News Details
2023.10.31
Taxation on Real Estate Owned by Non-Residents / Foreign Corporations
1. Introduction
With the recent depreciation of the Japanese yen and cheap Japanese products compared to other developed countries, the purchase of Japanese real estate by non-residents or foreign corporations has been increasing. In this News, we will mention the withholding tax treatment related to real estate owned by non-residents or foreign corporations.
2. Treatment of lease of property
When paying rental fees to a property owned by non-residents or foreign corporations, the payer (regardless of a Japanese individual or a Japanese corporation) is required to pay withholding tax at the rate of 20.42%.
However, exceptionally, withholding tax is not required in the following conditions.
・The non-resident or foreign corporation has the “Certificate of Exemption from Withholding” and presents it to the payer.
・The payer is an individual and uses the property for the purpose of his/her own residency or his/her relatives’ residency.
3. Treatment of purchase of property
When purchasing real estate owned by a non-resident or a foreign corporation, the payer (regardless of a Japanese individual or a Japanese corporation) is required to pay withholding tax at the rate of 10.21%. However, exceptionally, withholding tax is not required in the following conditions.
・The purchaser is an individual and uses the property for the purpose of his/her own residency or his/her relatives’ residency.
・The transfer value of the property is less than 100 million yen.
4. Japanese branch of a foreign corporation
When a Japanese individual or a Japanese corporation has a business related to real estate owned by a Japanese branch office of a foreign corporation, please make sure whether the withholding tax is required.
5. Conclusion
In this News, we mentioned “Taxation on Real Estate Owned by Non-Residents / Foreign Corporations.” Please note that this News only introduces general outlines and does not include professional advice. So please make sure not to make any decisions without taking professional advice individually. If you have any questions, please feel free to contact us.
(Reference / in Japanese)
National Tax Agency Tax Answer
(Accessed on October 18, 2023)
Query on the phone+81-3-6821-9455