Questions: Some legal issues for a *Permanent Resident* leaving Japan and work abroad

[Parkisland]

I am a Gaijin living in Japan over 10 years with a 'Permanent Resident' status. I will be transferred to an oversea branch for a few years. My existing employment contract with Japan office will be terminated and a new contract with oversea branch will be signed. My package will be paid in oversea afterwards. I shall be much appreciated if anybody can give me a hand:

1. How can I keep the Japan 'Permanent Resident' status if I leave Japan for a few years?

2. Does my overseas incomes subject to Japan tax if I keep the Japan 'Permanent Resident' status?

3. What is the tax impact if I still keep a directorship of a Japan company and receive director fee once in a year?

4. I have joined the National Pension over 10 years and do not want to claim the Lump-sum withdrawal Payments, how can I keep the Japan National Pension balance such that I can get pension benefit at age 65?

5. In addition to above questions, what other issues I should pay particular attention?

[KansaiBen]

I 1. How can I keep the Japan 'Permanent Resident' status if I leave Japan for a few years?

there is no expiry date on PR but your re-entry is only for 3 years. You either have to come back within 3 years or get it extended at an embassy.

2. Does my overseas incomes subject to Japan tax if I keep the Japan 'Permanent Resident' status?

Not if your country has a tax treaty with Japan to avoid double taxation.

3. What is the tax impact if I still keep a directorship of a Japan company and receive director fee once in a year?

You are considered permanent resident for tax purposes and taxed accordingly.

4. I have joined the National Pension over 10 years and do not want to claim the Lump-sum withdrawal Payments, how can I keep the Japan National Pension balance such that I can get pension benefit at age 65?

If you have PR you are ineligible to apply for the lump sum refund. Keep paying into the pension for a minimu of 25 years.

[Parkisland]

Thanks for prompt response, KansaiBen, can you provide me some more information?

there is no expiry date on PR but your re-entry is only for 3 years. You either have to come back within 3 years or get it extended at an embassy.

a. Do you mean that if I do not renew/extend my re-entry permit, I will lose my PR status?
b. Is it necessary for me to have a Japan residence when I renew/extend my re-entry permit?

Not if your country has a tax treaty with Japan to avoid double taxation.

a. My country has no tax treaty with Japan right now; that means I will still be a PR even if I am not living in Japan and all my Global Incomes are subject to Income Tax under Japan Tax Law, right?
b. If I give up my PR status, is there any difference on my tax liability?

You are considered permanent resident for tax purposes and taxed accordingly.

a. If I give up my PR status, will I be considered as PR under Japan tax law? Can I only pay the 20% withholding tax?

If you have PR you are ineligible to apply for the lump sum refund. Keep paying into the pension for a minimum of 25 years.

a. If I give up my PR status, can I still keep the pension balance and continue to pay the monthly contribution until age 65 or a minimum of 25 years such that I could get pension benefit at 65?

[KansaiBen]

a. Do you mean that if I do not renew/extend my re-entry permit, I will lose my PR status?

If you dont have a re-entry permit then your permanent resident status gets cancelled. The only people with right of residence in Japan are Japanese nationals. Anyway why do you want PR if you plan to be out of Japan longer than 3 years?

b. Is it necessary for me to have a Japan residence when I renew/extend my re-entry permit?

No just a passport and/or gaijin card.

a. My country has no tax treaty with Japan right now; that means I will still be a PR even if I am not living in Japan and all my Global Incomes are subject to Income Tax under Japan Tax Law, right?

PR is a stamp in your passport and its valid until govt takes it away from you. Permanent resident for tax purposes and permanent resident for immigration purposes are NOT the same thing.

b. If I give up my PR status, is there any difference on my tax liability?

why would you want to give up PR?

a. If I give up my PR status, will I be considered as PR under Japan tax law? Can I only pay the 20% withholding tax?

for the lump sum withdrawal?

a. If I give up my PR status, can I still keep the pension balance and continue to pay the monthly contribution until age 65 or a minimum of 25 years such that I could get pension benefit at 65?

You can pay in as long as you have a valid visa. You can even pay into it from overseas and not even live in Japan.

[Parkisland]

If you dont have a re-entry permit then your permanent resident status gets cancelled. The only people with right of residence in Japan are Japanese nationals. Anyway why do you want PR if you plan to be out of Japan longer than 3 years?

I want to keep the PR coz I dun want to give up the Japan National Persion benefit as I have joined the scheme over 10 years.

No just a passport and/or gaijin card.

If I dun have a Japan residence during re-entry permid extend, will they challenge me with an oversea address?

PR is a stamp in your passport and its valid until govt takes it away from you. Permanent resident for tax purposes and permanent resident for immigration purposes are NOT the same thing.

I understand that PR under tax law is different from the PR under immigration law. I just want to clarify whether I will still be deemed as PR under tax law even if I work and pay abroad during the coming few years.

why would you want to give up PR?

Since my country have no tax treaty with Japan, if I do not give up my PR, I may need to pay double tax, one for Japan and another one for my country. How can I pay only one country's tax if I dun give up my PR?

for the lump sum withdrawal?

No, I mean the director's fee paid in Japan.

You can pay in as long as you have a valid visa. You can even pay into it from overseas and not even live in Japan.

No problem, I can arrange auto-pay with a Japan bank account. Are you sure that I can enjoy the pension benefit at age 65 even I lost my Japan PR status and with an oversea address?
How much contribution I should pay into my pension account each month? How to calculate the payment amount?

[Glenski]

I think you need to have a nice long chat with someone at your ward office. That is where the tax issues can be discussed.

Leave Japan with a reentry permit, and you are still a PR, but only for the time limit on that reentry permit. You might be able to extend the permit a short time while you are still out of the country, but don't count on that as a 100% sure thing. In a 3 year period, you should be able to find some chance to return to Japan and get a new reentry permit!

[Parkisland]

I think you need to have a nice long chat with someone at your ward office. That is where the tax issues can be discussed.

Leave Japan with a reentry permit, and you are still a PR, but only for the time limit on that reentry permit. You might be able to extend the permit a short time while you are still out of the country, but don't count on that as a 100% sure thing. In a 3 year period, you should be able to find some chance to return to Japan and get a new reentry permit!

Thanks Glenski
The tax issue is quite complicated since I hold a PR status and have been stayed here over 10 years. In addition, my country have not yet finalized a tax treaty with Japan, now it is in a legalislation status for both countries.
I have called Immigration dept and they said that I should have a Japan address for my re-entry permit application; I can't apply for re-entry permit with an oversea address. In this case, tax bureau may consider that my domicile is still in Japan coz I still have a Japanese residence even though I am absent from Japan.

[Glenski]

Thanks Glenski
The tax issue is quite complicated since I hold a PR status and have been stayed here over 10 years. In addition, my country have not yet finalized a tax treaty with Japan, now it is in a legalislation status for both countries.

Like I wrote earlier, don't tell us here. Talk to the ward office.

I have called Immigration dept and they said that I should have a Japan address for my re-entry permit application; I can't apply for re-entry permit with an oversea address.

Write the address you currently use. They are not going to compare when you return. They will only want to know you have the permit.

In this case, tax bureau may consider that my domicile is still in Japan coz I still have a Japanese residence even though I am absent from Japan.

Taxes and immigration are separate issues. You resolve the immigration issue by getting a reentry permit and coming back before it expires.

You resolve the tax issue by telling the ward office you intend to be away, so that they can make the proper paperwork adjustments for the retention of a pension and for deferring your local taxes.