Expat Taxes in Japan

[!WARNING] Japan is a high-tax jurisdiction with severe inheritance and exit taxes.

The "Non-Permanent Resident" (NPR) Status

For your first 5 years in Japan, you are classified as an NPR.

• The Benefit: You are only taxed on Japanese-sourced income AND any foreign-sourced income that is remitted (sent) to Japan.
• The Strategy: If your clients are in the US, pay you into a US bank account, and you never transfer that money to a Japanese bank account (living entirely off savings or a foreign credit card while in Japan), that income is theoretically exempt from Japanese tax for the first 5 years.
• The Trap: If you perform the physical act of working while sitting in Japan, the National Tax Agency (NTA) classifies that as Japanese-sourced income, regardless of where the client is. Thus, the NPR loophole does not fully protect active remote workers.

The 5-Year Cliff

After 5 years, you become a Permanent Tax Resident. You will be taxed on your worldwide income at progressive rates up to 55% (including local inhabitant tax). You also become liable for Japan's brutal global inheritance tax.