Tax and residency status
Reader H.K. is wondering whether the granting of permanent residency will result in tax problems.
“What are the tax implications if I have to work overseas — will I be taxed on my income outside of Japan?”
We checked with the Tax Office and apparently it’s quite simple. If you are out of Japan for over a year you will have no tax liabilities in Japan. The only difficulty would be keeping your permanent residency current. This is because if you are out of the country for more than one year you are no longer considered a “resident.”
Permanent residency status, despite its name, can be withdrawn after a period of three years spent outside the country. You must have a three-year re-entry permit, and you need to re-enter Japan within this period to keep your permanent resident status.
So, in a nutshell, you will not be liable for Japanese taxes if you live outside Japan for a year or more, but you cannot stay away for more than three years and keep your permanent resident status.
There are a number of countries which have tax treaties with Japan. Check with the embassy of the country you are going to and find out if they have signed a deal with Japan. If they have, then the one-year restriction shouldn’t be a problem.
Without any special treaty between Japan and your country of residence, one year is the cut-off date, and you are not liable if you have been out of Japan for a year or more.
Do any of our readers have experience in paying taxes with permanent residency? Please let us know. (K.J.)
Driving license renewal
Dee was shocked to discover when she went home to the U.K. that she was unable to renew her regular driving license.
“My license was stolen along with other papers while I was traveling. ‘No problem,’ I thought. ‘Just get a new one when I go home.’
“But, because I was a nonresident in the U.K., the Driver and Vehicle Licensing Center in Swansea, Wales, was unable to replace it. Instead I have a piece of paper that says I can drive, which of course can create huge headaches when I try to rent a car or have to offer proof of authorization to drive.”
Dee wants other readers to know of her experience, because she became non-resident by accident, or rather, as she puts it, “my own ignorance.” She did not know that she had to return to her own country annually in order to remain resident in the U.K. and renew her international driving license.
“It’s created a lot of problems. To drive here I would have to learn from scratch in order to get a Japanese license. Luckily the public transportation system is brilliant. But imagine if I lived in some remote area, or in a less developed country. Please learn from my mistakes.”
Thank you, Dee, for offering up your experience for the benefit of others. You were not ignorant, just unprepared, and that is easy to remedy. (A.J.)
Angela Jeffs is a freelance writer and writing guide (www.thewriterwithin.net/). Ken Joseph Jr. directs the Japan Helpline at www.jhelp.com and (03) 000-911. Send questions to email@example.com