Withholding tax/When non-resident sell a real estate in Japan

A person who purchases a real estate in Japan from a nonresident or foreign corporation and pays the consideration for the transfer in Japan must withhold income tax and special income tax for recovery at a rate of 10.21% when paying the consideration to the nonresident or foreign corporation.

The withholding taxpayer includes all "persons who pay consideration for the transfer of a real estate". Therefore, not only corporations but also individuals (regardless of whether they are businesses or not) are subject to withholding at source.

However, if an individual purchases a real estate to use for his/her own residence or that of his/her relatives, and the consideration for the transfer of a real estate is 100 million yen or less, the individual is not required to withhold tax.

In addition, many tax treaties that Japan has concluded provide that the consideration for the transfer of real estate such as land may be taxed in the country where the real estate is located.

Therefore, when a nonresident transfers real estate located in Japan, the income arising from the transfer is taxable in Japan under the tax treaties.