Japan income tax and retirement benefit regulations

In Japan, tax and legal frameworks govern secondary income and retirement benefits. For secondary income, selling personal household items is generally tax-exempt, but items purchased for resale may be classified as business or miscellaneous income. Salaried employees must typically file a final tax return if miscellaneous income exceeds 200,000 yen annually.

Regarding retirement benefits, these payments are subject to ‘separate taxation’ and are excluded from the ‘total income amount’ used to determine resident tax exemptions.

From a legal perspective, assets such as retirement allowances are generally considered separate property under Article 762 of the Japanese Civil Code. While a spouse does not have an immediate legal right to these funds during marriage, retirement allowances may be subject to asset division during a divorce, specifically the portion corresponding to the period of marriage. Additionally, transferring significant sums of retirement money to a spouse may trigger gift taxes if the amount exceeds the 1.1 million yen annual tax-free threshold.