I live in America and my father is Japanese (Japanese nationality while living in Japan). If inheritance occurs, will my father’s property be taxed in Japan?
Before answering your question, please note two things. First, Japanese inheritance tax is different from the US estate tax. As the name states, the US taxes the estate of a deceased person, while Japan taxes the benefits of the estate as attributable to each inheritor. Second, we will only discuss the Japanese side of taxation in this article, so please be sure to ask a qualified tax professional about the tax implications in the US (or other country) in which you reside at the time of inheritance.
In order to determine your tax liability, we must look at the citizenship/residential status of the person leaving assets (your father) and the person receiving the assets (you). Please see the chart below.
In this case, we look at your father’s situation in the left “Deceased/Transferor” column and see that he falls under “address in Japan.” Since he is not a short-term resident, in your case all of his assets in Japan as well as overseas are taxable in Japan, meaning that you are liable for tax in Japan on his worldwide assets and there is a high possibility you need to file a return and pay tax in Japan.
Inheritance cases can get complicated very quickly. Are you and your family protected and ready?