Japan inheritance tax calculator, residents and non-residents

How Japan computes the tax

The estate is valued after debts and funeral costs, and the basic deduction is taken off. The remainder is then split, on paper, by the legal shares of Civil Code art. 900: half to the spouse and half to the children; two thirds to the spouse and one third to the parents; three quarters to the spouse and one quarter to the siblings. The scale is applied to each of these notional shares and the results are added up. That sum is the total inheritance tax.

The total is then shared among the people who actually receive property, in proportion to what each receives (art. 17). Two things depend on the real division: the spouse reduction and the 20 per cent surcharge. Everything else does not, which is why dividing the estate differently rarely changes the family's total bill.

The National Tax Agency's own example (No.4155): a wife and two children, a taxable estate of 152 000 000 yen after the basic deduction. The notional shares are 76 000 000 and 38 000 000 twice. The tax on them is 15 800 000 and 5 600 000 twice, a total of 27 000 000 yen. The calculator reproduces this figure.

Worldwide or Japanese assets only

Art. 1-3 classifies each heir separately. Heirs in items 1 and 2 are taxed on everything they acquire, wherever it is. Heirs in items 3 and 4 are taxed only on property situated in Japan. The answer depends on the heir and on the deceased.

The deceased matters only if they fall into one of two categories. A foreign resident deceased (外国人被相続人) had an address in Japan at death and held a status of residence of Table 1 of the Immigration Control Act, the work, study and business visas. A permanent resident or the spouse of a Japanese national holds a Table 2 status and is not in this category. A non-resident deceased (非居住被相続人) had no address in Japan at death and either no address there in the ten preceding years, or an address in that period but never while a Japanese national.

• An heir living in Japan is taxed on worldwide assets, unless they are a temporary resident (a Table 1 status and ten years or less of address in Japan within the last fifteen) and the deceased is in one of the two categories above.
• A Japanese national living abroad who had an address in Japan at any time in the ten years before death is taxed on worldwide assets, whoever the deceased was.
• A Japanese national abroad for more than ten years, and any foreign national abroad, is taxed on worldwide assets unless the deceased is in one of the two categories. Then only Japanese assets are taxed.
• A Japanese national who dies abroad less than ten years after leaving Japan is in neither category. Heirs abroad, of any nationality, are taxed on the worldwide estate.

The spouse and the 20 per cent surcharge

The spouse reduction removes the tax on what the spouse actually receives, up to the greater of 160 000 000 yen and the spouse's legal share. It applies only to property that has been divided by the filing date, or within three years after it, and it must be claimed in a return even when no tax is left to pay.

Siblings, nephews and nieces, grandchildren who do not inherit in place of a deceased parent, and people outside the family pay their share of the total plus 20 per cent. A grandchild adopted as a child is still surcharged.

Gifts before death

Japan also taxes gifts, on a separate and steeper scale. Each recipient deducts 1 100 000 yen a year. A gift from a parent or grandparent to a recipient aged eighteen or more on 1 January uses the special scale; other gifts use the general one. On a gift of 5 000 000 yen the NTA computes 530 000 yen at the general rate and 485 000 yen at the special rate (No.4408).

Gifts made to an heir shortly before death are added back to the estate. For deaths up to 31 December 2026 the window is three years. From 2027 it lengthens year by year to seven years for deaths from 1 January 2031, with 1 000 000 yen deducted from gifts made between the fourth and seventh year before death (art. 19, NTA No.4161).

What the calculator leaves out

The minor deduction of 100 000 yen per year until eighteen (art. 19-3), gifts added back to the estate, the gift tax itself, half-blood siblings, whose share is half that of full siblings, the limits on counting adopted children as heirs (art. 15(2)), the deemed address rules that follow the Japanese exit tax (art. 1-3(2)), and the valuation of land and shares. The calculator also assumes that every heir is in the same situation under art. 1-3; in reality each heir is classified separately.