Some might misunderstand that if non-permanent residents remit money to Japan, they are required to pay income tax on it. In this article, we will review what is regarded as a remittance and the scope of taxable income related to it.
What is Considered Remittance?
Remitting money to Japan includes transferring funds between your overseas bank account and a Japanese account, bringing cash directly into Japan, or any other method deemed as remittance. For example, if you use a credit card in Japan where the payments are drawn from your overseas bank account or withdraw cash in Japan from an overseas account, these are considered remittances to Japan.
Taxable Income for Non-Permanent Residents
Non-permanent residents are required to pay income tax on the following:
- Income other than foreign-source income,
- Foreign-source income paid in Japan,
- Foreign-source income paid abroad but remitted to Japan.
The amount remitted to Japan includes any funds received from abroad that exceed the amount of non-foreign-source income paid abroad during the year.
Example
If, as a non-permanent resident, you remit and receive 210 units from abroad to Japan, of which 200 units are non-foreign-source income paid abroad, the remaining 10 units (210 – 200) are considered foreign-source income remitted to Japan and are taxed accordingly.
＊Amount Remitted: 210
| Type of Income | Paid in Japan | Paid Abroad |
| Non-Foreign-Source Income | 500 | 200 |
| Foreign Source Income | 150 | 50 |
Q&A
Q: I’m planning to buy real estate in Japan and remit money to Japan. I also have income from financial products outside Japan.
A: You are required to pay income tax on the money remitted up to the amount of foreign-source income earned during the year. Compare the amount remitted to Japan with your foreign-source income; the smaller of the two will be taxed in Japan. If you have no foreign-source income in the following year, you can defer the tax liability by remitting in the next year.
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