JP Nonpermanent Resident

Quick reference

Quick reference (Income Tax Act (所得税法), Art. 2; Art. 7)

Item	Value
Non-permanent resident	Foreign national resident in Japan for ≤ 5 of the last 10 years
Permanent resident	Resident for > 5 of the last 10 years (or Japanese national)
Non-permanent resident: Japanese income	Fully taxed
Non-permanent resident: Foreign income remitted to Japan	Taxed
Non-permanent resident: Foreign income not remitted	Not taxed
Legislation	Income Tax Act (所得税法), Art. 2; Art. 7
Tax authority	National Tax Agency (NTA) — nta.go.jp

The three residency categories in Japan

The three residency categories in Japan

Category	Definition	Taxed on
Non-resident	Not resident in Japan	Japan-source income only
Non-permanent resident	Resident in Japan; foreign national; ≤ 5 years in Japan in last 10 years	Japan-source income + foreign income remitted to Japan
Permanent resident	Resident in Japan; > 5 years in Japan in last 10 years (or Japanese national)	Worldwide income

Becoming resident in Japan

• Resident (domicile/1-year residence) — A person is resident in Japan if they have a domicile (生活の本拠) or have resided continuously for 1 year or more (住所).

Foreign nationals on a work visa who live in Japan full-time are generally residents from day one of arrival.

Non-permanent resident: the tax advantage

• Non-permanent resident partial territorial basis — During the first 5 years (of the last 10) in Japan, a foreign national is a non-permanent resident and benefits from a partial territorial basis: Japanese-source income (salary from Japanese employer, Japan business income, Japan rental income, Japan dividends): fully taxed in Japan; Foreign-source income paid in Japan or remitted to Japan: taxed in Japan; Foreign-source income not remitted to Japan: not taxed in Japan.
• Capital gains on foreign assets — Capital gains on foreign assets (shares, property abroad): not taxed in Japan unless remitted.

Remittance = taxable

Any foreign income brought into Japan — wire transfers, foreign card transactions in Japan, debt repayment in Japan using foreign income — counts as remittance. Keep foreign and Japanese funds in separate accounts.

Transition to permanent resident status

• 5-year cumulative residence triggers permanent resident status — After 5 cumulative years of residence in Japan in any 10-year window, the individual becomes a permanent resident for tax purposes and is taxed on worldwide income regardless of remittance.

This is a cliff-edge change: plan carefully around the 5-year mark.

Japan income tax rates (2025)

Japan income tax rates (2025)

Income (JPY)	Rate
Up to 1,950,000	5%
1,950,001 – 3,300,000	10%
3,300,001 – 6,950,000	20%
6,950,001 – 9,000,000	23%
9,000,001 – 18,000,000	33%
18,000,001 – 40,000,000	40%
Above 40,000,000	45%

• Resident Tax (municipal/prefectural) — 10% percent (Plus 2.1% surtax; effective combined top rate ~55%)
• Surtax — 2.1% percent (Effective combined top rate ~55%)

Sources

• Income Tax Act (所得税法), Art. 2 (definitions), Art. 7 (scope of taxation)
• NTA: nta.go.jp/taxes/shiraberu/taxanswer/shotoku/1920.htm

Working paper only. The non-permanent resident status resets with breaks in Japanese residency — careful tracking of the 10-year lookback window is required. Have a qualified Japanese tax accountant (税理士) review.