Gift Tax On Non-resident

Last updated Sept. 22, 2000

Gift Tax On Non-resident

by Hiroshi Kawarazaki, Esq.

Question
I am working in US and a U.S. resident, (greencard holder, Japanese nationality ) and live in the house that my father bought 3 yeares ago. My father is a Japanese resident.
He wants to send U.S. $900,000 and to gift his house to me that I live now.
He wants to wire the money directly to me from his account in Japan to my account in the U.S.
Would I have to pay gift tax in Japan?
I understand that if I am not a resident of Japan, I only have to pay gift tax on the gift that is gifted in Japan.
Does the bank in Japan regard it as gifting in Japan even though I receive the money in the U.S.?

Answer
Before March 31, 2000
According to the clause 2 of article 2-2 of Japanese Inheritance Tax Law, gift tax is levied on a non-resident of Japan if gift is situated in Japan when he receives it.

And article 1-1-2 Common-6 of Inheritance Fundamental Order defines the resident of Japan as follows.

A person who is studying in foreign country and a dependant of the person that is in Japan.
A person who works in foreign country within short period ; approximately within 1 year.
A person who is in foreign country temporally.

As you are a greencard holder, perhaps you are a non-resident of Japan.If your father sends money to your account in US, then it's a problem whether cash is situated in Japan or in US at the time of gifting.
Tax bureau of Japan regards the cash is situated in Japan at the time of gifting. Japanese gift tax is levied on your $90,000,000 gift.
As the house is situated in U.S., Japanese gift tax is not levied on the gifting the house.In the case you are a resident of Japan.Both $90,000,000 and the house gifts are subject to Japanese gift tax.You need to to consult with Japanese tax burea before receiving gifts.

After April 1, 2000:Japanese tax law was changed.
The clause 2 of article 69 of Tax Special Treatment Law decides as follows.
If a person who receives gift is a resident of Japan or has Japanese nationality(except bellow mentioned) at the time of gifting, the entire gift is subject to Japanese gift tax.
Both the person who receives gift and who gives gift have not been resident of Japan within 5 years before the time of gifting, only the gift which is situated in Japan is subject to gift tax of Japan.
Gift tax payer is donee.

				Donor
				Japanese domicile	No Japanese domicile
				Japanese domicile	No Japanese domicile under 5 years	No Japanese domicile over 5 years
donee	Japanese domicile			The entire gift is subject to gift tax of Japan, wherever the gift may be situated.
	No Japanese domicile	Japanese nationality	No Japanese domicile under 5 years
		Japanese nationality	No Japanese domicile over 5 years	The entire gift is subject to gift tax of Japan, wherever the gift may be situated.		Only the gift which is situated in Japan is subject to gift tax of Japan.
		No Japanese nationality		Only the gift which is situated in Japan is subject to gift tax of Japan.

If your father gives gift to you after April 1, 2000, gift tax is levied on you.

Sept. 8, 1999

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