Rakuten Securities
楽天証券Brokerage (NISA/iDeCo) · Rakuten Securities
- Fees
- Varies
- English
- Partial
A leading low-cost brokerage for NISA and index-fund investing, integrated with Rakuten points and Rakuten Bank.
Foreign investment income and tax
Foreign dividends and gains, source-country withholding, foreign tax credits, FX conversion, and foreign brokerage accounts.
Direct answers
As a Japan resident, your foreign investment income is generally subject to Japanese tax outside NISA and may also face source-country withholding; foreign tax credits can relieve some double taxation through a Japanese return, and you must convert and record everything in yen.
Key points
- Japan taxes residents on worldwide income, so foreign gains/dividends are generally taxable outside NISA.
- Foreign dividends can also be withheld in the source country (e.g. US withholding).
- Foreign tax credits can reduce double taxation, but generally require filing a Japanese return.
- Convert foreign amounts to yen using appropriate rates and keep the records.
- Foreign brokerage accounts add filing, remittance, estate, and protection complexity.
Worldwide income and withholding
Japan taxes its residents on worldwide income. So outside NISA, your foreign dividends and capital gains are generally subject to Japanese tax just like domestic ones, at the applicable rates. On top of that, many countries withhold tax at source on dividends paid to foreign investors — US dividends, for instance, commonly carry US withholding.
The result can be double taxation: the source country withholds, and Japan taxes the same income. NISA removes the Japanese layer for qualifying holdings but never the foreign one, so foreign-source withholding can remain even inside NISA.
Foreign tax credits and FX
To relieve double taxation, Japan’s foreign tax credit system can let you credit some foreign tax paid against your Japanese tax — but this generally requires filing a Japanese return and meeting the conditions. Because NISA leaves no Japanese tax on qualifying income, a credit may not recover foreign withholding on NISA holdings, which is a reason to model after-withholding results.
Everything must be converted to yen. Use appropriate exchange rates for income and for acquisition/disposal, and keep records of the amounts and rates. FX conversion also affects your gain calculation on foreign-currency securities, since both the asset price and the exchange rate move.
Foreign brokerage accounts
Holding assets at a foreign brokerage is legal for a resident but adds complexity: Japanese tax still applies to your worldwide income, and you take on Japanese filing, remittance procedures, cross-border estate exposure, and different (or weaker) regulatory and investor-protection frameworks. A foreign account is not a way to avoid Japanese tax.
These situations are fact-specific and can involve treaty provisions, reporting obligations, and estate-tax exposure on foreign-situated assets. Where foreign income or accounts are material, get individual cross-border tax advice rather than relying on general guidance.
Who this is for
- Residents with foreign dividends or gains
- People using foreign brokerages
What this is not
- Domestic-only NISA investors
- Anyone needing individual advice (get a professional)
Important cautions
- Cross-border tax is fact-specific and treaty-dependent; consult a qualified tax professional.
Related products & services
SBI Securities
SBI証券Brokerage (NISA/iDeCo) · SBI Securities
- Fees
- Varies
- English
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Japan’s largest online brokerage by accounts, with a very broad low-cost fund lineup and full NISA/iDeCo support.
Monex Securities
マネックス証券Brokerage (NISA/iDeCo) · Monex
- Fees
- Varies
- English
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An established online brokerage often chosen for US-stock access and research tools, with NISA and iDeCo support.
Frequently asked questions
Should US citizens use NISA or Japanese mutual funds?
Be very careful. Japanese mutual funds and ETFs are usually PFICs (Passive Foreign Investment Companies) for US tax, which triggers punitive US taxation and heavy Form 8621 reporting — and the NISA tax exemption does not apply to the US. Many US persons in Japan avoid Japanese pooled funds and instead hold US-domiciled assets, but rules are complex. Get advice from a cross-border US/Japan tax professional before investing.