If foreign people start a business in Japan, it is essential to understand an individual status for taxation because the scope of taxes in Japan depends on its status.

1. Resident

A resident is someone who has a domicile in Japan or has a residence there for over one year. A domicile is the base of life, and objective facts judge it, such as an address, an occupation, the location of assets, the resident situation of a family, or nationality. A residence is a place where one resides for a substantial time, but a connection with one is not as strong as a domicile. In practice, judging status in tax investigations, whether the duration is less than 183 days or not, is more important because other factors are very ambiguous. Visa status will not influence the result.

– Non-permanent Resident

Among residents, someone without Japanese nationality and who has had a domicile or a residence for less than five years in the past ten years is considered a non-permanent resident. This one must pay taxes to Japan for domestic income. You have to pay attention to that this one also must pay tax for remittance to Japan if you get income from except for Japan.

– Permanent Resident

Resident, apart from non-permanent resident, is considered a permanent resident. This one must pay taxes to Japan for income all over the world.

2. Non-resident

One who is not a resident is considered a non-resident. This one’s taxation is limited to Japan’s domestic income.