Japan tax residency: non-permanent, permanent, and the 5-year clock
Japan classifies foreigners as non-resident, non-permanent resident, or permanent resident, each with different tax exposure. The 5-year rule is the key.
Japan's tax-residency system is unusual: it has three classifications with sharply different tax treatment. The 5-year clock is the most consequential threshold for foreigners, cross it, and Japan starts taxing your worldwide income on the same basis as Japanese citizens.
The three resident classifications
- Non-resident: not domiciled in Japan and not a 'resident' for the year. Taxed only on Japan-source income.
- Non-permanent resident: domiciled or has resided in Japan for less than 5 of the last 10 years. Taxed on Japan-source income plus foreign-source income remitted to Japan.
- Permanent resident: Japanese citizen, OR foreigner who has resided in Japan for 5+ of the last 10 years. Taxed on worldwide income.
The 5-year clock counts the days you've been domiciled in Japan over a rolling 10-year window. Spend 5 years in Tokyo, leave, come back, your prior days still count toward the 5-year threshold for 10 years.
What counts as residence in Japan
You become a resident of Japan if you're 'domiciled' there (centro vital your life is there) OR you maintain a 'place of abode' there for at least 1 year. The 1-year mark is the inflection point: shorter stays don't trigger residency, longer stays do.
The non-permanent resident window
If you're a non-permanent resident, foreign-source income is only Japan-taxable to the extent you remit it to Japan or pay it in Japan. This is functionally similar to the UK's old non-dom regime. Foreign capital gains (e.g., on US stocks held in a US broker) are not Japan-taxed unless remitted.
Strategy: keep foreign income in foreign accounts during the 5-year window. Only remit what you need for Japanese living expenses, and document the remittances clearly.
Tracking the 5-year clock
The 5-year threshold is calculated as days of Japan residency in any rolling 10-year window. The Japanese tax authority (NTA) examines your visa history, departure stamps, and Japanese registered address to confirm.
Many foreigners working in Japan optimize their setup as the 5-year mark approaches: structuring departures, accelerating remittances, and planning capital-gains realizations before the worldwide-income clock starts.
What counts as a Japanese day
Any presence on a calendar day counts. Days of arrival and departure both count. Layovers at Narita (NRT) or Haneda (HND) without immigration clearance don't count. Business trips abroad while domiciled in Japan don't reduce your Japanese day count for residency purposes (since residency tracks your domicile, not just presence days).
Japan's exit tax
If you've held permanent residency status (the 5-year mark or beyond) and your worldwide assets exceed certain thresholds, Japan applies an exit tax on certain unrealized capital gains when you depart. Consult a Japanese tax advisor before departure.
Track Japanese days correctly
Tax Days tracks Japanese days against the 1-year residency threshold and the rolling 10-year/5-year window for permanent classification. The exported PDF includes the per-year history the NTA expects.
Frequently asked questions
What is Japan's 5-year rule for tax residency?
Foreigners who have resided in Japan for 5 or more of the last 10 years are generally classified as permanent residents for tax purposes and taxed on worldwide income. The clock runs over a rolling 10-year window, so leaving Japan and coming back does not reset it: your prior days still count toward the 5-year threshold for 10 years.
What is a non-permanent resident in Japan?
A non-permanent resident is generally a foreigner who is domiciled in Japan or has resided there for less than 5 of the last 10 years. Non-permanent residents are typically taxed on Japan-source income plus foreign-source income that is remitted to or paid in Japan, so foreign income kept in foreign accounts is generally not Japan-taxed.
How long can I stay in Japan before becoming a tax resident?
You generally become a Japanese resident if you are domiciled there or maintain a place of abode in Japan for at least 1 year. The 1-year mark is the inflection point: shorter stays typically do not trigger residency, while longer stays do.
Are foreign capital gains taxed in Japan for non-permanent residents?
Generally not unless the money is remitted to Japan. Foreign capital gains, such as gains on US stocks held with a US broker, are typically not Japan-taxed for non-permanent residents unless remitted. A common approach is keeping foreign income in foreign accounts during the 5-year window, remitting only what is needed for living expenses, and documenting the remittances clearly.
Does Japan have an exit tax?
Generally yes, in certain cases. If you have reached permanent-resident status (the 5-year mark or beyond) and your worldwide assets exceed certain thresholds, Japan applies an exit tax on certain unrealized capital gains when you depart. It is worth consulting a Japanese tax advisor before leaving.