By Dako
Somebody in a forum thread will tell you Japan has an exit tax. Somebody else will tell you the US has one. Both are right. If you’re a household like ours, one American passport, one green card, a maybe-move to Japan on the table, the two sentences blur into a single vague dread: leaving costs money.
They aren’t the same tax. They aren’t even the same kind of tax. One fires when you give up a status. The other fires when you stop living somewhere. Once I saw that, the dread turned into two separate clocks, and only one of them is currently ticking for us.
Two taxes, one nickname
Here’s the whole confusion in one table-free paragraph. The American version, IRC 877A, is an expatriation tax. It’s triggered by handing back citizenship or, for long-term green card holders, handing back the card. You can move to Tokyo tomorrow, live there for thirty years, and never owe it, as long as you keep your US status. Japan’s version, 国外転出時課税, is a departure tax. It’s triggered by ceasing to be a Japanese tax resident, and it doesn’t care what passport you hold. A Japanese national and an American on a spouse visa are treated the same way at the airport.
So the US asks: who are you, and are you about to stop being that? Japan asks: where do you live, and are you about to stop living here? Everything else, the thresholds, the assets, the cushions, follows from that split.
The US exit tax, in the shape you need for comparison
I’ve written the long version and walked through the three covered expatriate tests separately, so this is the compressed shape.
It reaches you through two gates. First you have to be an expatriate: a citizen who renounces, or a long-term resident, meaning someone who held a green card in at least 8 of the 15 tax years ending with the year they give it up. Partial years count as whole years. Second, you have to be a covered expatriate, which means failing any one of three tests. Net worth over $2 million. Average annual federal income tax over $211,000 for the prior five years, using the 2026 figure. Or being unable to certify five years of tax compliance on Form 8854.
If both gates open, the day before you expatriate, everything you own worldwide is treated as sold at fair market value. Brokerage accounts, real estate, the lot. The first $910,000 of that pretend gain is excluded in 2026, and the exclusion adjusts for inflation every year. Retirement accounts get their own, harsher rules: a typical 401(k) keeps living but future distributions carry 30% withholding with no treaty relief, and IRAs are treated as fully distributed the day before.
Notice two things for the comparison ahead. The $2 million line is net worth, all assets, and it isn’t indexed. And nothing in this regime happens because you moved. It happens because you stopped being a US person.
Japan’s departure tax, which the US side never explains
Japan introduced 国外転出時課税 on July 1, 2015. English-language writing usually calls it the exit tax, and I’ll do the same. But the literal name is closer to “taxation at the time of departure from the country,” and that phrasing is the key to the whole thing.
Two conditions have to be true on the day you leave. Your covered assets must total ¥100 million or more. And you must have had a residence in Japan for more than five years out of the ten years before departure. Both, not either.
Now the fine print that matters for foreign spouses. Years spent in Japan under a work visa, a student visa, or any of the other statuses in Table 1 of the immigration law don’t count toward the five. Years under Table 2 statuses do: permanent residence, spouse of a Japanese national, long-term resident. Jay would arrive on a spouse visa, which is Table 2, so his clock would start on day one. So would mine, as a citizen coming home.
The covered assets are narrower than most people expect. Securities: stocks, bonds, investment trusts, Japanese or foreign, wherever the account sits. Plus interests in anonymous partnerships and unsettled margin and derivative positions. Cash isn’t covered. Bank deposits aren’t. Real estate isn’t. Crypto isn’t, as of now. This is a tax on unrealized gains in paper assets, full stop.
When it applies, those securities are deemed sold on departure day, and the gain is taxed at 15.315%. Not the usual 20.315% on Japanese securities, because the 5% local inhabitant tax only reaches people who have a Japanese address on January 1, and by then you don’t. When the return is due depends on whether you appointed a tax agent before leaving.
Then comes the part that makes Japan’s version feel less like a wall and more like a gate. If you appoint a tax agent before leaving and post collateral, payment can be deferred five years, and extended to ten on request. And if you come back within that window still holding the same securities, the tax is cancelled as though it never happened, provided you file a correction within four months of returning. There’s also a gift-and-inheritance version: a resident who meets both conditions and hands covered assets to someone living outside Japan triggers the same deemed sale.
I’ll be honest about one thing I can’t tell you: how ¥100 million feels depends entirely on the exchange rate the day you leave. At the mid-August 2026 rate of about ¥159 to the dollar, it’s roughly $630,000 of securities. A US brokerage account built for FIRE can cross that line without anyone feeling rich.
Same couple, both taxes, in order
Here’s the scenario I keep running. Say we do the full move. I’m a green card holder, and our 8-of-15 clock is already running. If at some point I give the card back, the US exit tax question arrives at that moment, wherever I’m living. It’s answered by the net worth and tax tests, not by anything Japan does.
Jay’s Japanese clock starts at zero the day we land. Mine depends on whether any of my earlier years in Japan fall inside the ten-year look-back. Either way, there’s a runway. Somewhere past year five, say we’ve kept the securities in one brokerage account and the yen total sits above ¥100 million. Then leaving Japan again, or handing those securities to someone outside Japan, becomes a taxable event. Same household, two different triggers, years apart.
Jay’s side runs the same way in mirror image. Renouncing US citizenship would put him through the American gates. Five-plus years on a spouse visa would put him inside Japan’s. Neither is a decision we’ve made, and I’m noting his case because the symmetry is the point: nationality decides the US question, residence decides the Japanese one.
What about the money that isn’t securities? Our accounts are all American and all in dollars, and only some of them are paper assets in Japan’s sense. Cash cushions and savings accounts don’t count toward the ¥100 million. Retirement accounts are something I’m not going to pretend to have settled. How Japan classifies them is a question for another post. The short version is that a FIRE portfolio’s taxable brokerage account is the piece Japan’s exit tax watches, and it’s exactly the piece the US exit tax watches too.
Which tax to think about first
Order matters here, and I think most people get it backwards because Japan is the destination and destinations feel urgent.
The US decision comes first. Two reasons. It’s status-based, so it’s tied to an irreversible act rather than a move, and the 8-of-15 clock doesn’t pause while you deliberate. If you’re going to surrender a green card before year eight, or naturalize and close the question forever, that decision belongs before the packing. We’re leaning one way and haven’t decided, which is its own tax cost, and a separate post.
Japan’s tax comes second, with a built-in five-year grace period nobody has to apply for. You simply aren’t eligible until you’ve lived there long enough. That’s planning time. It’s also why I’d never let fear of Japan’s exit tax decide whether to move. It decides how you hold securities in year five, not whether you get on the plane in year zero.
One more asymmetry worth carrying around. The US version has a $910,000 cushion but no undo button. Japan’s has no cushion but a five-year undo, plus deferral. They aren’t designed to be compared, and that’s the tell that they were never the same tax.
If you’re a dual-resident household weighing which country counts you where, the residence rules that decide Japan’s five years are the same ones we mapped for the tie-breaker question. And since Japan’s gift-and-inheritance variant turns on the same conditions, it belongs on the list next to the inheritance-law differences we just walked through.
FAQ
Does Japan’s exit tax apply to my US brokerage account?
If you meet both conditions, yes. The ¥100 million test counts securities regardless of where they’re held, and foreign stocks and funds are covered assets. Where the account lives doesn’t matter to Japan; what you own does.
I’m American on a spouse visa. Can Japan’s exit tax really reach me?
Yes. Nationality isn’t a factor. A spouse visa is a Table 2 status, so your years count toward the five-year test from the start. Years on a work visa before that wouldn’t have counted.
Can I owe both in the same year?
In principle, if you gave up your US status and left Japan in the same year while meeting both sets of conditions, yes. In practice the triggers are usually years apart, because the US one follows a decision and the Japanese one follows a calendar.
Does moving to Japan trigger the US exit tax?
No. Moving never triggers it. Only renouncing citizenship or giving up a green card after 8 of 15 years does. You can live in Japan indefinitely as a US person, filing US returns from there, without ever entering the 877A regime.
What if I leave Japan and come back?
If you return within five years (ten with an extended deferral) still holding the securities that were deemed sold, you can have the tax cancelled by filing a correction within four months of returning. That undo is unique to the Japanese side.
This article is general information about US and Japanese tax rules, not tax or legal advice. Expatriation and departure taxes are specialist areas where individual facts change the answer completely, and the Japanese rules in particular are usually explained only in Japanese. Please work with qualified cross-border professionals in both countries before acting, and see our Disclaimer for details.