Withholding Tax on Rent Paid to a Non-Resident Landlord in Japan: How Tenants Can Avoid It

Japan has a rule that "if the owner of real estate in Japan is a non-resident of Japan, the tenant must, as a general rule, withhold about 20% of the rent and pay it to the tax office."

This mechanism exists to prevent tax from going uncollected in cases where a non-resident owner receives rental income but does not pay tax on it in Japan.

For tenants, the rule brings no benefit at all; it is simply a hassle.

*Rules are as described at the time of writing. This article is an English version of our Japanese guide, adapted for foreign residents of Japan and international investors.

Withholding can be avoided by appointing a tax agent and having an application for exemption from withholding approved by the tax office

A major real estate company belonging to one of Japan's large corporate groups has also published a page explaining this withholding rule for tenants.

However, there is something you should be careful about.

There is an exception.
If the owner appoints a tax agent in Japan and applies to the Japanese tax office for exemption from withholding, and the application is approved, withholding can be avoided.

The explanatory page of the major real estate company mentioned above said nothing at all about this exception.
*So if you read only that page, you may mistakenly believe that "withholding is always required in every case", so please be careful.


It is tempting to assume that an explanation from a major real estate company can be trusted as it is, but as in this case, detailed explanations and exceptions are sometimes left out. Do not trust information immediately just because of a brand or title; check carefully.