On April 12, 2023, the Tokyo District Court delivereda judgment partly in favor of the taxpayerin tax litigation concerning resident or nonresident status after relocation to Singapore.

The case was handled by Picto Law Office of which attorney Keiichiro Nagayoshi and other litigation counsel, whileour firm assisted as tax adviser.The lawyers involved are also listed in the List of Representatives on page 29 of the judgment PDF.

Of the three years disputed, the court held that the center of the taxpayer's life was in Singapore in 2015, canceling the relevant individual income tax assessments and corresponding corporate withholding tax assessments. No appeal was filed, andthe judgment became final.The National Tax Agency's published materials also describe it as partially upheld and final.

For 2015, the year with the largest disputed amount, approximately JPY 186.87 million of assessments for the individual and company combined, including additional taxes, were canceled. Our firm therefore describes the case asa partial victory, effectively a victory. This is our firm's assessment and does not mean all assessments for all years were canceled.

The Issue: Where Was the Center of Life?

The case concerned whether the owner of a Japanese company remained a resident under Japan's Income Tax Act after filing a relocation notice to Singapore. The disputed period ran from the 2013 relocation through 2015.

The tax office considered the taxpayer's center of life to remain in Japan and imposed assessments on the individual's income tax and the company's withholding tax on remuneration. The taxpayer sought cancellation on the basis of nonresident status.

The question was not merely whether an overseas relocation notice was filed, but where daily life and work were actually centered.That was the issue.

The Judgment: Different Conclusions for Different Years

This shows that even for one person's relocation, conclusions may differ by year as living and business circumstances change. The Operative Judgment Is on Page 1 of the PDF Please see

By Disputed Amount, 2015 Accounted for Approximately Half the Total

Although the taxpayer succeeded for only one of the three years,the number of years alone does not show the judgment's economic significance.The judgment's schedules give the following totals of principal and additional taxes challenged by the individual and company.

The approximately JPY 186.87 million for 2015 represents about 50.6% of the three-year total of approximately JPY 369.55 million.Cancellation of the assessments for the largest year is why our firm describes this as a partial victory, effectively a victory.

The totals follow the scope of the cancellation claims and were calculated from Appendix 20 and Appendices 26–29. Company totals exclude the undisputed amounts in Appendix 2; 2013 includes the absorbed company's amounts. The individual's 2013 figure is the difference between the revised tax payable of JPY 6,783,300 and the refund of JPY 4,594,500 forming the claim's reference amount. Individual figures are after withholding credits; company figures are additional amounts notified. Delinquency tax and similar amounts are excluded, and these figures do not represent actual refunds received.

Point 1: 177 Days in Japan and 163 in Singapore Do Not Necessarily Mean Japanese Residence

In 2015, the taxpayer spent 177 days in Japan and 163 in Singapore. Despite spending 14 more days in Japan, the court found the center of life was in Singapore.

Besides finding no significant difference between the countries' day counts, the court considered the Singapore home sufficiently furnished with furniture and clothing and the taxpayer's continued life there.

The decision is not determined solely by which country had more days.This does not mean day counts are unimportant. In 2013 and 2014, substantially longer stays in Japan strongly supported the finding that the center of life remained there.

Point 2: Examine Actual Work, Not Just Titles and Remuneration

The taxpayer was a representative director and held other positions at Japanese companies, receiving substantial officer remuneration. The court did not decide on that basis alone.

Japanese operations were delegated, leaving limited work requiring the taxpayer's domestic presence. Meanwhile, the Singapore wine business was becoming established, with the taxpayer negotiating with suppliers and conducting sales activities, increasing the need to remain locally.

Alongside company location and title, the question is where the person actually worked, on what, and to what extent.

Point 3: Ask Which Business Third-Country Travel Served

The judgment also examined activities in third countries outside Japan and Singapore. For 2015, the court found that third-country travel involved purchasing and related work for the Singapore company's wine business.

Including those activities and calculating Singapore work at approximately four days a week or more, the court assessed 115 days, about 32% of the year, as devoted to that wine business. For Japan, even including meals recorded as entertainment expenses and domestic program recording, it counted 65 days, about 18%, comparing the substance of the work.

What was included was third-country activity relating to the Singapore company's business.The court did not automatically add all third-country travel or stays to Singapore residence days. The significance lies in examining which business the travel served, not just where it occurred. Page 25 of the Judgment PDF provides details.

For 2013 and 2014, the court held that even including the taxpayer's claimed third-country days would not change the conclusion because Japanese days remained substantially greater. This was not a general ruling that third-country days can always be added (Page 23 of the Same Judgment）。

Point 4: Assess Housing, Family, Assets, and Other Circumstances Together

The court treated domicile as the center of life and set out an overall assessment of location, including days and housing; occupation; residence of the spouse and other relatives sharing a livelihood; and asset location.

In this case, family and asset locations did not create a significant distinction between the two countries. Medical visits during temporary returns to Japan were also considered consistent with having the center of life overseas.

Intent to relocate, a departure notice, local work permission, and foreign tax payments do not alone determine the result.Both formal arrangements and actual life circumstances must be checked.

Practical Significance of the Judgment

The judgment does not establish a universal rule that fewer than 183 days in Japan or establishing a foreign company necessarily makes someone nonresident. It reflects a cumulative assessment of concrete living and business circumstances.

Drawing on experience in residence determinations and advisory involvement in tax litigation, our firm advises on Japanese tax issues associated with overseas relocation.

Full Judgment

National Tax Agency Website: Full Judgment (PDF)
Archived Full Judgment (PDF)

Source: National Tax Agency, Tax Litigation Materials No. 273, Serial No. 13841, Tokyo District Court judgment of April 12, 2023. See PDF page 19 for the analytical framework and pages 24–28 for 2015. The archived version is identical to the anonymized PDF published by the National Tax Agency.

This article presents the judgment's main points and our firm's assessment. Residence determinations depend on individual facts, and the same outcome is not guaranteed.