What Is Exit Tax (国外転出時課税制度)
Japan’s exit tax regime applies when certain residents move abroad (国外転出) or when assets are gifted or inherited by non-residents. If at that time you hold “target assets” worth ¥100 million or more (or more than ¥1 billion in aggregate assets for some residents), you may be treated as having sold them and taxed on unrealized gains.(nta.go.jp)
Key Details:
- Target Assets include securities, unsettled derivative positions, etc.(nta.go.jp)
- Taxation is triggered on April 1, 2015 or later move, for those meeting asset thresholds.(nta.go.jp)
- There’s also a special regime for stock options under the “特定従事者” framework, where stock option holders may face deemed disposal at exercise value upon exit. (nta.go.jp)
Reporting Assets & Liabilities (財産債務調書制度)
For residents and those preparing to leave, there are requirements to report assets and liabilities:
- If total income (excluding retirement income) exceeds ¥20 million and you have assets ¥300 million+, or “exit assets” worth ¥100 million+, you must file a Report of Assets and Liabilities for the year.(nta.go.jp)
- Also, residents with assets above ¥1 billion as of Dec 31 must report regardless of income.(nta.go.jp)
Compliance Steps When Planning Departure
- Appoint a tax agent (納税管理人) residing in Japan before departure for handling filings, notifications & refunds.(nta.go.jp)
- Be sure to file either tax returns or quasi-final returns depending on whether you appointed the tax agent.(nta.go.jp)
- For stock options: determine if you're a “特定従事者” and whether your holdings will be deemed disposed.(nta.go.jp)
Example
Imagine Alex, a resident with ¥150 million in stocks and derivative positions. If he renounces residency in 2026:
- Because his “target assets” exceed thresholds, he’ll face income tax on all unrealized gains.
- Must report his positions via the assets & liabilities report by June 30, 2026 (for Dec 31, 2025 values).(nta.go.jp)
- If he appointed a tax agent, he can file via tax agent during the usual period (Feb-Mar of the following year); otherwise he must file a quasi-final return before his departure.(nta.go.jp)
Practical Tips
- Start inventorying all international/securitized assets early, valuing them accurately.
- Review employment contracts and stock option agreements—may affect whether deemed disposal applies.
- Maintain records of foreign bank holdings, property, derivatives to back up your report.
- Consult with cross-border tax specialists to factor in treaties or reliefs from foreign jurisdictions.
Bottom Line: Leaving Japan triggers serious tax and reporting obligations. Planning early and working with professionals is crucial to avoid penalties or unexpected tax exposure.