My family is considering moving to Japan next year. I hope to start a technology business in Fukuoka, and if all goes well, work toward becoming a permanent resident.
One thing that worries me is investment management. I’m 37, and US citizen. Our liquid net worth is about $8.5m, largely in US securities.
If I did nothing and stayed in the US, I would expect this investment to double roughly every 7-10 years, and to only pay long-term capital gains when I drew down our yearly living expenses, which I expect to be quite small—100k-150k USD per year, taxed at roughly 20%. I’d like to keep up this trajectory even if we plan to live long-term in Japan.
As I understand it, once I become a tax resident of Japan, I’m taxed on those capital gains in Japan—roughly 20% as well.
Am I correct in assuming that the Japanese capital gains will appear as a tax credit when filing US taxes due to the tax treaty, just as it would for ordinary income?
Am I also correct in assuming that Japanese tax on securities only applies when the security is sold and the gain is realized, as it is in the US? (I.e., no marked-to-market shenanigans, or taxing unrealized gains.)
by damonkhasel