SEISEI INSIGHTS — Succession

Leave Japan, and the Inheritance Tax Still Follows: The "Ten-Year Rule"

2026-06-15

"Once I leave Japan and return home, Japanese inheritance tax no longer concerns me." Many who consult us begin from this premise, and we begin by examining it. Japan's inheritance tax is built so that, for a defined period after you no longer hold a domicile in the country, it continues to treat your worldwide assets as taxable.

Scope of Taxation Turns on Domicile and Nationality

The scope of persons liable for inheritance tax is set out in Article 1-3 of the Inheritance Tax Act. Whether the person who acquires the property has a domicile in Japan at the time the inheritance commences, together with their nationality, determines whether taxation is confined to Japan-located assets or extends to worldwide assets.

The decisive test is this: did the person have a domicile in Japan within the ten years before the inheritance commenced? Even with no domicile in Japan at that moment, if they held one within the preceding ten years, worldwide assets may, in principle, fall within Japanese inheritance tax. It is this ten-year window that overturns the assumption that "leaving ends it."

Situation at commencement of inheritance	Scope of taxation (in principle)
Domicile in Japan	All worldwide assets acquired
No domicile in Japan, but held one within the prior 10 years	In principle, worldwide assets
Falls within an exception such as a short-term resident on a status of residence (non-permanent / "temporary resident")	May be confined to Japan-located assets, subject to conditions

Note that this concerns not only the decedent but also the heir's circumstances. The domicile and nationality of the person receiving the property likewise affect the scope, so the whole family's positioning must be viewed together.

The Precise Definition of the "Temporary Resident" Exception

As an exception to worldwide taxation, there is the category of "temporary resident." Article 1-3 of the Inheritance Tax Act defines a temporary resident as a person who, at the commencement of inheritance, holds a status of residence and whose periods of domicile in Japan within the preceding fifteen years total ten years or less. The category is aimed at foreign nationals staying short-term on a status of residence.

Those who place their living base in Japan over the long term — holders of the Business Manager status, permanent residents, naturalized citizens — do not fall within this exception. In other words, even after leaving, they remain within the worldwide-taxation framework for a defined period. This ten-year period was extended from the former five years by the 2017 (Heisei 29) tax reform, so the threshold for using departure as an inheritance-tax strategy is higher than it once was.

Thinking in Terms of "Planning Within the Year"

In our experience, the ten-year rule is best treated not as a hidden obligation but as a design premise. The directions one may legitimately consider fall broadly into two:

After departure, refrain for a defined period from re-establishing your base of life in Japan, and order the actual facts of residence accordingly.
Before departure, order the location of assets and the structure of succession in advance, through gifts, trusts, and similar means.

Neither can be improvised on the eve of departure. Many mechanisms, such as gifting, operate within annual frameworks, so they must be planned methodically within the year. Setting the timing of departure, the status of residence, and the transfer of assets along a single timeline is the starting point for confronting this ten-year period.

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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