SEISEI INSIGHTS — Cross-border Compliance

"Move the People, or Move the Structure?" — What to Clarify Before Considering a Move to Singapore or Hong Kong

2026-06-25

"A friend moved the company to Singapore and says there's no estate tax and no capital gains tax there — is that true?" We are asked this repeatedly. As a matter of fact, both Singapore and Hong Kong have abolished estate (inheritance) tax, and neither, in principle, taxes gains on the disposal of shares. The structural gap with Japan is indeed large. But the question "should I move too?" requires one distinction first: is it the people you move, or the structure? These are entirely different questions.

The Structural Difference

Rate details vary by country and tax year, but the differences worth grasping structurally are these three:

Issue	Japan	Singapore / Hong Kong
Estate (inheritance) tax	Yes (high top rate)	None (both abolished)
Tax on gains from shares	Taxed in principle	Not taxed in principle
Scope of taxation	Residents taxed on worldwide income (Income Tax Act, Art. 7(1)(i))	Closer in principle to a domestic-source / remittance basis

Where Japan taxes at every stage — earning, holding, and passing on — Singapore and Hong Kong impose structurally lighter burdens at the disposal and succession stages. That is the backdrop to why relocation comes up at all.

But "Moving the People" Has a Price

Relocating people carries issues that are easily overlooked:

Exit tax (taxation on departure from Japan). A resident holding qualifying securities above a threshold (¥100 million or more in aggregate) who has lived in Japan for a certain period is taxed on unrealized gains upon leaving the country (Income Tax Act, Art. 60-2).
CRS (Common Reporting Standard). If assets sit in both the destination and Japan / the home country, account information is exchanged automatically, and filing in both countries becomes the premise.
Substance requirements. Singapore's fund incentives require genuine local management activity; a name-only setup does not meet them.
Cost of living. Housing, international schools, and employment costs can exceed Tokyo's.

Three Options

Organized, the choices fall broadly into three:

1. Move both the people and the structure — the family relocates and changes its tax-residency status itself. This carries the price of giving up Japan's advantages in living, education, healthcare, and residence status, and presupposes a substantial asset base and a business that can be managed remotely.

2. Move only the structure, keep the people in Japan — establish a fund or management company in Singapore. But if the individual remains a Japan resident, worldwide taxation still applies, and the controlled-foreign-company rules (CFC, Act on Special Measures Concerning Taxation, Art. 66-6) are reviewed strictly. Unless specific exemption requirements are met, the low local tax is pulled back in on the Japan side, and the expected benefit is largely eroded.

3. Don't move; maximize the tools within Japan — combine a holding company, family entities, trusts, insurance, and gifting to put the structure in order while remaining in Japan. No relocation, no exit tax.

In our experience, the realistic starting point for most families in Japan is the third. Only where the asset base is large enough and a change in lifestyle is acceptable does the first become a genuine option. The second looks attractive but, because of CFC and worldwide taxation, its tax benefit tends to be limited.

"Preparing" and "Acting" Are Not the Same

The wiser course is to put the structure in order within Japan first, so that you can act if and when relocation truly becomes necessary. Domestic optimization requires no move. And if, in future, a change in asset scale or family circumstances leads you to relocate, the structure built in Japan (the holding company, the trust) need not be dismantled — it keeps operating; only your personal tax-residency status changes. Preparing is not the same as acting. But without preparation, the option itself never arises — that is the heart of the relocation question. The specific design must be developed together with a licensed professional versed in international taxation.

This article provides general information on tax systems and does not constitute individual tax consultation. Specific filings and tax computations are handled by licensed partner tax accountants whom we introduce.

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