Overview for the reporting form for assets located outside Japan（国外財産調書）
Reporting form for assets located outside Japan (国外財産調書） is required to be filed with the Japanese tax authorities by certain residents including non-Japanese taxpayers.
Recently, there has been an increasing number of underreporting cases in connection to income generated from assets located outside Japan.
Many countries have signed a tax convention to exchange such information in order to impose taxes properly in each country.
In line with this trend, Japan tax authorities have established a self-reporting system for assets located outside Japan.
Filing the Form is as important as the individual tax return because the reporting system will be implemented along with a penalty system if a taxpayer fails to report.
Who must file
If a taxpayer is a permanent resident* and if he/she has assets located outside Japan which are worth more than JPY 50,000,000 in tolal as of December 31, 20××, the taxpayer is required to file the Form.
*A Permanent resident is either:
(1) An individual who has a Japanese passport, or
(2) An individual who has lived in Japan for more than 5 years during the last 10 years.
A taxpayer is required to file the Form by March 15, 20××.
Penalties and Penalty tax
The penalty for false reporting and non-filling of the form is a custodial sentence of up to one year in prison or a fine up to JPY 500,000.
If the tax authorities find underreporting on a tax return or where there is a failure to submit a tax return and the underlying reason relates to income form assets located outside Japan, then the penalty for underreporting (5% or 10% normal) or non-filling of a tax return (15% or 20% normal ) will be decreased or increased by 5% as follows:
(1) In cased where the assets relating to the income underreported / not reported has properly been disclosed on the form, the penalty rate will be decreased by 5% with respect to the said asset located outside Japan.
(2) In the case where the deadline is missed and/or the assets relating to the income underreported / not reported has not properly been disclosed on the Form (including the case insufficient information is provided), the penalty rate will be increased by 5% with respect to the said asset located outside Japan.