Foreign companies, offshore dividends, non-permanent resident status, and US LLCs

If a Japan resident owns a company in a low-tax jurisdiction (for example, Hong Kong), they may need to declare and pay Japanese tax on the foreign company's profit even without physically remitting money into the country — especially if the company has no real presence or employees where it is registered. A threshold was mentioned: if a Japan resident's ownership share is under 50%, the company falls outside the CFC rules — this needs legal verification and is not fully confirmed. If an offshore company does not pay out dividends and simply retains its profit, nothing is owed in Japan on that profit until personal income/dividends are declared — but residents must still declare their equity stakes and foreign transactions regardless. Buying real estate in Japan with offshore company funds and then living in it personally can be viewed as misuse of company funds — a risky gray area. The chat's take: as long as money is not withdrawn as dividends or a loan, the tax office may raise no objection, but advice from EoR-company managers on tax questions is unreliable. On residency status, a non-permanent resident (非永住者, under 5 years of residence) is not taxed on income earned before entering Japan and brought in as personal savings, if its origin can be proven with bank statements and past years' returns; passive income (rent, stocks) may go untaxed on remittance during the first 5 years of residency, but income from active entrepreneurial activity is very likely to be classified as active and taxed from day one, even if formally employees rather than the owner do the work. After 5 years of residence, mandatory declaration applies regardless of where funds originated — an opinion from the chat, disputed; the legal risk in an audit sits with the taxpayer, so consulting a specialist is recommended. This rule applies specifically to foreign passive income, not to income from work physically performed in Japan. Separately, ordinary permanent resident (PR) status is not equivalent to tax PR status — it is assessed separately; holding ordinary PR almost automatically creates "tax permanent resident" status too, but the exact rules for losing this status on leaving Japan are ambiguous — the official English NTA tax guide is the recommended source of truth. Finally, a US LLC is by default treated as a pass-through entity for a Japan tax resident — its income is taxed in Japan regardless of whether funds are withdrawn; IRS Form 8832 can theoretically change this classification, but the topic is disputed and not fully clarified. Source: https://inoshi.cc/en/guides/tax-residency — Guide to tax residency and the 5-year/remittance rule for Japan residents..