To improve income and inheritance tax compliance relating to overseas assets, permanent residents who hold overseas assets may be required to report these to the Japanese tax authorities commencing in FY2013.
The requirement will apply to Japanese nationals who are resident in Japan and foreign individuals who have been in Japan for more than five of the preceding 10 years.It will apply when a permanent resident holds assets, including non-financial assets, outside Japan that exceed ¥50 million in gross value (liabilities such as home loans will not be considered) as of December 31 each year. Individuals must disclose such assets, for the purpose of income and inheritance taxes, by submitting an annual report to the tax office by March 15 of the following year.
The disclosure obligation must be filed regardless of whether an individual income tax return is required.
In addition, assets jointly held outside Japan must be reported separately by each asset holder, based on their portion of the assets. For example, a non-working spouse or child with no Japan tax return filing requirement must submit the report if they have overseas assets worth more than ¥50 million.
Definition of an asset and valuations
For the purpose of reporting overseas assets, an asset is defined as something for which the economic value can be estimated in monetary terms.
Unlike offshore asset disclosures in other countries, the reporting in Japan will have a broader scope and will cover more than just financial assets. Examples include:
Real estate
Bank accounts
Brokerage accounts
Bonds
Stock shares
Insurance products
Vested equity awards that are not yet paid/exercised (such as stock options)
Interests in partnerships and trusts
Antiques
Jewelry and other valuables
Assets for both business and personal purposes need to be included.
Overseas assets are those located outside Japan. Values for the purpose of reporting overseas assets are fair values or estimated values as of December 31 of that year.
Source: NewsOnJapan
The disclosure obligation must be filed regardless of whether an individual income tax return is required.
In addition, assets jointly held outside Japan must be reported separately by each asset holder, based on their portion of the assets. For example, a non-working spouse or child with no Japan tax return filing requirement must submit the report if they have overseas assets worth more than ¥50 million.
Definition of an asset and valuations
For the purpose of reporting overseas assets, an asset is defined as something for which the economic value can be estimated in monetary terms.
Unlike offshore asset disclosures in other countries, the reporting in Japan will have a broader scope and will cover more than just financial assets. Examples include:
Real estate
Bank accounts
Brokerage accounts
Bonds
Stock shares
Insurance products
Vested equity awards that are not yet paid/exercised (such as stock options)
Interests in partnerships and trusts
Antiques
Jewelry and other valuables
Assets for both business and personal purposes need to be included.
Overseas assets are those located outside Japan. Values for the purpose of reporting overseas assets are fair values or estimated values as of December 31 of that year.
Source: NewsOnJapan
