined whether the recipient of a gift of an equity interest in a foreign corporation on December 27, 1999 was domiciled in Japan. The taxpayer won in the Tokyo District Court, lost on reversal in the Tokyo High Court, then won again on reversal in the Supreme Court. The Supreme Court judgment published by the NTA sets out the procedural history at each level.

The Supreme Court emphasized objective facts: the taxpayer rented a home in Hong Kong, worked there, and spent approximately two-thirds of the relevant period there. Approximately one-quarter was spent in Japan. The court held that relatives and substantial assets in Japan, and a motive to avoid gift tax by staying in Hong Kong, did not erase Hong Kong's actual role as the principal base of life. The majority's reasoning on page 4 is central.

The point is less that motives are irrelevant than that motives do not rewrite objective facts.Actual life and work in Hong Kong were essential. The case does not say that merely transferring a residence registration for tax savings is enough. Nor can these proportions be replaced with a separate 183-day annual test.

Our firm's tax support is described in our announcement on the Takefuji gift tax litigation. The scope of gift taxation on foreign assets has since changed. Today, the absence of a Japanese domicile alone does not establish that a gift of foreign assets is tax-free.

3. A Japanese domicile despite prolonged work on a ship overseas

In the Sendai High Court judgment of April 13, 2011, people working on a foreign corporation's deep-sea fishing vessels were found domiciled in Japan. The case concerned income tax for 2003 through 2005.

For one plaintiff, the court found a pattern of voyages normally lasting about 1 year and 1 month, followed by approximately 1 month in Japan before sailing again. However, the person's base of life ashore was in Japan, returning to the home where their spouse lived. There was no separate residence abroad. The court distinguished prolonged work aboard ship from the base of family life. Pages 16–17 of the judgment Please refer to.

Spending a long time abroad is not the same as establishing a principal base of life abroad.For business trips, voyages, or itinerant work, it also matters where the person returns and conducts private life when off duty. The voyage cycle in this case must not be converted into a fixed annual number of days in Japan.

The NTA's information on this High Court judgment records a final appeal and a petition for acceptance of final appeal. This article discusses the High Court's decision and does not claim to have verified the subsequent Supreme Court outcome.

4. A U.S.-citizen infant found domiciled in Japan despite spending longer in the United States

The Nagoya High Court judgment of April 3, 2013 concerned gift tax when an 8-month-old infant received a benefit relating to a foreign trust. Although the infant was a U.S. citizen, the court examined the principal base of life of the parents providing care and recognized a Japanese domicile.

The taxpayer argued that the infant had spent 183 days in the United States and 72 days in Japan between birth and establishment of the trust in question.These 183 days were a party's count for the relevant period, not a statutory test adopted by the court or a calendar-year total.Because an infant cannot live independently, the court emphasized the parents' work, housing, and other circumstances. Pages 15–16 of the judgment set out the findings and arguments about day counts.

The father's work circumstances in the United States were not accepted as alleged, and the finding that the parents' principal base of life was in Japan led to the outcome. Nationality, visas, and birthplace alone do not determine tax domicile. On July 15, 2014, the Supreme Court dismissed the final appeal and declined to accept the petition, making the judgment final. The Supreme Court's decision did not establish a new general test for domicile.

The weight of family circumstances depends on the person's age and degree of independence.The emphasis on parents' lives for an infant cannot simply be applied to an independent adult.

5. The seller's nonresident status creates withholding obligations for the buyer

In the Tokyo High Court judgment of December 1, 2016, a company purchasing real estate challenged a withholding income tax payment notice and related assessments, arguing that the seller was a Japanese resident. However, the seller's principal base of life was found to be in the United States, and the buyer lost. The judgment is final.

The seller lived with family in the United States while also visiting Japan. Documents showing a Japanese address did not alter the assessment based on actual living circumstances. The key date was March 14, 2008, when the property price was paid. Simply listing annual day counts afterward was insufficient. Full High Court judgment and Full lower court judgment Please refer to.

Relying solely on the counterparty's residence certificate, registration, or own explanation carries risk.This is not solely an issue for nonresidents themselves. Domicile determinations directly affect companies paying Japanese real estate prices or remuneration to people living overseas.

6. Which country's life are third-country business trips connected to? The 2019 judgment

The Tokyo District Court judgment of May 30, 2019 and the Tokyo High Court judgment of November 27, 2019 upholding it concerned a business owner traveling among Japan, Singapore, the United States, and other countries. Even though days in Japan exceeded those in Singapore, Japan was not found to be the principal base of life.

The table above uses day counts from page 20 of the district court judgment. Because the person also stayed in other countries, the three-country total is not the total days in a year. In some years, time in the United States exceeded time in Singapore, but this alone did not establish a U.S. domicile.

Time spent at business destinations and the base from which trips begin

The court examined the actual pattern of short business trips to third countries from the person's home base in Singapore. Pages 3–4 of the High Court judgment explain why it was reasonable to assess those third-country stays as substantially equivalent to stays in Singapore.

However, this does not mean every day abroad can be added to Singapore. The district court treated China differently from other third countries, partly because many trips there originated in Japan. The distinction on page 21 of the district court judgment is important.

What matters is explaining where a trip was based and what activity it involved, rather than merely labeling it an overseas stay.Departure and return locations, business contacts, purpose, and itinerary together explain the significance of time in third countries.

How the court assessed family, assets, and positions in Japan

This business owner had family, assets, and corporate ties in Japan. Even so, the court examined personal involvement in overseas operations and delegation of daily domestic operations to others. The spouse's and others' continued residence in Japan was assessed in light of the children's education, the individual's frequent travel, and related circumstances. Family in Japan did not automatically establish the individual's Japanese domicile. The district court's findings on housing, occupation, relatives, and assets Please refer to.

The lesson is not permission to leave all family and assets where they are. The same circumstances can carry different weight depending on their reasons and reality. Even if assets remain in Japan, whether managing them requires the person's continuous presence there is a separate question.

7. Resident in 2013–2014, nonresident in 2015: The 2023 judgment

In the Tokyo District Court judgment of April 12, 2023, in which our firm provided tax support, the conclusions differed across three years after a move to Singapore. A Japanese domicile was recognized for 2013 and 2014, but not 2015. The taxpayer partly won, and the judgment became final without an appeal. Announcement concerning the judgment And, Full judgment published by the NTA Please see

Actual presence: 177 days in Japan and 163 days in Singapore

Sources for actual day counts: Page 20 of the judgment and Page 24. The 2013 comparison covers the relevant period after May 30, the departure date, rather than the full year.

In 2015, Japan still accounted for 14 more days. However, the court did not regard that difference as significant and assessed housing, occupation, and other factors together. It considered that the Singapore business had become established, the individual visited monthly, and they lived in a specific residence well equipped for daily life. Page 24 of the judgment contains the main comparison.

“185 days in Singapore” was not the court's finding of actual presence

The plaintiffs also argued for an assessment including third-country stays for Singapore business. For 2013 and 2014, the court found that even if this method produced 67 and 112 days, Japan's 141 and 253 days substantially exceeded them. This was a hypothetical assessment, not adoption of a general rule requiring third-country days to be combined. Page 23 of the judgment Please refer to.

The plaintiffs' figure of 185 days for 2015 likewise included third-country stays as part of their argument. It appears in the plaintiffs' arguments on page 13 of the judgment.Summarizing the case as “the court found 185 days in Singapore, exceeding Japan's 177, so the taxpayer won” misreads the judgment.The court distinguished actual presence of 177 versus 163 days from its assessment of occupational activities discussed below.

Occupational activities: 115 days attributable to Singapore and 65 to Japan

This is the assessment on page 25 of the judgment of occupational activities, not a table of actual presence compiled directly from immigration records. The 115 days reflect working on the Singapore business at least about 4 days a week while there, plus business travel to third countries for purchasing and similar purposes. Japan's 65 days were calculated by provisionally including meals and similar events as business activities and adjusting for overlapping activities on the same day.

Revenue or director remuneration alone does not determine the country of a person's principal base of life. Even someone receiving substantial remuneration from a Japanese company may delegate daily operations to employees and have only a limited need to stay in Japan. Conversely, a new overseas business paying little remuneration may require the person's sustained work locally. Page 27 of the judgment considers occupational factors in relation to the need for the person's presence.

Does moving among rooms in Japan mean there is no Japanese domicile?

The plaintiffs also argued that several places were used during stays in Japan. However, for 2013 and 2014, the court found that a particular room in Japan contained basic living facilities, clothing, and other items, and served as a base for use of other locations. Even if storage accounted for much of its use, it was not treated as merely equivalent to a hotel. Pages 22–23 of the judgment Please refer to.

For 2015, however, with the difference in days between Japan and Singapore reduced, the contrast between using multiple locations in Japan and a particular well-equipped home in Singapore became meaningful. The analysis neither focused only on country-level day counts nor abandoned country comparisons in favor of counts for individual rooms.

The conclusion can change for the same person as actual life and business circumstances develop.This does not mean domicile resets every January 1, nor did the judgment newly establish a particular departure date as the date of transition to nonresident status.

Read published tribunal decisions as well as court judgments

Substantial overseas financial assets do not prevent resident status if life is centered in Japan

The National Tax Tribunal decision of March 26, 2021 recognized a Japanese domicile for a person with overseas financial assets and ties to overseas companies. The tribunal found proportions of time in Japan of 61%, 59%, 65%, 79%, and 76%, respectively, starting in 2013.

Although financial assets in Hong Kong exceeded those in Japan, the tribunal also examined their use for living, actual use of the Japanese home, and where overseas business work was performed. An argument that the person had been treated as a nonresident in an earlier audit did not guarantee the outcome for later periods with more time in Japan.Having once been a nonresident does not prove continued nonresident status indefinitely.

A tribunal decision looking beyond the duration of overseas work

The decision of June 5, 2008 also examined the domicile of a foreign-vessel crew member by considering family in Japan and the principal base of life off duty. It shares issues with the court cases, but this article does not treat it as a confirmed match to the 2011 High Court case.

Tribunal decisions are decisions of the National Tax Tribunal, not court judgments. This discussion does not mean we have verified whether litigation followed these decisions or its outcome.

What emerges from comparing the cases?

Compare day counts using consistent periods and methods

First align whether the period is a calendar year, the time before a gift, or only the period after departure. Check treatment of arrival and departure days, days spent in two countries, and third countries. The infant's 183 days in the 2013 case and the business owner's 177 days for 2015 cannot be compared as if they used a common annual test.

Then distinguish large differences in days from small ones. The 2014 and 2015 findings in the 2023 judgment illustrate this well. One may read the decision as placing greater importance on housing and occupation when day counts become close, but it did not create a new “a difference of up to 14 days is safe” rule.

Third-country days are not leftovers: Examine the activities

Was the trip for business or a holiday? Did it start and end in Japan, or involve travel from the destination country through other countries and back? Consider which country's life or business the stay continued. A spreadsheet automatically adding all third-country days to the destination erases important differences between the 2019 and 2023 judgments.

Housing: Examine how it is used, not just legal rights

Ownership versus rental, or size alone, does not decide the issue. Consider frequency of use, furnishings, clothing, living facilities, and whether it is where the person returns off duty. The 2002 temporary visits to an owned Japanese home and the 2011 returns to a Japanese family home after voyages give different meanings to the same fact of “having a home in Japan.”

Occupation: Look beyond company location, title, and remuneration

Ask not only which company the person represents, but what they do, where, and how necessary their presence is. Owning a Japanese company differs from living in Japan; establishing an overseas company differs from working overseas. Meetings, delegated authority, business contacts, and local work reveal the reality behind a title.

Family: Neither a mere formality nor always the overriding factor

Consider actual cohabitation or separation, living expenses, education, and independence. Infants depend heavily on their parents' lives. Adults may have reasonable grounds for a spouse remaining in Japan. Thus, moving the entire family is not necessarily sufficient, and leaving family behind is not necessarily irrelevant.

Assets: Consider their connection to daily life, not just value

Some financial assets can be managed from abroad. The country holding the largest total does not automatically become the domicile. Examine use of assets needed for living, home management, daily payments, and the need for the person's presence.

In practice, can actual living circumstances be reconstructed later?

The facts courts examine in detail concern travel, housing, work, and family life years earlier. Rather than deciding the desired conclusion and collecting only favorable records, we believe it is important to retain the following materials consistently.

• Travel:Immigration records, tickets, itineraries, purposes of third-country visits, and departure and return locations.
• Housing:Contracts, actual use, furnishings and living facilities, and records of daily life.
• Work:Responsibilities, meetings, local business contacts, division of authority, and the need to work in that country.
• Family:Actual living arrangements, education, and responsibility for living expenses.
• Changes:A timeline distinguishing the initial move from an established business, and temporary visits from a permanent return.

This does not mean documents alone can relocate a domicile. It means preserving actual life in a form others can verify. Tax domicile, overseas immigration status, resident registration, and treaty treatment must also be kept distinct.

Lawyers and tax professionals supporting tax litigation

Attorney Hidetoshi Masunaga, also known for the blue LED litigation, was involved in the Takefuji gift tax case. A published interview with Mr. Masunaga also describes his work on both cases. After the High Court judgment, our firm supported the plaintiff taxpayer through advice on tax concepts of “nonresident” and “domicile,” and by providing academic papers and other materials.

In the case decided on April 12, 2023, attorney Keiichiro Nagayoshi of Pict Law Office and others served as litigation counsel, while our firm provided tax support as certified tax accountants. The lawyers can also be identified in the attached list of representatives in the judgment materials published by the NTA. The arguments and findings discussed here are limited to what can be verified in published judgments and related materials.

The more we study the cases, the clearer the need for explicit rules

An overall assessment can accommodate individual circumstances. However, needing so many facts and lengthy litigation to predict the outcome imposes a substantial burden on taxpayers. Matching the day count in a past successful case is no assurance; seemingly similar cases can differ when work or housing is assessed differently.

We need a tax system simple and clear enough to avoid litigation in the first place.A system is needed in which quantitative criteria such as days present, their exceptions, and their relationships with other factors can be understood in advance. This is our firm's view on future policy, not a statement that current law uses a 183-day test.