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Dual taxation accountant

Apologies if this is too far off topic;

I’ll be moving back to Japan from the UK on my spouse visa. I’ll be keeping my employment in the UK but will need to be declaring my income in Japan in line with the dual taxation treaty in place between the two countries.

It’s been advised that I consult with an accountant familiar with/specializing in dual taxation.

  • Is there anyone on here who is/has been in similar situation?
  • Did you have a good experience with an accountant that you would be happy to recommend?

For this sort of question you might have more luck posting on the JapanFinance reddit.

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Thankyou Paul - I’ll have a look in there :slight_smile:

Hey there, did you find any useful info in the reddit or somewhere else? I’m in the exact same situation as you, but coming from Australia (we also have the tax treaty). Every piece of information I come across seems to have a different answer so it’s quite confusing :frowning:

Hi Andy,

The information was a mixed bag of facts and opinions, reddit style, but there are some people on there who are pretty knowledgeable on the subject so it’s worth a look. Some of the chat on there in combination with my own research kinda got me where I needed to go. There’s also a lot of good financial advice on the RetireJapan.com forum.

For my situation it turned out that what I would need is a tax advisor in the UK rather than Japan.

It appears that from the Japan side; things are pretty straightforward. In simple terms I would declare my earnings from my job as Overseas Income on an annual tax return and would then be taxed on them accordingly.

The complications lie more in the UK (surprise surprise). I can continue to earn and have my earnings visible to the tax office in the UK and my employer would need to issue me with an annual document to state that my tax affairs in the UK are in order. I would likely be entitled to have most or all of that income tax rebated at some point as Foreign Tax Relief, depending on how my activities compare against a set of thresholds (hours worked in UK/Japan, time spent in either country, etc) in any given year.

I would sever residency in the UK on the date that I leave. This would trigger the tax office to instruct my employer to update my tax code eventually and after that point it’s unlikely that I would be paying income tax in the UK on my earnings (or at least be paying at a lower rate) but it would likely take a year or two for things to settle to the point where I’m able to just pay my taxes in Japan without chasing rebates in the UK.

I don’t know how this would differ in Australia but the resounding message was to seek an accountant/advisor in the country where I’m earning the money because that’s where the complications would arise from.

Plot twist; for all my ongoing efforts in getting informed on these matters my employer in the UK announced at the beginning of this week that they would be “letting me go” at a date that coincides with my leaving the country (as part of a round of redundancies) so I will be looking for a job in Japan after we arrive. Mixed blessing, I think; I’m gutted to be leaving the job as it’s somewhere I’ve really enjoyed working but I’m glad to not have to deal with the hassle of managing the dual tax situation on top of everything else (flights, visas, house hunting, school application, nursery application, container shipping etc.). Looking forward to a new start.

I realise that descended into an anecdotal ramble - hopefully there was something of use in there.

Wow, thanks for the detailed information and I’m sorry to hear that you went through all that for nothing, but I’m sure now the path is easier and things will work out for you. I’ll continue with what you gave me and hopefully there will be a way possible. In my case, it’s currently “shadow tax/payroll” being the issue, however I’ve come across so many people who have not required that on an individual basis - and when searching for shadow payroll, the only results are from the companies offering such services (and stand to make a profit) so I’m really unsure on how necessary it actually is. If it’s simply a case of reporting all your income/earnings in both Japan and your home country then I got no problem with that :slight_smile:

Hopefully it’s more straightforward in the Australian system :crossed_fingers:

Hi Andy. I moved to Japan from Australia at the start of this year but continue to work for an Australian company. So I can give you some insight on what I needed to do to reduce my tax liability. But I am not a lawyer and my situation may be different from yours.

First thing I did was contacted tax lawyers and financial advisors that specialise in international tax matters. I talked to them about their experience with the Japanese tax system. I gathered that there are two paths

  • Manage tax in both countries yourself or with an accountant. Claiming tax payed in one country against the tax payed in the other when filing at the end of the financial year.
  • Cease to be an Australian Resident for tax purposes and stop paying tax in Australia, and only file in Japan.

Managing tax in both countries is tricky and but do able with the help of an accountant. The main issue being that the filing times are different by 6 months in each country. E.g. if you work two full years from 2022 -2023. Then you would pay tax the first half of 2022 in Australia (Jan - Jun), but could claim that tax against your Japanese filing at the start of 2023. Though you would pay Japanese tax on the remained of 2022. Then on you Australian filing for 2023, you could claim your Japanese tax paid for 2022. And so on.

Ceasing to be a resident for tax purposes removes the need for you to pay any tax in Australia, even on money earned in Australia. You will need to show that you have cut ties sufficiently with Australia, but does not mean ceasing to be an Australian citizen. Owning significant property in Australia, or not having clear proof of becoming a permanent(not the visa definition) resident in another country would get in the way of this status. So if you intent to do so, look into getting a ruling from the ATO.

I have ceased to be an Australian resident for tax purposes. In my case I had to become a contractor for my employer as their payroll system was not flexible enough to account for me not needing PAYG withholding. I negotiated a contract that included holidays, compensation for super and expected tax. In my bracket I am taxed less in Japan and can also avoid Australian CGT on my share options.

If your employer is OK with it and can handle the slight difference in your pay-rolling, you could still remain a full employee while not being an Australian resident for tax purposes. You would still be eligible for Super as well.

At the end of the day, if you want to avoid getting in trouble with the tax office in either country, you should talk to real professionals about your situation and what needs to be down to reduce your tax liability. You will need to pay someone money, but it will be worth it.

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Hey there, thanks for your help, it’s very useful! Did you also look into any GEO solutions, where there is essentially a middleman who has a tax presence in both countries, and you are paid through them?

I’m not sure if I could go down the path of ceasing to become a resident for tax purposes as I do have property here like you mentioned, but perhaps that could be something that happens later down the track.

So ideally I would want my employer to setup PAYG withholding for the pay-rolling, anything else that would make things easier for both myself and them?

GEO stands for Global Employment Outsourcing, is that correct? I just had a brief look in to it and also “shadow payroll” and, while I’m not sure I 100% get the concepts, I think they could take care of your tax obligations in Japan. But am unsure if they would be better than having a personal tax advisor.

GEO/“shadow payroll” might be ok for your current situation, but they seem to be services for your current employer rather than yourself. If your situation changes, then you may find yourself back to square one.

My main point was that everyone’s situation is different and so it is best to get professional advice directed at your situation. It is important to consider factors like how long you intend to live in Japan, if you intend to always have employment in Australia or eventually work for a Japanese company, and your financial obligations to Australia.

Remember that you (and your family) are the most important person here, and while your company maybe receptive they will be looking to put themselves in the best position when push comes to shove.
Also any money you spend on tax advice/accounting is deductible in Australia,( and maybe even in Japan?)

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