Inheritance means that when a person dies, his or her spouse or children take over the property of that person (including all rights and obligations, not just money and real estate). According to the Civil Code, inheritance begins when a person dies. The person who died is called the decedent, and the person who inherits his property is called the heir.
What is Inheritance Tax like in Japan?
Inheritance tax is a tax on the person who inherits the property.
Inheritance tax will be levied on the property owned by the deceased person minus tax exemption, debt and funeral expenses, etc.
Taxable property
・cash/deposits,
・securities such as stocks and bonds,
・real estate such as land/buildings
・antiques such as calligraphy and antiques
The spouse of the decedent is always the heir. However, since a formal marriage is required, the wife of the inner family does not have the right to inherit. Other than the spouse, the child is the first heir. If there are no children, the decedent’s parents are the heirs, and if there are no children or parents, the siblings are the heirs.
Waiver of inheritance and Qualified Acceptance
If you have more liabilities than assets, or if you can’t tell which one you have, you can choose a system called “ｗaiver of inheritance” or “qualified acceptance”, so consider it.
・ Waiver of inheritance; If an inheritance waiver is granted, the heir is considered not to be an heir from the beginning, but the number of legal heirs in calculating the basic deduction for inheritance tax and the tax exemption limit. Enter.
・Qualified acceptance;Assets and liabilities are inherited as inherited assets, but liabilities are also inherited to the extent that positive assets can be paid. This system has advantages if you do not immediately know how much debt the decedent has, but it requires the consent of all the heirs and is more complicated than abandoning the inheritance.
Will inheritance tax be imposed on you in Japan?
Only about 1 in 12 people (about 8%) are subject to inheritance tax because this tax basically will be levied only when the property is worth more than 36 million,
To calculate whether you will be subject to inheritance tax, there are 2 steps:
1. Calculate the net inheritance
The property to be inherited includes not only positive property (assets) but also negative property (that is, debt). For example, if the property of the deceased person is 100 million yen in bank deposits and 30 million yenin debt, the net inheritance property is 70 million yen (100 million yen-30 million yen).
2. Inheritance tax deduction
Basic deduction = 30 million yen + (Number of legal heirs x 6 million yen)
Let’s try to calculate the basic deduction amount for inheritance tax.
If the deceased person had a wife and two children, the number of legal heirs would be three, so the basic deduction would be 48 million yen(= 30 million yen + 6 million yen x 3).
Therefore, if the amount of property does not exceed 48 million yen, inheritance tax will not be incurred.
What is the inheritance tax rate in Japan?
If you have to pay an inheritance tax, there are 3 steps to figure out how much the inheritance tax will be.
1. Calculate Total Taxable Property
First, calculate the “total taxable property“.
Total Taxable property = Net Inheritance Property-Basic Deduction for Inheritance Tax
(Example)
100 million yen- (30 million yen + 6 million yen x 3 people)
= 52 million yen(Total Taxable property)
Once you have calculated the total amount of taxable property, the next step is to calculate the total amount of inheritance tax.
Assuming that the total taxable property amount is 52 million yen, each acquisition amount will be calculated based on the statistics share in inheritance.
* Statistics Share in Inheritance:
The legal inheritance of a spouse is half of the inheritance, and the total legal inheritance of a child is half of the inheritance. If you have more than one child, divide half of the property evenly by the number of children.
2. Apply Statistics Share in Inheritance to the Total Taxable property
According to the statistics Share in inheritance, when the total taxable property amount is 52 million yen, the division of the inherited property will be like this.
Spouce: 52million ×1/2 = 26million
Child 1: 52million ×1/4 =13million
Child 2: 52million ×1/4 =13million
3. Apply this rate to these values
This table shows the tax rate and the amount of deductions depending on the amount of the taxable inheritance tax.
| Taxable Inheritance Tax | Tax Rate | Deduction |
| 10 million yen or less | 10% | – |
| 30 million yen or less | 15% | 0.5 million yen |
| 50 million yen or less | 20% | 2 million yen |
| 100 million yen or less | 30% | 7 million yen |
| 200 million yen or less | 40% | 17 million yen |
| 300 million yen or less | 45% | 27 million yen |
| 600 million yen or less | 50% | 42 million yen |
| 600 million yen ~ | 55% | 72 million yen |
According to this table, each heir’s tax rate will be 10% (because their inheritance tax is more than 10 million yen and less than 30 million yen)
Spouce: 26million×10% – 0.5million=2.1 million
Child 1: 13million×10% – 0.5million = 0.8 million
Child 2: 13million×10% – 0.5million = 0.8 million
The sum of these= 2. 1+ 0.8 + 0.8= 3.7 million
4. Calculate the Inheritance tax burden for each heir
Let’s assume that the actual acquisition rate of the property is 60% for the mother, 30% for the eldest son, and 10% for the second son.
Spouce: 3.7million ×60% = 2.22 million
Child 1: 3.7million ×30% = 1.11million
Child 2: 3.7million ×10% = 0.37million
These are the amount of inheritance taxes each heir has to file.
Legacy Division Conference
If a will is left, the property of the deceased person is basically divided according to the will. If there is no will, all heirs will discuss and decide.
The statutory inheritance amount explained earlier is just a guideline for the proportion of inheritance stipulated by the Civil Code, and there is no need to follow it if everyone agrees.
This discussion with all the heirs is called a legacy division conference.
Inheritance Tax in Japan
Inheritance means that when a person dies, his or her spouse or children take over the property of that person (including all rights and obligations, not just money and real estate). Only those who have a property of 36 million yen or more will be eligible, but if applicable, it is important to inherit according to the rules
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