In the previous article, we worked through the figures for a family where you — the family member living in Japan — hold permanent residency, and Japanese inheritance tax reached your U.S. securities and insurance proceeds. This article keeps the same family and the same estate, and changes one thing only: your status of residence, and how long you have been in Japan.
The result is not a smaller bill. It is no bill at all.
1. The assumed facts
The decedent and the family
Decedent A was a U.S. national who lived in the United States all his life and never had a domicile in Japan (no domicile in Japan within the preceding 10 years — a Non-resident Decedent).
There are three statutory heirs — his wife and two children — and he also left a bequest to his grandson.
| Name | Relationship | Nationality | Domicile | Status of residence |
|---|---|---|---|---|
| B | Wife (mother) | U.S. | U.S. | — |
| C | Son | U.S. | Japan | Engineer / Specialist in Humanities / International Services (6 years in Japan) |
| D | Daughter | U.S. | U.S. | — |
| E | Grandson (Son C's child) | Japan | Japan | — |
Son C works for a Japanese company and lives in Japan on the Engineer/Specialist in Humanities/International Services status of residence. He arrived six years ago and had never lived in Japan before that. In this example, you are in Son C's position; Wife B and Daughter D are your family members back home, and Grandson E is your own child.
The only change from the previous article is Son C's status of residence and length of stay. Previously he held the "Permanent Resident" status.
Grandson E is not a statutory heir. He receives property because Decedent A left him a bequest by will.
What each person received (converted into yen)
| Acquired by | Asset | Location | Amount |
|---|---|---|---|
| Wife B | Cash and deposits | U.S. | ¥80,000,000 |
| Wife B | Cash and deposits | Japan | ¥25,000,000 |
| Son C | Securities | U.S. | ¥120,000,000 |
| Son C | Life insurance proceeds | U.S. | ¥20,000,000 |
| Daughter D | Real estate | U.S. | ¥150,000,000 |
| Grandson E | Cash and deposits | Japan | ¥5,000,000 |
| Total | ¥400,000,000 |
2. Determining the scope of taxation
| Name | Domicile | Nationality | Category | Scope of taxation |
|---|---|---|---|---|
| Wife B | U.S. | U.S. | Limited Taxpayer | Assets in Japan only |
| Son C | Japan | U.S. | Limited Taxpayer | Assets in Japan only |
| Daughter D | U.S. | U.S. | Limited Taxpayer | Assets in Japan only |
| Grandson E | Japan | Japan | Unlimited Taxpayer | Assets in Japan + overseas assets |
Why Son C is now a Limited Taxpayer
Son C has a domicile in Japan but does not hold Japanese nationality. The question is whether he is a Temporary Resident, which requires both of the following:
- Holding a status of residence under the upper column of Appendix Table 1 of the Immigration Control and Refugee Recognition Act at the time the inheritance commences
- A total period of domicile in Japan of 10 years or less within the preceding 15 years
The Engineer/Specialist in Humanities/International Services status is listed in the upper column of Appendix Table 1, so condition 1 is satisfied. He has lived in Japan for six years, which is 10 years or less within the preceding 15, so condition 2 is satisfied as well.
Son C is therefore a Temporary Resident. Because Decedent A was a Non-resident Decedent, Son C is a Limited Taxpayer, and the ¥120,000,000 of U.S. securities and the ¥20,000,000 of insurance proceeds fall outside the scope of Japanese inheritance tax altogether.
Note that temporary absences — study abroad, an overseas assignment — do not interrupt a period of domicile in Japan.
Wife B, Daughter D and Grandson E
The analysis for the others is unchanged. Wife B and Daughter D had no domicile in Japan and hold no Japanese nationality, so they are Limited Taxpayers. Grandson E holds Japanese nationality and lives in Japan, so he is an Unlimited Taxpayer.
3. Calculating the Japanese inheritance tax
Step 1 — The taxable amount for each person
| Person | Property acquired | Amount | Treatment |
|---|---|---|---|
| Wife B | Cash and deposits (Japan) | ¥25,000,000 | Taxable |
| Wife B | Cash and deposits (U.S.) | ¥80,000,000 | Not taxable |
| Son C | Securities (U.S.) | ¥120,000,000 | Not taxable |
| Son C | Life insurance proceeds (U.S.) | ¥20,000,000 | Not taxable |
| Daughter D | Real estate (U.S.) | ¥150,000,000 | Not taxable |
| Grandson E | Cash and deposits (Japan) | ¥5,000,000 | Taxable |
Only two items in the whole estate are within the scope: the deposit Wife B took in Japan, and the deposit left to Grandson E.
| Person | Taxable amount |
|---|---|
| Wife B | ¥25,000,000 |
| Son C | ¥0 |
| Daughter D | ¥0 |
| Grandson E | ¥5,000,000 |
| Total | ¥30,000,000 |
Of a ¥400,000,000 estate, ¥30,000,000 is within the scope of Japanese inheritance tax.
Step 2 — The basic exclusion
The basic exclusion depends on the number of statutory heirs. Grandson E takes under a bequest and is not a statutory heir, so he does not count towards it.
¥30,000,000 + ¥6,000,000 × 3 = ¥48,000,000
The calculation ends here
¥30,000,000 − ¥48,000,000 → ¥0
The total taxable amount is below the basic exclusion. There is no taxable estate, no tax to divide among the heirs, and no inheritance tax payable by anyone — Son C and Grandson E included. No return is required.
The rate table, the statutory-share apportionment, the credit for spouses, the 20% surcharge on Grandson E — none of it comes into play, because the calculation never gets that far.
4. The same estate, two outcomes
Nothing about the family or the estate has changed between the two articles. Only Son C's status of residence and length of stay are different.
| Previous article (Permanent Resident) | This article (Engineer/Specialist, 6 years) | |
|---|---|---|
| Son C's category | Unlimited Taxpayer | Limited Taxpayer |
| Son C's taxable amount | ¥125,000,000 | ¥0 |
| Total taxable amount | ¥155,000,000 | ¥30,000,000 |
| Basic exclusion | ¥48,000,000 | ¥48,000,000 |
| Total inheritance tax | ¥16,075,000 | ¥0 |
| Son C's tax payable | ¥12,963,700 | ¥0 |
| Grandson E's tax payable | ¥622,200 | ¥0 |
| Return required? | Yes | No |
Grandson E is worth noting. He is an Unlimited Taxpayer in both articles, and what he receives is identical. He paid ¥622,200 in the first case and nothing here — not because anything about his own position changed, but because Son C's overseas assets dropped out of the total, bringing it below the basic exclusion. In Japan, the tax is calculated on the estate first and then shared out, so one person's status of residence moves everybody's figure.
5. What this example shows
Appendix Table 1 or Appendix Table 2 — which one your status falls under comes first. "Permanent Resident", "Spouse or Child of Japanese National", "Spouse or Child of Permanent Resident" and "Long-Term Resident" all sit in Appendix Table 2. With any of these, Temporary Resident status is out of reach no matter how briefly you have been in Japan. With an Appendix Table 1 status, the length of your stay comes into play. So if you are considering a switch to "Spouse or Child of Japanese National" after marrying, and an inheritance in the family is a realistic prospect, there is a case for staying where you are.
Ten years is the line. Son C has been here six years. If he stays and his domicile in Japan exceeds 10 years within the preceding 15, he becomes an Unlimited Taxpayer on the same status of residence, and his U.S. assets come back into scope. Even then, having no domicile in Japan when the inheritance commences would leave him a Limited Taxpayer, so leaving Japan is one option where an inheritance is a realistic near-term prospect.
Temporary absences do not reset the clock. Time spent abroad on study or an overseas assignment still counts as domicile in Japan.
Reducing the property held in Japan is another option. For a Limited Taxpayer, only assets located in Japan are within the scope. If the parent's Japanese holdings are reduced before the inheritance commences, the Japanese tax falls accordingly. For liquid assets such as bank deposits, closing the Japanese account and moving the funds home is one way to do this.
In closing
Because Son C is a Temporary Resident, his taxable amount drops from ¥125,000,000 to ¥0, and the family's total falls from ¥155,000,000 to ¥30,000,000 — below the basic exclusion, so no one pays anything. In a cross-border estate, establishing where each person lives, what nationality they hold, and what status of residence they are on comes first — that is what determines which assets Japanese inheritance tax reaches.
This article assumed that the property held in Japan was a bank deposit and the property abroad was securities, insurance and real estate. But where an asset "is" for these purposes is not always where it appears to be. A bank deposit is located where the branch holding it is, not where the account holder lives; shares are located where the issuing company has its head office, not where they are listed. The next article sets out how the location of each type of property is determined.
Drawing on many years of international tax practice, our office assists with inheritance tax returns involving overseas assets, taxpayer-category determinations, and the availability of the foreign tax credit. The initial consultation is complimentary. Please feel free to get in touch.
Based on laws and regulations in force as of April 1, 2026. This article is general information, not advice. Tax outcomes depend on your specific facts and the rules may change. Please consult a certified tax accountant (zeirishi) regarding your individual circumstances.
Supervised by Takuya Oishi, Certified Public Tax Accountant (Zeirishi) Registration No. 151174, Tokyo Certified Public Tax Accountants' Association (Azabu Branch)