Japan Inheritance Tax for Foreign Residents: What You Need to Know

At a Glance: The Single Most Important Factor

Japan inheritance tax depends heavily on your visa type. This is the rule that surprises most foreign residents:

Your Visa at Time of Inheritance	Which Assets Are Taxed?
Permanent Resident (永住者)	All worldwide assets — from day one
Spouse of Japanese national (日本人の配偶者等)	All worldwide assets — from day one
Long-Term Resident (定住者)	All worldwide assets — from day one
Work visa (技人国, 特定技能, 経営・管理...) AND resided ≤ 10 years in Japan in past 15 years	Japan-situs assets only — overseas inheritance NOT taxed
Work visa AND resided > 10 years in Japan in past 15 years	All worldwide assets
Non-resident (not living in Japan)	Japan-situs assets only

The key legal distinction: Table 1 visas (activity-based: work, study, business) can qualify for worldwide-asset protection if the residency time test is met. Table 2 visas (status-based: permanent resident, spouse of Japanese national, long-term resident, special permanent resident) have no such protection and are taxed on worldwide assets regardless of how long you have been in Japan.

Who Is a "Unlimited Taxpayer" vs. a "Limited Taxpayer"

Japan's inheritance tax law divides heirs into two categories.

Unlimited Taxpayer (無制限納税義務者)

Owes Japan inheritance tax on all assets worldwide — Japanese property, overseas bank accounts, foreign real estate, overseas investments, everything.

You are an unlimited taxpayer if you have a jusho (住所 — principal place of life, determined by facts: where you sleep, where your family is, where your assets are) in Japan at the time you receive the inheritance, AND you hold a Table 2 visa (permanent resident, spouse of Japanese national, long-term resident).

You are also an unlimited taxpayer if you hold a Table 1 work visa but have lived in Japan for more than 10 years within the past 15 years.

Limited Taxpayer (制限納税義務者)

Owes Japan inheritance tax only on assets physically located in Japan (Japan-situs assets). Overseas assets are not subject to Japan inheritance tax.

You are a limited taxpayer if:

You do not have a jusho in Japan (you live abroad), OR
You have a jusho in Japan AND you hold a Table 1 visa AND you have lived in Japan for 10 years or less in the past 15 years

The Rule Changes You Need to Know

Japan made significant amendments in 2017, 2018, and 2021 — and important rules changed again in 2024.

2017 — The "Temporary Foreigner" Protection Was Created

Before 2017, any foreigner with a Japanese address was taxed on worldwide assets with no exception. The 2017 reform created the "temporary domiciled foreigner" category: Table 1 visa holders with ≤10 years in Japan over the past 15 years are only taxed on Japan-situs assets. This applies to both heirs and decedents.

2018 — The "5-Year Tail" After Departure Was Abolished

Previously, if you left Japan after a long stay, you remained subject to Japan's worldwide inheritance tax for 5 years after departure. The 2018 reform abolished this rule for foreign nationals on Table 1 visas. Leaving Japan now terminates worldwide tax exposure, with one caveat: if you return to Japan within 2 years of departure, worldwide asset liability reattaches.

2021 — Decedent-Side Time Test Removed for Table 1

Before 2021, a foreign executive who had lived in Japan for 15 years on a work visa and died would have their estate exposed to worldwide taxation — even if their overseas heirs had no connection to Japan. The 2021 reform removed the time test for the decedent/donor side for Table 1 visa holders.

Practical effect: If you die holding a Table 1 work visa, the time you spent in Japan no longer determines whether your overseas assets are taxed. What matters now is only the heir's situation — specifically, the heir's visa type and residency duration.

What was NOT changed: Table 2 visa holders (permanent residents and others) are still taxed on worldwide assets. The 10-year test still applies to heirs on Table 1 visas.

Effective for inheritances on or after April 1, 2021.

Source: KPMG Japan — 2021 Tax Newsletter

2024 — Gift Lookback Extended to 7 Years

Gifts from the deceased given within 7 years of death are now added back into the taxable estate (extended from 3 years, effective January 1, 2024). The corresponding gift tax paid on those gifts is credited against inheritance tax.

For the 4th through 7th year of the lookback period (not the final 3 years), a ¥1 million deduction reduces the amount added back. This prevents the new rule from overly penalizing small gifts made well before death.

The 7-year window phases in fully by January 1, 2031.

Source: Ichinose Tax — Tax Revision 2024; PwC Japan Significant Developments

What Assets Are "Japan-Situs"?

For limited taxpayers (non-residents and protected Table 1 visa holders), only Japan-situs assets are taxed. Key classifications:

Asset	Japan-Situs?
Real property physically in Japan	Yes
Bank deposits at Japanese branches	Yes
Shares in Japanese companies	Yes
Life insurance from a Japanese insurer	Yes
Household goods in Japan	Yes
Overseas real property	No
Overseas bank accounts	No
Shares in foreign companies	No
Foreign life insurance	No

Shares are classified based on the company's registered country — not where the physical stock certificate is held.

Basic Exemption and Tax Rates

Exemption Threshold

Before any tax is owed, Japan allows a basic exemption that scales with the number of statutory heirs:

¥30,000,000 + (¥6,000,000 × number of statutory heirs)

Heirs	Exemption
Spouse only	¥36,000,000
Spouse + 1 child	¥42,000,000
Spouse + 2 children	¥48,000,000
Spouse + 3 children	¥54,000,000

If the total taxable estate (after liabilities and funeral expenses) falls below this threshold, no inheritance tax is owed and no filing is required.

Source: PwC Japan — Other Taxes

Progressive Tax Rates

Tax is calculated per heir on their proportional share of the estate (not on the total estate), then summed and reallocated. This means the effective rate depends on how many people share the estate.

Taxable Amount per Heir's Share	Rate	Deduction
Up to ¥10,000,000	10%	—
¥10M – ¥30M	15%	¥500,000
¥30M – ¥50M	20%	¥2,000,000
¥50M – ¥100M	30%	¥7,000,000
¥100M – ¥200M	40%	¥17,000,000
¥200M – ¥300M	45%	¥27,000,000
¥300M – ¥600M	50%	¥42,000,000
Over ¥600M	55%	¥72,000,000

Key Deductions

Spousal deduction (配偶者控除): The surviving spouse owes zero inheritance tax on the greater of:

Their legal share of the estate (usually 50%), OR
¥160,000,000

This is one of the most significant deductions in Japan's tax law. Filing is still required to claim it, even if no tax is owed.

Life insurance benefit exemption: ¥5,000,000 × number of statutory heirs — not included in the taxable estate.

Retirement/death benefit exemption: ¥5,000,000 × number of statutory heirs — not included in the taxable estate.

Real estate valuation advantage: Land is typically valued at approximately 80% of market value (路線価 / roadside price method). Buildings at approximately 70%. This makes Japanese real estate structurally more tax-efficient than cash or financial assets from an inheritance planning perspective.

Double Taxation Treaties

Japan has only one inheritance/estate tax treaty — with the United States. All other countries (including the UK, Germany, France, Canada, Australia, and all Asian countries) have no treaty with Japan covering inheritance taxes. Japan's many income tax treaties do not cover estate or inheritance taxes.

US-Japan Estate, Inheritance and Gift Tax Treaty: Prevents double taxation on inheritances involving US and Japanese assets. US taxes paid on Japan-taxed assets reduce US estate tax obligations dollar-for-dollar and vice versa. Japanese nationals in the US gain access to the high US federal estate tax exemption (approximately $12.92 million as of 2025) rather than the default $60,000 foreigner exemption.

For all other nationalities: Japan's domestic foreign tax credit rules apply. You credit foreign taxes paid against the Japanese inheritance tax due — but since Japan's rates are high, a residual Japan tax liability is common.

Source: ACTEC Foundation — US-Japan Estate Tax Treaty

Filing: Deadline, Process, and Non-Residents

Deadline: 10 months from date of death

This is strict. Extensions are rarely granted. Late filing results in penalties on top of any tax owed. If the decedent died abroad, the 10-month clock still runs from the actual date of death.

Who must file

Any heir whose share of the taxable estate is above zero after the basic exemption — even if no tax is owed after applying deductions like the spousal exemption. Filing is required to claim most deductions.

If the heir lives outside Japan

Non-resident heirs must appoint a Tax Administrator (納税管理人) — typically a Japan-resident individual — to file on their behalf and handle correspondence with the Japanese tax office. If no tax administrator is appointed, the heir may not be able to receive benefit of deductions and credits.

If the deceased was a non-resident foreigner holding Japanese real estate or bank accounts, Japan inheritance tax still applies to those Japan-situs assets. With no specific jurisdiction determined, the filing goes to the Azabu Tax Office (麻布税務署) in Tokyo, which handles non-resident inheritance matters.

Source: NTA Japan — No. 4138 Heirs Residing Abroad

2024: Mandatory real estate registration (property law, not tax law)

Since April 1, 2024, heirs who receive Japanese real property must register the property transfer with the Legal Affairs Bureau (法務局) within 3 years of learning of the inheritance. Properties inherited before April 2024 must be registered by March 31, 2027. Non-compliance carries a fine of up to ¥100,000. This is a separate obligation from the inheritance tax filing.

Source: Akiya Japan — 2024 Inheritance Laws

The Four Common Scenarios

Scenario 1: You are on a work visa (技人国, 特定技能) and have lived in Japan for 6 years. Your parent in your home country passes away and leaves you their overseas bank account. → You are a limited taxpayer. The overseas bank account is NOT a Japan-situs asset. No Japan inheritance tax. You may still owe tax in your home country — that depends on your home country's laws.

Scenario 2: You are a permanent resident. Your parent in your home country passes away and leaves you their overseas bank account. → You are an unlimited taxpayer. The overseas bank account IS subject to Japan inheritance tax. After the basic exemption, Japan will levy tax on the overseas amount. If your home country also levies inheritance tax, you may use Japan's foreign tax credit.

Scenario 3: You are on a work visa and have lived in Japan for 12 years. Your parent passes away. → You have exceeded the 10-year threshold. You are now an unlimited taxpayer — treated the same as a permanent resident. The overseas estate IS subject to Japan inheritance tax.

Scenario 4: You live abroad. Your grandparent who lived in Japan passes away, leaving you a Tokyo apartment. → You are a limited taxpayer (non-resident). The Tokyo apartment is a Japan-situs asset. Japan inheritance tax applies to the apartment's value. You must appoint a Tax Administrator in Japan and file within 10 months of the grandparent's death.

FAQ

Q1. I'm on a work visa and have been in Japan for 8 years. What happens in year 10 — does my tax situation change suddenly? Yes. Once you exceed 10 years of residence in Japan within the past 15 years, you cross from limited taxpayer to unlimited taxpayer status. This means your worldwide assets become subject to Japan inheritance tax. For many long-term residents on work visas, this is a significant planning trigger — some consult a tax advisor about their estate situation as they approach the 10-year mark.

Q2. I'm a permanent resident. Can I do anything to reduce my inheritance tax exposure on overseas assets? Some planning strategies exist — such as structuring assets into life insurance policies (which have their own exemption), systematic gifting within the annual ¥1.1M gift tax exemption, and the 相続時精算課税制度 (inheritance-at-settlement gift taxation) system. These are complex and should be discussed with a Japanese 税理士 (tax accountant). With the 2024 extension of the gift lookback to 7 years, aggressive gift strategies are more limited than before.

Q3. I'm American. Does the US-Japan tax treaty help me? Yes, significantly. The US-Japan Estate, Inheritance and Gift Tax Treaty prevents double taxation. If you pay Japan inheritance tax, you receive a dollar-for-dollar credit against US estate tax. Conversely, US estate tax paid is credited against Japan inheritance tax. Most Americans in Japan don't owe US estate tax due to the high US federal exemption threshold.

Q4. My spouse and I both live in Japan. Who files if one of us dies? The surviving spouse (as an heir) is responsible for filing within 10 months of death, along with any other heirs. If the surviving spouse's share is below ¥160 million or their legal share of the estate (whichever is higher), they owe no inheritance tax. However, they must still file to claim this exemption. The filing goes to the tax office that had jurisdiction over the deceased's registered address in Japan.

Q5. I received an inheritance from overseas while on a work visa. Do I need to report it even if no Japan tax is owed? If you are a limited taxpayer (Table 1 visa, under 10 years in Japan) and the inheritance is all overseas assets, you technically have no Japan inheritance tax obligation. However, separately: if you now hold overseas assets exceeding ¥50 million, you may be required to file an annual Report of Foreign Assets (国外財産調書) by March 15. This is a separate reporting obligation from inheritance tax and applies to residents who have been in Japan for 5+ years. Consult a tax accountant.

Last updated: 2026-06-16

Japan Inheritance Tax for Foreign Residents: What You Need to Know

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