Exit Tax, Dividend vs. Director Salary Taxation, and Transitioning to Sole Proprietor Status

Japan applies an exit tax on departure: if lifetime accumulated assets exceed $600,000, leaving Japan triggers an additional 15% tax on both sold and unsold assets. Separately, selling a company triggers its own tax of 20% or more at the time of sale; these details have not been fully verified and warrant confirmation. Dividends (配当金, haitōkin) and director salary (役員報酬, yakuin hōshū) are taxed differently. Dividends are subject to a separate flat tax of 20.42%, which the company pays by the 10th of the month following the payment, whereas director salary is taxed progressively as ordinary income. For those transitioning to sole-proprietor (individual business owner) status, the 開業届 (kaigyō todoke, notification of business commencement) is filed with the tax office; there is no penalty for failing to file it, though it is technically required by law. In Japan, there is no need to formally 'incorporate' or register a sole proprietorship to conduct business and pay taxes — filing an annual 確定申告 (kakutei shinkoku, final tax return) is sufficient. Separately, and optionally, one can file the 青色申告承認申請書 (aoiro shinkoku shōnin shinseisho, application for approval of blue-form tax return), which requires having already filed the 開業届 first; this blue-form status provides a deduction of up to 650,000 yen, provided the requirements are met, including keeping electronic accounting records and filing the return online. When transitioning from company employment to sole-proprietor status, a person must contact their local municipal office within 14 days of their resignation date to switch their pension enrollment from 厚生年金 (kōsei nenkin, employees' pension) to 国民年金 (kokumin nenkin, national pension) and their health insurance from corporate coverage to 国民健康保険 (kokumin kenkō hoken, national health insurance) — alternatively, corporate health insurance can be retained at one's own expense, with a 20-day window to decide. Sources: https://www.nta.go.jp/taxes/shiraberu/taxanswer/gensen/2526.htm — National Tax Agency reference page on dividend taxation; https://www.nta.go.jp/publication/pamph/jigyo-shokei/index.htm — Official National Tax Agency materials on sole-proprietor registration and tax filing.