Last Updated: April 2026
Japan's exit tax, introduced on July 1, 2015, was designed to prevent high-net-worth long-term residents (particularly wealthy foreign executives and entrepreneurs) from relocating to a low-tax jurisdiction immediately before realising large capital gains on financial portfolios. The ¥100 million threshold and 5-year residency requirement mean the exit tax does not affect most foreign employees on temporary assignments in Japan. However, for long-term Japan residents — foreign nationals who have built significant investment portfolios during 10+ years of Japanese residency — the exit tax can be a significant departure cost. Beyond the exit tax, Japan's administrative departure process (Jūminhyo deregistration, final kakutei shinkoku) is well-defined.
Japan-to-USA migration is common among multinationals rotating staff and Japanese-American families. Key JP-US planning points:
Exit tax and US residency timing: Japan's exit tax is assessed on the day before departure. If you depart Japan on March 1 and become a US tax resident on March 1 (same day), there is potential for the gains to be assessed by both Japan (as pre-departure deemed disposal) and the USA (as income from the date of US residency). Work with a cross-border specialist to time the Japanese departure and US residency commencement to avoid double taxation on the same gains.
Japan-USA DTA: The 2003 Japan-USA DTA is comprehensive. Capital gains: primary taxing right generally in residence country. If the exit tax creates a deemed gain while you are still Japan-resident, Japan taxes first; US FTC for Japan taxes paid. Pension: Japan pension payments to US residents — 10% Japanese withholding (DTA Article 17); creditable in USA.
Japanese pension lump sum vs preservation: If you have fewer than 10 years of total Japanese pension contributions but more than 6 months: the lump-sum withdrawal is available (20.42% withholding). Under USA-Japan totalization agreement: US Social Security years + Japanese pension years can be combined to reach the 10-year threshold — this may make keeping the pension worthwhile.
FBAR for Japanese accounts: Once a US resident, all Japanese bank accounts exceeding $10,000 in aggregate must be reported on FinCEN Form 114 annually.
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Get US Expat Tax Help After Leaving Japan →With 8 years of Japanese residency (≥5 years) and financial assets over ¥100M, the exit tax applies in full. The tax is calculated on all unrealised gains across all in-scope financial assets (shares, bonds, investment trusts, derivatives, crypto). Step 1: calculate FMV of each asset on the day before departure. Step 2: subtract your original acquisition cost (cost basis). Step 3: sum all net gains across the portfolio. Step 4: apply 20.315% exit tax rate. Example: ¥150M portfolio, cost basis ¥80M, unrealised gain ¥70M. Exit tax: ¥70M × 20.315% = approximately ¥14.2M. The tax is reported on your final kakutei shinkoku (filed before departure or by March 15 via nōzei kanrinin). If cash flow is an issue, apply to the NTA for a deferral arrangement by providing security (collateral). The NTA's exit tax helpline and NTA Publication No. 2869 provide detailed guidance on the calculation methodology.
Yes — the lump-sum withdrawal (dattai ikkat shikyū) lets foreign nationals reclaim their Japanese pension contributions on departure. Key requirements: (1) you do not hold Japanese nationality; (2) you have contributed to the Japanese national pension (kokumin nenkin) or employees' pension (kōsei nenkin) for at least 6 months total; (3) you are not currently living in Japan; (4) you have not yet reached Japanese pension age; (5) you apply within 2 years of leaving Japan. Apply from outside Japan via the Japan Pension Service (Nihon Nenkin Kikō — nenkin.go.jp) or through the Japanese embassy in your country. You will need: your basic pension number (kiso nenkin bangō), your non-Japanese bank details for payment, and a completed application form. Tax: Japan withholds 20.42% of the lump sum at source. Under most DTAs, you may be able to reclaim excess withholding — check the specific DTA. The amount returned depends on your total contribution months: the more months you contributed, the larger the lump sum, subject to a maximum of 60 months (5 years) of contributions.
Probably not. The Japan exit tax requires: (1) total financial assets of ¥100 million or more on departure, AND (2) at least 5 years of Japanese tax residency in the past 10 years. For a 3-year assignment: you have fewer than 5 years of Japanese residency — the exit tax does NOT apply regardless of your asset level. Additionally, if you were under a 'non-permanent resident' status (non-Japanese nationality, fewer than 10 years of Japanese residence, income not from Japanese sources): Japan has more limited taxing rights on foreign-source income anyway. For most corporate assignees on 2–5 year rotations: the exit tax is not a concern. The exit tax primarily affects wealthy entrepreneurs, investors, and executives who have been long-term Japan residents with substantial financial portfolios. Check your exact residency years carefully if you are near the 5-year threshold.
Japanese bank accounts (at Mitsubishi UFJ, SMBC, Mizuho, Japan Post Bank, etc.): you can maintain them as a non-resident. Notify your bank of your change of residency. Japanese banks may reclassify non-resident accounts and restrict some services (online banking, new product subscriptions). Interest on Japanese bank accounts: subject to 20.315% withholding for non-residents. Securities accounts (NISA, iDeCo): NISA (Nippon Individual Savings Account) — the Japanese equivalent of an ISA — must be closed within a certain period of becoming non-resident; gains in the NISA account at closure may be subject to tax. iDeCo (individual defined contribution pension): contributions stop on departure; the balance remains invested until withdrawal at age 60+. As a non-resident, iDeCo balance is preserved but not accessible early. Regular securities accounts (tōkihikoza): can be maintained as non-resident. Dividends and gains: subject to Japanese withholding tax on Japan-source income.