Japan Tax Bulletin
Remittance Taxation for Non-permanent Residents
May 20231.

Non-permanent residents

In accordance with the Japanese Income Tax Law, individuals
are classified into two categories for tax residency status, namelyresidents and non-residents. Residents are classified further into
permanent residents and non-permanent residents. Nonpermanent residents are individuals who do not have Japanesenationality and have had a residence or address in Japan for lessthan five years in the past 10 years. Taxable income subject toincome tax is different depending on individuals’ tax residencystatus.
2.

Income subject to tax for non-permanent residents

Non-permanent residents are subject to income tax on their(a) Japan source income, (b) foreign source income paid in Japanand (c) foreign source income paid abroad which is deemed tobe remitted into Japan from abroad. Income deemed to be“remitted into Japan from abroad and subjected to income tax”
is known as “Remittance Taxation”.
Foreign Source IncomeClassification

Japan Source
IncomePermanent
Residents

3.

Paid Abroad

TaxableResidents
Non-permanent
Residents

Paid inJapan

TaxableOnly the portion
deemed remittedto Japan istaxable.

Meaning of remittanceIn addition to the general concept of remittance resembled bya wire transfer of money from an individual’s bank accountabroad to his/her bank account in Japan, remittance forpurposes of Remittance Taxation includes the following acts
(1) Carrying or sending precious metals, public bonds, sharecertificates or other valuables into Japan, which are deemed tobe made in lieu of ordinary remittances. Borrowing or receiving
advance payments in Japan and using one's own cash deposits
abroad to settle the advance, which are deemed to have been
carried out in lieu of an ordinary remittance.

(2) Purchasing goods and services within Japan using a credit
card issued by a financial institution abroad whereby settlement
occurs within an bank account abroad.
4.

ExampleExample below shows a non-permanent resident’s annual
income of 1,000 in the current year being broken down into
various sources. Under the Remittance Taxation, taxability ofthis individuals’ remittance of 260 from his/her own savings
account held abroad into his/her bank account in Japan is
examined as follows.
Japan Source Income(750)

Foreign Source Income(250)

Paid in Japan[A]Paid Abroad[B]

Paid in Japan[C]

Paid Abroad
[D]

500

250

150

100

The amount “remitted to Japan from abroad” means, among
the amount remitted by non-permanent residents from abroad
into Japan each year, “the amount exceeding Japan source
income paid abroad” in that year.
In the case where a non-permanent resident remits 260 fromabroad into Japan, 250 (B) is first deemed to be remitted into
Japan. Note, this 250 is subject to income tax irrespective ofRemittance Taxation as it is income sourced in Japan. Theamount exceeding Japan source income or 10 (260-250) issubject to income tax in Japan due to application of Remittance
Taxation. Note further that 150 (C) is also subject to income tax
irrespective of Remittance Taxation as while it is foreign source
income, it is paid in Japan.
Source: National Tax Agency, “2022 INCOME TAX AND SPECIAL INCOME TAX FOR RECONSTRUCTION GUIDE”
pp.7© Grant Thornton Taiyo Tax Corporation. All rights reserved. “Grant Thornton” refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Taiyo Human Capital Corporation is member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms
are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms
are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions.

www.grantthornton.jp