Summary of taxation rights under Japan's tax treaties
This page features tables summarizing the treaty rules for some common types of income. In particular, these tables are intended to help people living in Japan confirm:
- when they are entitled to avoid double-taxation by preventing a country from taxing them;
- when they are entitled to alleviate double-taxation by claiming a foreign tax credit; and
- when a foreign tax credit is required, which country must provide them with the credit.
Explanations and disclaimers
The information in these tables only applies to people who are tax residents of Japan.
For the purpose of these tables, "employment income" refers to payments received in exchange for work performed in Japan (i.e., the employee was physically in Japan when the work was performed).
Also, for the purpose of these tables, the rules for dividends and capital gains derived from the sale of shares are generally limited to shares that do not derive the majority of their value from real estate held by the company. Shares in real estate holding companies (REITs, etc.) are typically subject to different rules—check the relevant treaty for details.
It's important to note that treaties don't require countries to tax income merely because they have the right to tax it. Accordingly, the fact that a country has the right to tax particular income under a treaty (as shown in the tables below) does not imply that the country taxes that income.
Some of the formatting in the tables was designed for the GitHub version of this wiki. If you are reading this on the Reddit version, click here for the GitHub version.
The information provided below is intended as a summary. Tax treaties contain exceptions and the tables should not be used as substitutes for reading the text of any relevant treaty. The tables were prepared in May 2024.
United States
Applying the US-Japan tax treaty (PDF) is more complicated than applying other treaties, due to the saving clause in Article 1(4). The saving clause means that the treaty rules are different depending on whether the Japan-resident taxpayer is a US citizen. Tables for both scenarios are provided below.
Non-US citizen
| Income | Who can tax it? | Who must provide FTC? | Treaty Article |
|---|---|---|---|
| Employment | Japan | - | 14(1) |
| Capital gains (US shares) | Japan | - | 13(7) |
| Capital gains (US real estate) | Both | Japan | 13(1) |
| Dividends (US company) | Both | Japan up to 10%, then US | 10(1) |
| Interest (US bank) | Japan | - | 11(1) |
| Royalties (US payer) | Japan | - | 12(1) |
| Director's fees (US company) | Both | Japan | 15 |
| Annuities (US payer) | Japan | - | 17(2) |
| Pension (Japanese) | Japan | - | 17(1) |
| Pension (US Social Security) | Japan | - | 17(1) |
| Pension (US Government) | US1 | - | 18(2) |
| US Retirement Scheme (IRA, 401(k), etc.) | Japan | - | 17(1)2 |
US citizen
| Income | Who can tax it? | Who must provide FTC? | Treaty Article |
|---|---|---|---|
| Employment | Both | US (FEIE also possible) | 14(1) |
| Capital gains (US shares) | Both | US | 13(7) |
| Capital gains (US real estate) | Both | Japan | 13(1) |
| Dividends (US company) | Both | Japan up to 10%, then US | 10(1) |
| Interest (US bank) | Both | US | 11(1) |
| Royalties (US payer) | Both | US | 12(1) |
| Director's fees (US company) | Both | Japan | 15 |
| Annuities (US payer) | Both | US | 17(2) |
| Pension (Japanese) | Both | US | 17(1) |
| Pension (US Social Security) | Both | US | 17(1) |
| Pension (US Government) | US3 | - | 18(2) |
| US Retirement Scheme (IRA, 401(k), etc.) | Both | US | 17(1)2 |
United Kingdom
The current UK-Japan tax treaty is available as a PDF here.
| Income | Who can tax it? | Who must provide FTC? | Treaty Article |
|---|---|---|---|
| Employment | Japan | - | 14(1) |
| Capital gains (UK shares) | Japan | - | 13(6) |
| Capital gains (UK real estate) | Both | Japan | 13(1) |
| Dividends (UK company) | Both | Japan up to 10%, then UK | 10(1) |
| Interest (UK bank) | Japan | - | 11(1) |
| Royalties (UK payer) | Japan | - | 12(1) |
| Director's fees (UK company) | Both | Japan | 15 |
| Annuities (UK payer) | - | - | - |
| Pension (Japanese) | Japan | - | 17 |
| Pension (UK State Pension) | Japan | - | 17 |
| Pension (UK Government) | UK1 | - | 18(2) |
Canada
The current Canada-Japan tax treaty is available as a PDF here. Note that the Canada-Japan treaty is quite outdated compared to many of Japan's other treaties, and does not comply to current OECD standards. It also lacks any clauses dealing with pensions or annuities.
| Income | Who can tax it? | Who must provide FTC? | Treaty Article |
|---|---|---|---|
| Employment | Japan | - | 15(1) |
| Capital gains (CA shares) | Both | Japan | 13(4) |
| Capital gains (CA real estate) | Both | Japan | 13(1) |
| Dividends (CA company) | Both | Japan up to 15%, then CA | 10(1) |
| Interest (CA bank) | Both | Japan up to 10%, then CA | 11(1) |
| Royalties (CA payer) | Both | Japan up to 10%, then CA | 12(1) |
| Director's fees (CA company) | Both | Japan | 16 |
| Annuities (CA payer) | - | - | - |
| Pension (Japanese) | - | - | - |
| Pension (CPP) | - | - | - |
| Pension (CA Government) | - | - | - |
Australia
The current Australia-Japan tax treaty is available as a PDF here.
| Income | Who can tax it? | Who must provide FTC? | Treaty Article |
|---|---|---|---|
| Employment | Japan | - | 14(1) |
| Capital gains (AU shares) | Japan | - | 13(6) |
| Capital gains (AU real estate) | Both | Japan | 13(1) |
| Dividends (AU company) | Both | Japan up to 10%, then AU | 10(1) |
| Interest (AU bank) | Both | Japan up to 10%, then AU | 11(1) |
| Royalties (AU payer) | Both | Japan up to 5%, then AU | 12(1) |
| Director's fees (AU company) | Both | Japan | 15 |
| Annuities (AU payer) | Japan | - | 17(2) |
| Pension (Japanese) | Japan | - | 17(1) |
| Pension (AU Age Pension) | Japan | - | 17(1) |
| Pension (AU Government) | Australia1 | - | 18(2) |
New Zealand
The current New Zealand-Japan tax treaty is available as a PDF here.
| Income | Who can tax it? | Who must provide FTC? | Treaty Article |
|---|---|---|---|
| Employment | Japan | - | 14(1) |
| Capital gains (NZ shares) | Japan | - | 13(6) |
| Capital gains (NZ real estate) | Both | Japan | 13(1) |
| Dividends (NZ company) | Both | Japan up to 15%, then NZ | 10(1) |
| Interest (NZ bank) | Both | Japan up to 10%, then NZ | 11(1) |
| Royalties (NZ payer) | Both | Japan up to 5%, then NZ | 12(1) |
| Director's fees (NZ company) | Both | Japan | 15 |
| Annuities (NZ payer) | - | - | - |
| Pension (Japanese) | Japan | - | 17 |
| Pension (NZ Super) | Japan | - | 17(1) |
| Pension (NZ Government) | NZ1 | - | 18(2) |
Taiwan
Due to the fact that Japan does not officially recognize Taiwan (Republic of China) and there are no formal diplomatic relations between these two nations, there is no tax treaty between them. Instead, there is a "tax agreement" signed by two goverment-related associations which is essentially a tax treaty in practice. The current Taiwan-Japan tax agreement is available as a PDF here.
| Income | Who can tax it? | Who must provide FTC? | Treaty Article |
|---|---|---|---|
| Employment | Japan | - | 15(1) |
| Capital gains (TW shares) | Japan | - | 13(5) |
| Capital gains (TW real estate) | Both | Japan | 13(1) |
| Dividends (TW company) | Both | Japan up to 10%, then TW | 10(1) |
| Interest (TW bank) | Both | Japan up to 10%, then TW | 11(1) |
| Royalties (TW payer) | Both | Japan up to 10%, then TW | 12(1) |
| Director's fees (TW company) | Both | Japan | 16 |
| Annuities (TW payer) | - | - | - |
| Pension (Japanese) | Both | - | 18 |
| Pension (TW Government) | Both | - | 18 |
Footnotes
-
Japan has sole taxation rights if the recipient is a Japanese citizen. ↩ ↩2 ↩3 ↩4
-
The Japanese tax treatment of US tax-advantaged retirement schemes is somewhat unresolved, as discussed here and here. But at this stage Article 17 seems the most likely to apply. ↩ ↩2
-
The US has sole taxation rights with respect to US government pensions (excluding social security) unless the recipient holds Japanese citizenship. Thus, people who hold both US and Japanese citizenship will be subject to tax in both countries and must claim a FTC in the US. ↩