Gift tax is the complementary tax of inheritance tax.
If you receive the gift by inheritance, you need to pay inheritance tax. If you receive gift before the inheritance, you need to pay gift tax.
The different types of tax are levied depending on who is donor and donee.
Gift from individual to individual → Gift Tax
Gift from individual to corporation → Corporate Income Tax
Gift from corporation to individual → Individual Income Tax
Base exemption rule
If the value of gift is less than 1,100,000 yen per year, you are exempt from gift tax.
In Dec 2016, John gave 2M yen to Mike. Mike needs to pay gift tax because total amount of gift is exceeding JPY 1.1 M.
In, Dec 2016 John gave 1M yen to Mike. In Jan 2017, John gave 1M yen to Mike. Mike does not have to pay gift tax because total amount of gift is less than 1.1M yen in each year.
Tax rate of gift tax is very expensive.
Up to 2M yen 10%
Up to 3M yen 15%
Up to 4M yen 20%
Up to 6M yen 30%
Up to 10M yen 40%
Up to 15M yen 45%
Up to 30M yen 50%
Above 30M yen 55%
There are several cases that you are exempted from gift tax.
1. When supporters (parents, brother and sister etc.) pay living expenses and education expenses of dependents, dependents are exempted from gift tax.
2. When you receive the condolence payment for funeral and gratuity for wedding, you are exempted from gift tax.
3. There are other exemption rules to purchase home.
As the criteria for the exemption are complicated, please contact us for the detail advice.