Inheritance Tax

Student: Bao Chau Xuan Nguyen Searching on Estate Planning under Inheritance Tax & other Laws in Japan

1. Japanese Inheritance tax is based on the residence status of the heirs

Inheritance tax in Japan is based on the residence status of the individual. Beneficiaries are subject to inheritance tax on property they received if they are domiciled in Japan. However, if beneficiaries are not domiciled in Japan, they are still subject to inheritance tax if the property that they inherited is situated in Japan. Still, a non-domiciled person could still be subject to inheritance tax if he has a Japanese nationality and if he or the donor had lived in Japan at any time within 5 years before the deceased’s death. The registration tax rate for entrusting real estate is 0.4% on the appraised value of the property. TAX BASE, JPY (US$) Up to 10, 000,000 (US$109,493) 10, 000,000 – 30, 000,000 (US$328,479) 30, 000,000 – 50, 000,000 (US$547,465) 50, 000,000 – 100, 000,000 (US$1, 094,131) 100, 000,000 – 300, 000,000 (US$3, 284,791) Over 300, 000,000 (US$3, 284,791) TAX RATE 10% 15% 20% 30% 40% 50%

An heir who is a foreign national residing abroad is subject to Japanese inheritance tax for such property which is located in the territory of Japan; the typical type of such property is real estate in Japan. Inheritance tax is levied at progressive rates (up to 50%) on the fair market value of the property inherited minus funeral expenses and taxes. Further deductions are permissible, depending on the status of the heirs:

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JPY10,000,000 (US$109,493) for each statutory heir JPY160,000,000 (US$751,899) for the surviving spouse

2. Deceased’s National laws apply to inheritance issues

The principal laws applying to inheritance issues are: Act on the General Rules of Application of Laws; Act on Governing Law of Formalities of Wills; Civil Code; Code of Civil Procedure and Domestic Relations Trial Act. Only the national inheritance laws of the deceased apply. The religion and...