Inheritance tax in Japan: calculation and procedures

In Japan, whether an inheritance of 40 million yen is subject to tax depends on the number of statutory heirs. The tax system includes a basic deduction calculated as 30 million yen plus 6 million yen multiplied by the number of statutory heirs.

For example, if there is only one statutory heir, the basic deduction is 36 million yen. In this case, a 40 million yen inheritance would result in a taxable amount of 4 million yen, leading to an estimated tax of 400,000 yen. However, if there are two or more statutory heirs, the basic deduction exceeds 40 million yen, meaning no inheritance tax would generally be owed.

Tax liability also varies based on the relationship of the heir to the deceased. Spouses may qualify for significant exemptions, while siblings or nieces and nephews may face a 20% tax surcharge. Additionally, the ‘Special Provision for Small-scale Residential Land’ can reduce the taxable value of a primary residence by up to 80% under certain conditions.

The inheritance process typically involves verifying wills, investigating assets and heirs, deciding on renunciation within three months, dividing the estate, registering property within three years, and filing inheritance tax returns within ten months of the death.