You can check in any time you like...
This one crept under the radar somewhat. In 2015 the Japanese Diet approved a bill imposing an exit tax on 'wealthy individuals'.
The amount to qualify as 'wealthy' is only 100m yen in worldwide assets. Not pocket change, but not the wealth of Croesus either.
Many RetireJapan readers could conceivably end up with assets equivalent to 100m, especially if the yen weakens in the future and overseas assets become much more valuable in yen terms.
It's certainly something to understand and be aware of.
The good news is that cash and real estate don't count towards the 100m limit, only stocks and similar assets that can end up with capital gains.
I was a bit sceptical of this tax until I thought about the scenario it is trying to prevent.
Presumably, before the exit tax, it would be perfectly legal and practical for someone to work in Japan, send all their savings to a tax-free jurisdiction like Singapore or Hong Kong, and invest in something that gains in value but doesn't produce income.
Then when they are ready to cash out they could then move to Singapore, stop being resident in Japan for tax purposes, sell their assets, realize the capital gains tax free, then move back to Japan with their cash that they wouldn't owe any tax on.
Bit of a no-brainer for anyone with enough assets.
I can understand why the Japanese government wants to prevent this scenario. Unfortunately, it's also going to affect normal people who decide to stop living in Japan for other reasons.
So what is the exit tax?
As far as I understand, the exit tax requires qualified people who are leaving Japan to calculate capital gains on their assets at that time and pay Japanese taxes on those 'gains'.
When does it start?
It started in 2015, but will only apply to non-Japanese nationals after they have been here for five years from that date, so the first people will be affected in 2020 -get out before then if you need to ;)
It's definitely worth talking to a professional if you think this will impact you. For those of use who may be impacted in the future, it's worth keeping in mind.
I am curious as to how Japan is going to know about people's (undeclared) worldwide assets, and whether they'll bother going after people who barely qualify.
I guess we'll find out after 2020 when some case studies will start emerging.
I'm not too bothered about this to be honest. I doubt I'll end up with much more than 100m yen, and you could always tactically sell some assets to get under the 100m yen limit (as cash doesn't count) just before leaving.
Any thoughts on the exit tax?
This post first ran on RetireJapan in July 2016
