The tax procedure is complicated for non-residents who purchase real estate in Japan. One of the most critical points is appointing a “tax agent. This article will explain in detail what a tax agent is, why it is necessary, and the risks involved if you do not choose one.
What is a non-resident?
First, let us briefly explain “non-residents” under Japanese tax law. In Japan, individuals who do not have a certificate of residence and do not intend to reside in Japan for more than one year are classified as “non-residents.” If a non-resident earns income or has assets in Japan, different tax rules apply to residents.
In particular, a “tax agent” is often required to deal with the tax office or municipality.
Tax obligations of non-residents purchasing real estate
When you own real estate in Japan, you must pay annual property and city planning taxes.
The municipality must pay this annual tax if you own land or buildings in Japan. You are taxed if you own real estate, even with no earnings.
In addition, if you sell the real estate in the future, you may be subject to transfer income tax. It should be easy to understand that you will be taxed on it since you will have a marginal gain when you sell it.
If the property owner is in Japan, these taxes can be handled directly with the tax office, but this can be difficult for non-residents.
What is a Tax agent?
This is where the “tax agent” comes in. A tax agent is a person who conveys a notification from a tax office on behalf of a non-resident.
If the tax agent is contracted with a licensed tax accountant, he/she can represent the non-resident in the tax payment procedures. A person or legal entity with a domicile in Japan can fulfill this role. Through the tax agent, tax reporting and tax payment by non-residents are facilitated.
For example, suppose a non-resident owns real estate in Japan. In that case, they are obligated to pay taxes on that real estate (fixed property tax and city planning tax) on time, but if they are not physically present in Japan, it is difficult to handle the situation. If you are unknowingly overdue, you may be subject to delinquent taxes. In such cases, a tax payment administrator can contact the non-resident on behalf of the non-resident and have them proceed with the tax payment procedures as necessary.
Risks of not appointing a Tax Agent
If a non-resident does not choose a tax agent, several risks arise. The most significant risk is the possibility of fines and late fees due to unpaid taxes. If the agent does not receive a notice from the tax office, the taxes may become unpaid without their knowledge. In the worst-case scenario, the tax agent may be subject to foreclosure or other action.
In particular, you should consider the risk that a service of public notice could result in delinquent taxes being incurred even if you did not receive it in your possession, as if you had.
Service of public notice is a procedure used in lawsuits and court proceedings when the other party’s address or residence is unknown and normal service cannot be made. By posting the contents of the notice on a court bulletin board for a certain period of time, it is deemed that the notice has been delivered to the other party. Service of public notice is a formal procedure based on the law, which legally recognizes that the other party has been notified.
Failure to appoint a tax agent may also delay the procedures for the sale of the property and the payment of taxes on the gain from the sale, which may result in extra costs.
How to Choose a Tax Collector
Any individual or corporation with an address in Japan can become a tax agent. However, since knowledge of taxation is required, it is generally recommended that a tax accountant be hired. Our firm also accepts tax agents. By choosing a specialist, complicated tax procedures and incomplete documents can be avoided, and tax handling can be performed smoothly.
When appointing a tax agent, it is essential to note the following points
- Reliability: Make sure the client has firm trustworthiness.
- Tax experience: It is a good idea to choose a tax attorney with experience in taxation, especially real estate and non-residential taxation.
- Fees: Confirm the tax agent’s fees and services in advance and proceed with the contract satisfactorily.
Actual procedures and precautions
The procedure for appointing a tax agent is relatively simple. First, a “Tax Agent Notification Form” is submitted to the tax office to register the information of the tax payment manager. This notification form requires information on the person or corporation who will be the tax agent, including the address and contact information.
Please note that no qualifications are required to be a tax agent, but qualifications are required to be a tax agent. This is important to keep in mind. Even if you ask for a tax agent, you will need someone who can eventually become a tax agent to handle the process.
summary
For non-residents who have purchased real estate in Japan, it is very important to have a tax agent. By representing you in tax procedures, you can avoid the risks associated with unpaid taxes and ensure smooth asset management. Appoint a reliable professional as soon as possible and be prepared to own Japanese real estate with peace of mind.
キーワード
「納税管理人」
Keywords.
Tax Agent
