Money Hub Japan > English > Tax Residency Guide
Japan Tax Residency Guide
Whether your overseas dividends, rental income, or stock gains are taxed in Japan depends on which of three residency tiers you fall into. This guide explains the tests in plain English with practical examples.
The three residency tiers
Income Tax Act Article 2 defines:
- Resident: has a domicile (住所) in Japan, OR has stayed continuously for ≥1 year
- Non-Permanent Resident (NPR): a resident who is not a Japanese national AND has had a domicile in Japan ≤5 years out of the past 10
- Permanent Resident (tax): a resident who doesn't qualify as NPR (i.e., Japanese national OR foreigner >5/10 yrs)
- Non-Resident: not a resident
⚠️ "Permanent Resident" here is for tax purposes — entirely separate from the immigration permanent residency status. They overlap but are not the same.
The 5-out-of-10 test
Count how many years (or partial years) you had a Japan domicile during the previous 10 years (looking back from the start of the current tax year). If the total is 5 years or less, you are a Non-Permanent Resident.
- Years not consecutive — they can be split across multiple stays
- Partial years count fully (a 3-month stay = 1 year for the test, conservatively)
- The test is recomputed each January 1
- After the 5-year mark, you transition to Permanent (tax) at the start of year 6
Scope of taxable income by tier
| Income type | NPR | Permanent (tax) | Non-Resident |
|---|---|---|---|
| Japan-source income | Taxed | Taxed | Taxed |
| Foreign-source, paid abroad | Not taxed* | Taxed (worldwide) | Not taxed |
| Foreign-source remitted to Japan | Taxed up to remitted amount | Taxed (worldwide) | Not taxed |
* Foreign-source income paid IN Japan or remitted to Japan is taxable for NPRs.
Remittance rule for NPRs
Even if your foreign salary or dividends never touch a Japanese account, sending other money into Japan in the same year can retroactively taxable that foreign income — up to the remitted amount.
Example: You earn ¥3M in US dividends in 2026 (kept in a US account). You also wire ¥5M from your US savings to Japan to buy a house. The entire ¥3M of foreign-source income becomes taxable, because the remittance (¥5M) exceeds the foreign income (¥3M).
What changes when you leave
- Your last full year of residency is taxed as a partial-year resident return
- From departure, you become Non-Resident — only Japan-source income (rental, etc.) is taxable
- Resident tax for the prior year's income is still due in June after departure → appoint a Tax Representative
- If >5 years resident with ¥100M+ securities: Exit Tax may apply
- National pension contributions can be partially refunded via Lump-sum Withdrawal