Tax and short term visitors to Japan

October 6, 2010  |  Individual, Tax Treaties

Tuna, in Japanese maguro, being examined in Tokyo's world famous fish market, Tsukiji.

Under Japanese domestic law where an individual who is not resident in Japan comes to work in the country he would normally be treated as earning Japan source income and hence have an obligation to file a Japanese tax return and pay Japanese tax.

A typical example of this situation may be a resident of Hong Kong employed by a Hong Kong company which has a branch or subsidiary in Japan who comes to work in the country for an extended business trip (although if Japan and Hong Kong sign their planned tax treaty then, depending on its terms, this may no longer be the treatment for visitors from Hong Kong).

Japanese tax applicable to a non-resident Japanese individual is discussed further in this article. The residence status of an individual for Japanese tax purposes is discussed here, or please see the individual tax section for more information.

Treatment of short term visitors

Exemption for short term visitors

Many companies and individuals are not aware of the above issue, which can give rise to many practical enforcement difficulties.

Fortunately, Japan’s tax treaties mitigate this problem through providing an exemption (below the ‘Short Term Visitor’s Exemption’) from the imposition of tax on individuals working in Japan for short periods of time provided certain conditions provided in each treaty are met.

The table in this article summarizes the terms of the Short Term Visitors Exemption for each of Japan’s tax treaty partners shown in the table.  For the vast majority of treaties the Short Term Visitors Exemption follows the OECD standard exemption terms.




Conditions for exemption

Reference must be made to the table and then the detailed terms of each tax treaty but common conditions for the exemption are:

  1. The visitor stays in Japan for less then 183 days (note for some treaties this is 183 days or less and a few others specify an entirely different number of days).  The treaty should be consulted to check over what period this 183 days is calculated, for example whether over a calendar year, the last twelve month period and so on.

  2. The company paying the employment income of the visitor concerned is not a resident of Japan (effectively this means it is not a Japanese company)

  3. The costs of the costs of the visitor concerned are not borne by a Japanese permanent establishment of a foreign company.


Given the ‘bright line’ days in Japan rule used in most treaties, a visitor would be well advised to leave some leeway around the number of days the spend in the country in order to avoid the risk of being snowed in at Narita airport on the 182 day in the country.

For point 2 above companies wishing to apply the exemption should check that they are not including the costs of the visitors to Japan in head office to branch or intra-group allocations to their Japanese branch operations.

Note that directors of a company are treated differently from other visitors.  Under Japan’s tax treaties compensation paid to the director of a Japanese company in respect of his duties as a director cannot typically apply the above Short Term Visitors Exemption, and hence for non-resident individuals may still be subject to tax in Japan.  There are some exceptions to this treatment (as indicated in the table), but they are rare.

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