Time to go home?

Business - November 16th, 2007
Magellan Japan

Provided by MAGELLAN:
THE FINANCIAL PLANNING COMPANY
Tel. 03-3769-5511

The Financial Implications of Leaving

Finished your contract here or it is just time to move on from Japan? This major step will bring with it a range of emotions as well as financial implications. Not just from the Japan side but also from the country you are going back to.

Make a note and make sure you speak with a reputable financial adviser before you leave to make sure that you don’t take back with you unexpected tax liabilities into the country you are moving on to. Unfortunately, some people miss out on this important step as they get wrapped up in a whirl of sayonara parties only to find that once settled in the new country that an unexpected tax liability has occurred that could easily have been avoided with a little forethought and planning.

It is also worthwhile checking out that you leave the Japanese tax and pension system in order so that there are no nasty surprises at Immigration Control should you travel back to Japan anytime in the future.

You may know that if you have been contributing to the Japanese Pension Scheme during your stay that despite the number of years you have been a member you can only claim back up to three years of contributions when you leave. To get a Japanese pension you need a 25 year contribution record!

The taxes to be aware of in your new country are typically income, capital gains and estate duties—these vary dependent on the country you move to or return to, so hence the need to take specialist advice.

Make sure you close all bank accounts and if possible crystallise any capital gains before you move away from Japan. That way you take in assets to the new country, which are effectively re-based at current rather historic values containing, unrealised capital gains.

If you have been renting out your home whilst overseas you need to give notice to the existing tenants to move out. You may wish to have works done before you arrive back and this has to be organised well before you leave Japan. If you have a good management company they will handle this for you.

Be aware, you may have to live in the property for six months prior to selling it to avoid any capital gains tax.

You need to advise the Revenue authorities of the country you are moving to. Failure to do so will result in emergency tax being deducted until everything is in order.

In an ideal world, it is always advisable to return at the beginning of a new tax year, unfortunately this is not always possible but you can start the ball rolling by taking advice as soon as you know you will be returning rather than leaving it too late, or worse—to luck.

Enjoy the experience of Japan and savor the memories, safe in the knowledge that your finances are in order before you leave.

Sayonara and Bon Voyage!