International Inheritance / Estate Tax and Gift Tax Consulting

International Inheritance / Estate Tax and Gift Tax Consulting

In situations where family members and estates span multiple countries and tax jurisdictions, the differences between each country’s laws can lead to complicated inheritance/estate tax issues. We at Grant Thornton Taiyo ASG Tax Corporation provide inheritance/estate and gift tax compliance and planning services in conjunction with professionals from Grant Thornton International member firms around the World.

Japan’s inheritance and gift tax regulations mean that taxpayers often fall within their scope without being aware of their position. These taxpayers are those with a domicile in Japan and can include expats, senior executives, entrepreneurs and those in international marriages. In addition foreign nationals with no domicile in Japan who have diversified into stocks of Japanese companies or real estate here also face a possible liability.

Points to be aware of

Broadly speaking under Japan’s inheritance tax law, successors and donees with a domicile in Japan are liable to inheritance tax on all assets they inherit regardless of where the asset is located. This can often be a surprise for non-Japanese citizens living here, particularly when they inherit overseas assets from relatives.

If the decedent had a domicile in Japan at the time of death and the successor has Japanese citizenship, all assets are subject to inheritance tax regardless of location. If the successor has no domicile in Japan and does not have Japanese citizenship, inheritance tax is still due on the assets that are located in Japan. Therefore those in international marriages can find themselves facing a liability on the assets they inherit.

Foreign nationals with no domicile in Japan who own shares in Japanese companies or real estate here and gift or leave those assets to their successors should also note that as the assets are located in Japan, they will be subject to inheritance tax.

A taxpayer’s liability to Japanese inheritance tax and gift tax is summarised by the chart below:

As a result of these rules, inheritance/estate tax can often be due on the same asset in both Japan and the country in which it is located. In cases where tax is due in Japan and another country, a credit can be applied for to take into account inheritance/estate tax paid in the other country. This can lead to complicated and burdensome filing requirements at a time when they are least needed.

Audits

The National Tax Agency has recently taken a much more aggressive stance towards inheritance tax audits involving cross-border inheritances. As a result of an increasing number of Tax Information Exchange Agreements that have been entered into with foreign countries, it has started contacting foreign government bodies to gain a clearer understanding of assets held overseas.

How can we help?

Here at Grant Thornton Taiyo ASG Tax Corporation we provide inheritance/estate tax compliance services in conjunction with professionals from Grant Thornton International member firms in over 100 countries.

We can provide:

• Compliance services to ensure that your inheritance/estate tax filing obligations are handled smoothly and with the least amount of worry for you.
• Valuation services relating to shares in privately-held companies and real estate.
• Advisory service for lifetime inheritance and gift tax planning.