I just want to clarify my understanding here. I think I have it correct. Japan has a flat tax rate on dividends so it doesn’t matter how they are classed with the exception of a return of capital. So all distributions/dividends are US base taxed (for me) and then any necessary tax credits can be claimed in Japan.
For dividends classified as a return of capital, there is no tax payment in the US as there is a corresponding reduction in cost basis and my understanding is that I should pay Japan taxes on this as capital gains as if I had sold (assuming I remit the gains or after I no longer have NPR status).
I have a bunch of high yielding income funds and a portion of those always ends up as ROC.
by twbird18