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Paying tax as a resident when working outside Japan

Hi,
My wife (Japanese national) and I (French national) have recently moved to Japan. I am on a spouse of Japanese national visa.

However, we will be working abroad for a few months (up to a year), in the Republic of Palau, and were wordering if people had information on how things work for taxes in this case.
We will most likely have to open a bank account in a US bank.

We’re wondering if it’s best/simpler to just give up on residency and declare that we are leaving Japan, even if this is only for a few months, or if it’s possible/recommended to maintain residency in this case.

The other issue is that we have a flat in France, which means that French tax services consider us to be fiscal residents in France. There is a fiscal convention between Japan and France, but none with Palau.
We’re not sure what would be best in this case, to avoid double or triple taxation.

Thanks for your advice!
b

I’m not a tax expert, but if you spend less than 6 months of the calendar year in Japan, you won’t become a Japan tax resident, you’ll either remain a tax resident of France or become a tax resident of Palau. Visa status and tax status are not the same thing, although the exact measure that the Japan tax authorities use (as with most countries) is a little complicated. Time spent in the country is the number one consideration, but they also consider things like family, properties you own etc. Either way, if you’ve only been here a short time, Japan is not going to suddenly force you to pay tax here. Also, just to reiterate, I’m not a tax expert!

Thanks.

We got this confirmed at the tax office. Apparently it depends on intent - if the intent is to work outside Japan for over a year, then you are not taxed in Japan, but locally. We need to check what happens to local taxes, shiminzei etc.

Next step is to go see immigration to see if a foreign resident is allowed to work outside the country “temporarily” and maintain residency since we intend to return, or if I’ll lose residency and have to start over. The situation is a little complicated due to the fact that both my wife and myself, so the whole seitai is going to work abroad temporarily, so I really don’t know how that works.

cheers
b

1 Like

Hello Bjaz,
I had a friend with a similar question and contacted the National Tax Consultation number and spoke completely in Japanese. Below is based on getting paid from a JP company, but living outside of Japan (moving back to the USA), in this case my friend was actually giving up his residency and moving back to the USA. I am not sure about your residency issue and whether you would have to give it up or not; depends on your visa and many other variables.

  1. If you move back to USA, and do work on line, and plan on being out of country more than one year, then the day after you arrive in USA, you will be Hikyojusha. Meaning your earnings are no longer a taxable in Japan.

  2. Even though you are working for a JP company and getting paid from Japan,
    it only matters where your physical body is located when you work!

  3. your income will be considered from outside of Japan 国外源泉所得 but no pay tax 非課税

  4. You will most likely have to pay Tax in USA and may not be able to use foreign earned income exclusion.

Most people have a hard time grasping this concept!
below site, all in JP, has a nice chart/table describing the different status types.

国際労務.com 海外勤務者の給与・税金
海外勤務者の給与や所得税、住民税の取り扱いについて解説しています。
Below are similar Japan National Tax Agency articles you can look up.
No.2517 海外に転勤した人の源泉徴収|国税庁
No.2517 海外に転勤した人の源泉徴収|国税庁
No.1920 海外勤務と所得税額の精算|国税庁