#1 Japan Has One of the World's Highest Inheritance Taxes. Most Foreigners Don't Know They're Exposed.

If you have a Japanese address, the government can tax your global estate at up to 55% — regardless of your nationality. Here's what that actually means.

The assumption that gets you

There is a number your heirs will need to find — in cash — within ten months of your death. Most foreign residents in Japan have no idea what that number is. Many assume it doesn't apply to them at all.

They're wrong. And the size of that number tends to surprise people.

"You don't have to be Japanese for Japan to tax your estate. You just have to live here."

Japan operates what's called an "unlimited tax liability" rule. If you are a resident of Japan at the time of inheritance — or if the person who passed away was a resident — your worldwide assets are included. Real estate in London, brokerage accounts in Singapore, a family home in California. All of it.

And the rates are not gentle. Japan's inheritance tax peaks at 55%. That is among the highest effective rates in the developed world.

What it looks like in practice

Consider a foreign resident in Japan with ¥200M in total assets — a mix of Japanese real estate, overseas investments, and savings. One legal heir. No planning in place.

The bill that arrives: approximately ¥50–55 million.
Due in cash within 10 months.
No extensions. No payment in property unless a special application is approved.

That is not a hypothetical. That is the current law, applied to a situation that describes a large number of foreign residents in Japan right now.

"The tax doesn't care where your assets are. It cares where you live."

The part most expats miss

There are three reasons foreign residents consistently underestimate their exposure.

First, they assume nationality protects them. It doesn't. Japanese inheritance tax is residency-based, not citizenship-based. If you've lived here five or more years, you're in.

Second, they assume overseas assets are safe. They are not. Worldwide assets are included for residents under unlimited liability rules — unless a tax treaty specifically carves out an exception, and most don't fully do so.

Third, they've never been asked the question. Financial advisors focused on investment returns rarely raise succession. Tax accountants handling your annual return may not specialize in estate planning. Nobody volunteers the uncomfortable conversation.

Your move

1. Take the number seriously. If your total assets are above ¥100M and you have lived in Japan for more than five years, the exposure is real. Not theoretical. Real. That is the first thing to sit with.

2. Get the right conversation on the calendar. Not your general financial advisor. A Japan-licensed tax attorney or 税理士 who specializes in cross-border estate planning. The first conversation is usually free. The problem it addresses is not.

"Every year without a plan is a decision. Most people just don't realize they're making it."

What comes next

This is the first issue in a short series on estate planning for long-term foreign residents in Japan.

#02 covers something specific: a structure that families in Japan — foreign and Japanese alike — have used for decades to move wealth to the next generation gradually, legally, and at a fraction of the tax cost. It doesn't eliminate the problem. But used correctly, it reduces it significantly.

If the number above made you uncomfortable, #02 is worth reading

This article is for informational purposes only and does not constitute tax, legal, or financial advice. Japan's inheritance tax rules are complex and depend heavily on individual circumstances, treaty positions, and residency history. Please consult a licensed Japanese tax professional before making any decisions.