Classification of resident and non resident of Japan

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Tax payer is subject to tax liability of income tax and special income tax for reconstruction in accordance with the following categories.
1. Residents
Any individual who has a domicile or owns a residence continuously for one year or more is classified as a resident.
Residents, except for those classified as “non-permanent residents” have an obligation to pay the income tax and special
income tax for reconstruction for whole domestic source income and foreign source income.
Among residents, any individual of non Japanese nationality having domicile or residence in Japan for an aggregate period
of five years or less within the last ten years is classified as a non-permanent resident. Non-permanent residents are obliged
to pay income tax and special income tax for reconstruction with respect to any income which has its sources in Japan, any
income which has its sources abroad and is paid in this country and remitted from abroad.
2. Non-residents
Any individual other than the residents mentioned in “1. Residents” above is classified as a non-resident.
Non-residents are obligated to pay the income tax and special income tax for reconstruction for any income from domestic
sources.
In the case that a non-permanent resident receives the amount remitted from abroad to Japan yearly, it is deemed to be the
remittance relating to foreign source income paid outside Japan, which the non-permanent resident earned in the year, within
a scope of the remitted amount.
However, if the non-permanent resident has the amount paid outside Japan relating to domestic source income in the year,
the payments made from abroad to Japan are first deemed to be remittance relating to domestic source income, and then if
there is still the amount exceeding the domestic source income paid outside Japan, the portion is deemed to be the remittance
related to foreign source income within a scope of the exceeding amount.
Note. If a person who owns a residence in this country leaves Japan with the intent to be absent temporarily and later reenter
Japan, the person shall be treated as having been residing in Japan during the period of absence.
The intention to be absent temporarily will be presumed if, during the period of absence, (a) the person’s spouse or
relatives remain in the household in Japan, (b) the person retains a residence or a room in a hotel for residential use after
returning to Japan, or (c) the person’s personal property for daily use is kept in Japan for use upon return to Japan.
〔 Source of income subject to taxation 〕
Classification
Income from Sources in Japan Income from Sources in Abroad
Paid in Japan Paid in Abroad Paid in Japan Paid in Abroad
Resident
Non-permanent Resident
(A resident taxpayer of non
Japanese nationality who has had
domicile or residence in Japan for
an aggregate period of five years
or less within the last ten years.)
All income paid in
Japan is taxable.
All income paid in
abroad is taxable.
All income paid in
Japan is taxable.
Only the portion
deemed remitted to
Japan* is taxable.
Permanent Resident All income paid in
abroad is taxable.
Non-resident Income is, in principle, taxable. Income is not taxable.
*Scope of inward foreign remittance among foreign source income (payments made outside Japan) “Inward foreign remittance”
means, among payments made from abroad to Japan, the amount “exceeding Japanese source income paid outside Japan”
【An example of non-permanent resident who has two kinds of income, Japanese source income paid outside Japan and
foreign source income paid outside Japan】
Income from Sources in Japan(750) Income from Sources in Abroad(250)
A Paid in Japan B Paid in Abroad C Paid in Japan D Paid in Abroad
500 250 150 100
For example, in the case that a non-permanent resident individual remits 260 to Japan, among the payment of 350 (B+D) made
outside Japan, 250 (B) portion is first deemed to be the remittance for Japanese source income paid outside Japan, and then the
remaining 10 is deemed to be the remittance for foreign source income paid outside Japan, which will be taxed accordingly.
1-5 Taxpayers
3
(Reference1) Classification of taxpayers
(1) In cases where an individual has not owned his or her domicile during the period from the date of entry into this country
to the date on which one year has elapsed.
(2) In cases where an individual did not own his or her domicile in this country immediately after entry into this country, but
had previously owned his or her domicile during the period from the date of entry into this country to that on which one
year has elapsed.
(3) In cases where an individual is of non Japanese nationality and the period during which he or she has owned his or her
domicile or residence in this country exceeds five years or more within the last ten years.
(Reference2) Judgment (presumption) of the presence of a domicile
Fact Judgment Remarks
An individual’s base of living is in Japan. Judged as having a
domicile

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