I am moving abroad. What will happen to my resident tax?
What will happen to my Japanese resident tax payments when I am transferred overseas or return to my home overseas?
Although tax evasion is not allowed, it is a type of tax saving to decide when to move in with an understanding of the basics of inhabitant tax. So let's learn basic taxation and tax saving of inhabitant tax.
Basic Knowledge of Resident Taxes
Resident tax is levied on those with an address in the municipality as of January 1.
The municipality of your address, as of January 1, will send you a payment slip around the end of May, and you will continue to pay it from June until May of the following year as the resident tax for the year.
If you work for a company, your address would be verified with the company, called Salary Deductions (Special Collection). And if you are paying directly to the municipality yourself (General Collection)), you will receive a payment slip straight from the city. This is around May.
For example, suppose you live in Osaka City until December 30 and move to Kyoto City on December 31. In this case, your address as of January 1 is in Kyoto City, and you will receive a resident tax payment slip from Kyoto City.
This is a little more subtle, but if you lived in Osaka City until January 1 and moved to Kyoto City on January 2, your inhabitant tax levy would come from Osaka City.
To summarize in a diagram, it looks like this: the key is where the address is located as of January 1.
However, it may be difficult for the general public to understand that at this point alone, the location of the resident tax payment for the year after June will change.
Resident tax when moving abroad
If the above is foreign, it will change whether it is taxable or not. Earlier, both A and B were domestic. Now let's go overseas.
In case C, you will have no address in Japan on January 1. As a result, in case C, no inhabitant tax will be imposed in Japan.
On the other hand, in case D, you have a domicile in Japan on January 1. In this case, you are obliged to pay Japanese resident tax. You are not in Japan, aren't you? You may say, "You are not in Japan," but in principle, this is how it works.
tax agent
In case D above, a Tax Agent must be set up at the time of departure.
Also, be aware of the possibility of tax payment omission. A common case is omission of tax payment: suppose you moved to Singapore on January 2, 2023, and you paid your residence tax for June 2023 to May 2024 in one lump sum. This is of course fine.
However, if you have an address in Osaka City as of January 1, 2023, you will be liable for resident tax from June 2024 to May 2025. And you should not have received a tax notice for this new tax amount. Failure to pay this portion of the tax is likely to occur.
Please make sure that you have a tax manager.
Looking at registration in the Basic Resident Registry.
Where do you determine whether or not you have an address? It is whether or not you are listed in the Basic Resident Registration System (BRS).
If the procedure is omitted, or if the move date is stated as January 2 in the notification, even if the actual date of the action is December 31, the address will be in the municipality on January 1 as registered in the Basic Resident Registry.
In this case, taxation is imposed.
We're also looking at the actual situation.
So, even though the move is on January 2, why don't I just report the move as a move on December 31 in the Basic Resident Registration? You may be thinking, "Yes, I moved on January 2. In this case, there is a possibility of taxation on the contrary.
Basically, we look at whether they are on the basic resident register, but if we look at the current situation and find that they have not moved, we will tax them for the actual situation.
Be aware that tax-related false declarations can be problematic.