As a non-resident in Japan who has been working there for only one year, you are classified as a non-permanent resident under Japanese tax laws. Here’s how your tax on stock market investments will work:
Tax on Capital Gains and Dividends
- Capital Gains Tax:
If you sell stocks at a profit, the capital gains tax rate is 20.315%.
This rate applies only to gains on stocks purchased and sold within Japan (Japan-sourced income).
- Dividend Tax:
Dividends from Japanese stocks are also taxed at the same rate of 20.315%.
Foreign Stock Investments
As a non-permanent resident, income or capital gains from foreign stocks are taxed only if the income is remitted to Japan.
If the income is retained abroad and not remitted to Japan, it is generally not taxable.
Tax Reporting Requirements
You may need to report your stock income through separate self-assessment taxation at the flat rate of 20.315%.
Alternatively, your brokerage may handle the tax deductions for you, depending on the account type.
Tax-Advantaged Accounts
If you plan to invest in Japanese stocks, consider using a Nippon Individual Savings Account (NISA), which allows tax-free investments up to a specific limit. However, availability for non-residents may vary.
Other Points to Consider
Verify with your brokerage whether they automatically withhold taxes on capital gains and dividends.
If you have income or gains from other countries, you should consult a tax advisor to ensure compliance with Japanese tax laws and avoid double taxation under tax treaties.
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