Property Ownership in Japan for Non-Residents: Tax Representative and Domestic Contact Explained

When a non-resident foreigner wants to purchase a property in Japan, it is necessary to understand and fulfill certain administrative requirements to avoid penalties.

Two key roles needed for a non-resident foreigner to own property are a tax representative and a domestic contact person. This article explains the responsibilities, legal requirements, and how they ensure compliance with Japanese laws.

The role of the tax representative

The primary role of a tax representative is to manage tax-related matters on behalf of a non-resident property owner. Their responsibilities include:

Performing general tax matters

• Handling tax-related applications such as registering as a business, blue tax filing, and consumption tax applications.

Acting as a communication liaison

• Coordinating between the non-resident property owner, relevant tax authorities, and CPA.

Managing tax payments/refunds

• Make payments for taxes or receive refunds for the non-resident owner, since many lack a Japanese bank account. 

• Note: Tax representatives can handle an estimation of tax but only CPAs can formally prepare and file tax refunds.

Managing specific taxes

• If the property is generating income:

The property must file corporate/individual consumption tax in order to receive bills from the government. Most likely, tax refunds (common in the case of consumption or blue-form tax filers) need to be taken care of by the tax representatives because a non-resident cannot have a domestic bank account.

• Non-income-generating properties: 

The taxes that must be considered are assets tax (levied by the government and sent directly to the property owner), real estate registration tax (registration lawyer will register the property and the tax will be included in the bill from the registration lawyer), real estate purchase tax (will be sent 2 to 4 months after the purchase from the local government). 

The role of the domestic contact person

When purchasing a property in Japan as a non-resident foreigner, a domestic contact person handles domestic communications and documents on behalf of the non-resident property owner. Their responsibilities include: 

Legal requirement for property registration 

• As of April 2024, a non-resident foreign individual or corporation who wishes to own property in Japan needs to provide the contact information of a domestic contact person (name, address, etc.) for property registration.

• Additionally, the following documents are required:

1. Proof of the domestic contact person’s information

2. Confirmation of consent from the domestic contact person

3. A certificate of the domestic contact person’s seal (or electronic signature and certificate)

Communication liaison 

• Receive notifications and communications from public institutions such as the Legal Affairs Bureau and tax offices, and relay them to the property owner.

• Ensures effective communication between Japanese authorities and the non-resident property owner regarding tax matters and legal procedures.

Domestic emergency contact

• First point of contact in the case of an emergency that might affect the condition of the property.

• Disaster mitigation and liaison between local authorities.

Information updates

• Updating ownership information such as change of address, phone number, etc, and relaying to the relevant authorities.

Document handling

• Accept important documents, including property tax notices, and forward them to the property owner.

Can one person serve both roles?

Yes, as both roles have overlapping responsibilities, and it is common to have one person act as both the tax representative and the domestic contact person. This is actually recommended, as it streamlines the communication process and lessens the chance of human error.

Potential penalties for non-compliance

There is no penalty if the procedures (communication with Japanese tax authorities, tax payments and receiving tax refunds, etc.) can be done by the non-resident property owners. However, it is practically impossible to do so because of the following reasons:

1. Language barriers

2. Lack of a domestic bank account as a non-resident foreigner

3. Misunderstanding of the domestic tax laws and regulations that may result in penalties and fines

In order to avoid potential penalties and problems, it is necessary to hire a tax representative due to practical reasons. Having a domestic contact person is required to register the property.

Check out MailMate’s tax representative & domestic contact plan

Check out MailMate’s tax representative and domestic contact plan! MailMate’s service includes the following key items—ideal for foreign property owners managing properties from abroad: 

• Bill payment of utilities 

• Bill payment of property taxes

• Domestic contact person on your property’s registration papers

• Can help with application forms for house/fire insurance

• Can help with internet setup

How to appoint representatives

1. Tax representative

• File a declaration (Japanese tax rep form) with the appropriate government tax office (based on property location or ownership)

• Fill out necessary forms and submit documentation such as financial statements

2. Domestic contact person

• Fill out their contact information during the property registration process

• Provide a document of consent, and an official seal certificate (or other legal form of acceptable documentation)

Frequency of tax fillings & payments

1. Income & corporate tax: File a tax return once a year, payment twice a year

2. Consumption tax: File a tax return once a year, paid 1,2,4,12 times a year depending on the tax due

3. Fixed asset tax: Payment 4 times a year

Benefits of appointing professionals

When looking for an agency to fill these important roles, it is suggested to hire a professional who specializes in the relevant fields. Deciding to appoint a professional can help with the following:

1. Communication solution: Often, language or cultural barriers may limit the individual in fulfilling tax responsibilities domestically in Japan, since many property owners are living overseas.

2. Local system expertise: Tax representatives are experts in navigating local tax laws and regulations to ensure an up-to-date, and streamlined process.

3. Discrepancy mitigation: Prevention of legal or financial issues that may arise when dealing with overseas accounts and domestic property management

Conclusion

Non-resident property owners in Japan must appoint a tax representative and domestic contact person to meet legal and administrative requirements. 

By simplifying communication, ensuring tax compliance, and handling documents, they help maintain ownership rights and avoid problems or penalties. 

Combining both roles into a single point of contact is a practical and common solution, ensuring efficient management of the property.