Tax Guide for Chinese Citizens Living in Japan

Tax residency: China vs Japan 中国と日本の税務上の居住地

China uses a domicile and residence-based taxation system. Under the revised Individual Income Tax (IIT) Law effective January 2019, China determines your tax status through two tests:

Chinese tax residency rules

• Domicile test (住所): A person who has a domicile (住所) in China — defined as a habitual residence due to household registration (户口), family ties, or economic interests — is a Chinese tax resident regardless of physical presence. This is the critical test for most Chinese citizens.
• 183-day test: A person without a domicile in China who resides in China for 183 days or more in a tax year is also a Chinese tax resident for that year.

The domicile test is the most important consideration for Chinese citizens living in Japan. Because most Chinese citizens maintain their 户口 (household registration) in China and often have family and property there, China may consider them to retain a Chinese domicile — and therefore to remain Chinese tax residents — even while living abroad.

However, in practice, the Chinese tax authorities have adopted a pragmatic approach for citizens living abroad long-term. If you have been living and working in Japan for an extended period, have registered with the local Chinese embassy/consulate as an overseas Chinese (海外侨民), and are filing taxes in Japan, the Chinese tax authorities generally do not actively pursue worldwide income taxation. This is an area where the law on paper and enforcement in practice diverge.

The "6-year rule" for non-domiciled individuals

China has a special provision for individuals without a Chinese domicile who become Chinese tax residents through the 183-day test: during the first 6 consecutive years of Chinese tax residency, foreign-source income not paid by Chinese entities is exempt from Chinese tax (provided you leave China for more than 30 consecutive days in at least one of those years). This rule primarily benefits foreigners working in China, not Chinese citizens going abroad, but it illustrates the complexity of China's residency rules.

Japanese tax residency

Japan determines tax residency based on your 住所 (domicile) or 居所 (place of residence). If you have a 住所 in Japan — generally interpreted as living in Japan with the intention to stay for at least 1 year — you are a Japanese tax resident from day one. (国税庁タックスアンサー No.2010)

Chinese filing obligations 中国での申告義務

Under the revised IIT Law, Chinese tax residents are subject to tax on worldwide income. In theory, if you retain your Chinese domicile, you should report and pay Chinese tax on your global income, including your Japanese salary. In practice, this obligation is rarely enforced for Chinese citizens living abroad long-term.

Situations where you are more likely to have actual Chinese filing obligations:

• Chinese rental income: If you own property in China and earn rent, the income is China-source and subject to Chinese IIT. Rental income tax is typically calculated at 20% of net rental income after deductions.
• Chinese employment income: If you perform any work in China or receive salary from a Chinese employer.
• Capital gains on Chinese property: Selling property in China triggers Chinese capital gains tax (typically 20% of the gain, or a simplified 1-3% of the gross sale price depending on the locality).
• Capital gains on Chinese shares: Selling listed Chinese A-shares is currently exempt from individual capital gains tax (a temporary exemption that has been repeatedly extended). Selling unlisted shares or equity interests in Chinese companies is subject to 20% tax on gains.
• Chinese financial income: Interest from Chinese bank accounts is currently exempt from IIT (since 2008). Dividends from Chinese companies are subject to 20% withholding tax.

The Chinese tax year runs from January 1 to December 31 (same as Japan). The annual IIT reconciliation filing deadline is June 30 of the following year. In Japan, your 確定申告 is due by March 15.

China-Japan tax treaty 日中租税条約

China and Japan have a Double Tax Agreement that has been in force since 1983, with a major revision through the 2019 Protocol that modernized rates and added new provisions. Given that Chinese citizens are the largest foreign national group in Japan, this treaty is among the most heavily used in Japan's treaty network.

Key treaty rates (2019 revised treaty):

Key treaty provisions:

• Employment income: Taxed in the country where the work is performed (with the 183-day short-stay exception). Your Japan salary is taxed in Japan.
• Pensions: Under the revised treaty, pensions are generally taxable only in the country of residence. If you live in Japan and receive a Chinese pension, Japan has the primary taxing right.
• Capital gains: Gains from real property are taxed in the country where the property is located. Gains from shares deriving more than 50% of value from real property can also be taxed in that country.
• Students and trainees: The treaty includes a specific provision exempting students and trainees from taxation on payments received from abroad for education and maintenance. Chinese students studying in Japan can benefit from this provision.
• Double taxation relief: Japan provides a foreign tax credit (外国税額控除) for Chinese taxes paid on the same income. China provides a credit for Japanese taxes under its IIT law.

China-Japan social insurance agreement (limited) 日中社会保障協定（限定的）

China and Japan signed a Social Insurance Agreement (社会保障协定 / 社会保障協定) that came into effect in September 2019. This was a significant milestone — it was the first social insurance agreement China signed with any country in Asia. However, the agreement is notably more limited than Japan's agreements with countries like the US, UK, Korea, or Australia.

What the agreement covers: double coverage prevention only

The agreement only prevents double social insurance contributions:

• Employed locally in Japan: You pay into Japan's pension system (厚生年金) and are exempt from China's pension insurance (养老保险). On the Japanese side, the agreement covers 厚生年金 and 国民年金. On the Chinese side, it covers 职工基本养老保险 (urban employee basic pension insurance).
• Temporarily posted from China: If a Chinese employer sends you to Japan temporarily (for up to 5 years, extendable to 8 years with approval), you can remain in the Chinese pension system and be exempt from Japanese 厚生年金. You need a Certificate of Coverage (参保证明) from the Chinese social insurance authority.
• Self-employed: The agreement also covers self-employed individuals. If you are self-employed in Japan, you pay into 国民年金 and are exempt from Chinese pension contributions.

What the agreement does NOT cover: no totalization

This is the critical limitation. Unlike the US-Japan, UK-Japan, Korea-Japan, and Australia-Japan agreements, the China-Japan agreement does NOT include totalization provisions. This means:

• Chinese pension periods do NOT count toward Japan's 10-year minimum: If you work in Japan for 7 years and in China for 15 years, you do not qualify for the Japanese old-age pension (老齢年金). Your 7 years in Japan stand alone — they do not reach the 10-year threshold.
• Japanese pension periods do NOT count toward China's minimum: Similarly, your Japanese contribution years cannot be used to meet Chinese pension eligibility requirements.
• Each system is independent: You must independently meet each country's minimum contribution requirements to receive a pension from that country.

What about health insurance? The agreement covers only pension insurance. Health insurance (健康保険 on the Japan side, 医疗保险 on the China side) is not covered. In Japan, you must enroll in the Japanese health insurance system regardless — either 社会保険 (if employed) or 国民健康保険 (if self-employed).

Chinese pension while abroad 海外在住中の中国の年金

China's pension system consists of two main tiers: the basic pension insurance (基本养老保险) and the optional enterprise annuity or personal pension. When you move to Japan, your Chinese pension situation depends on your employment history:

Your Chinese pension while in Japan

• Contributions pause: When you leave Chinese employment and move to Japan, your contributions to the Chinese basic pension insurance stop. Your accumulated contributions and account balance remain in the system.
• Minimum qualification: China's basic pension requires a minimum of 15 years of contributions to receive the old-age pension. If you worked in China for fewer than 15 years before moving to Japan, you may not qualify for the Chinese pension without making additional contributions.
• Pension age: The current statutory pension age in China is 60 for men, 55 for women in management/technical positions, and 50 for women in other positions. China is gradually raising these ages starting from 2025.
• Resuming contributions: If you return to China and resume employment, you can continue contributing where you left off. Years of contribution do not need to be consecutive.
• Account portability: If you have worked in multiple Chinese cities, your pension accounts can be consolidated. China has been improving the portability of pension accounts across provinces.

Withdrawing from the Chinese pension

Chinese citizens who leave China cannot withdraw their pension contributions early (unlike the Japanese 脱退一時金 available to foreigners leaving Japan). Your contributions remain in the system. If you do not meet the 15-year minimum, you can either:

• Continue contributing voluntarily: Some localities allow overseas Chinese citizens to make voluntary contributions to reach the 15-year minimum. Check with your local social insurance office (社保局) in your registered 户口 city.
• Extend at retirement age: If you reach retirement age with fewer than 15 years, you may be able to extend contributions until you reach 15 years (up to a maximum of 5 additional years in some cases).
• Withdraw the individual account: If you cannot reach 15 years and are at retirement age, you can withdraw the balance of your individual account (个人账户) — but the employer-pooled portion (统筹账户) is not refundable. This results in a significant loss.

Chinese property while living in Japan 日本在住中の中国の不動産

Many Chinese citizens in Japan own property in China — purchased before moving, received from family, or bought as an investment. Chinese property ownership and taxation while living abroad involves several considerations:

Rental income

Rental income from Chinese property is taxable in China. Key points:

• Chinese tax: Individual rental income is subject to IIT at 20% of net income (after deductions for repairs, taxes paid, and a standard deduction). In practice, many localities apply simplified rates or thresholds.
• Other Chinese taxes on rental: Value-Added Tax (VAT) at 5% (with a small-scale taxpayer exemption for monthly rent below ¥100,000 CNY), urban maintenance and construction tax, education surcharges, and property tax (房产税 at 12% of rent) may also apply. The effective combined tax burden on rental income can be significant.
• Japan reporting: Report Chinese rental income on your Japanese 確定申告 and claim a foreign tax credit (外国税額控除) for Chinese taxes paid on the same income.

Selling Chinese property

Selling property in China triggers several taxes:

• Individual Income Tax: Capital gains on property sales are taxed at 20% of the gain (sale price minus original cost, renovation costs, and transaction fees). Some localities allow a simplified calculation at 1-3% of the gross sale price if original cost documentation is unavailable.
• VAT: 5% on properties held for less than 2 years (in many cities); exempt or reduced for properties held over 2 years that are the seller's only residence (varies by city).
• "Only residence" exemption: If the property is your only residence in China and you have held it for more than 5 years, the capital gains tax may be exempt in many cities. However, since you live in Japan and likely have the property vacant or rented, this exemption may not apply.
• Japan reporting: Report the capital gain on your Japanese 確定申告 with a foreign tax credit for Chinese taxes paid.
• Repatriation of proceeds: Sending sale proceeds out of China is subject to SAFE regulations (see remittances section below). You will need documentation proving the sale was legitimate and taxes were paid.

Remittances to and from China 中国への送金

Cross-border remittances involving China are subject to stricter regulations than most other countries due to China's capital controls managed by the State Administration of Foreign Exchange (SAFE / 国家外汇管理局). Understanding these rules is essential for Chinese citizens in Japan.

Sending money from Japan to China

Sending money from Japan to China is relatively straightforward from the Japan side. There are no Japanese restrictions on outbound remittances (though transactions over ¥1 million require Bank of Japan reporting). On the Chinese receiving end:

• Receiving in China: Your Chinese bank account can receive foreign currency transfers. The bank converts the funds to CNY at the prevailing rate. For amounts under $50,000 USD equivalent per year, settlement is relatively straightforward.
• Services: Bank wire transfers, Wise (limited to China), WeChat Pay cross-border, Alipay international transfer, and specialized China remittance services are available. Fees and rates vary significantly — compare before sending.

Sending money from China to Japan

This is where China's capital controls become relevant:

• Individual annual quota: Chinese citizens have an annual foreign exchange purchase quota of $50,000 USD equivalent per person. This covers all foreign currency purchases for the year — remittances, overseas spending, and cash withdrawals combined.
• Exceeding the quota: If you need to send more than $50,000 in a year, you must provide documentation justifying the purpose (property purchase abroad, tuition, living expenses, etc.) and the bank submits the request to SAFE for approval. This process can be slow and uncertain.
• Prohibited purposes: SAFE prohibits foreign exchange purchases for overseas real estate investment, securities investment, or purchasing life insurance. If you are sending money to Japan for investment purposes, this can be problematic.
• Family pooling: Some Chinese citizens use family members' annual quotas to transfer larger amounts (known as "蚂蚁搬家" / ant moving). Chinese banks and SAFE have cracked down on this practice — multiple transfers from different individuals to the same overseas account can trigger investigations and account freezes.

NISA for Chinese citizens 中国人のためのNISA

Japan's NISA (少額投資非課税制度) is an excellent investment tool for Chinese citizens living in Japan, with no significant complications from the Chinese tax perspective.

• No PFIC issues: China does not have US-style "Passive Foreign Investment Company" rules. You can invest in Japanese mutual funds (投資信託) through NISA without any adverse Chinese tax consequences. eMAXIS Slim, SBI V Series, Nikko AM, and all other popular Japanese index funds are perfectly fine.
• Genuinely tax-free in Japan: NISA gains are tax-free for Japanese tax purposes. Since you are filing primarily in Japan, this is a direct and immediate benefit.
• Chinese tax considerations: In theory, if China considers you a tax resident (due to your 户口 domicile), NISA gains could be subject to Chinese tax on worldwide income. In practice, China does not currently enforce taxation on Japanese NISA gains for overseas Chinese citizens. However, keep this in mind as China's enforcement posture may change.
• Full access to both NISA types: You can use both the つみたて投資枠 (¥1.2M/year for accumulation investing with mutual funds) and the 成長投資枠 (¥2.4M/year for growth investing), up to the ¥18M lifetime cap.

If you leave Japan: Your NISA account will be frozen (no new contributions). Existing investments can remain. Capital gains that accrued within NISA during your Japanese residency remain tax-free in Japan. If you return to China, the gains would theoretically be subject to Chinese IIT, but enforcement on gains that accrued in a foreign tax-exempt account while you were abroad is currently minimal. Consult a tax advisor before making decisions about your NISA when planning to leave Japan.

Frequently asked questions よくある質問

Do I need to file taxes in both China and Japan?

You always file in Japan if required (based on your income and employment type). Whether you file in China depends on your practical situation. If you have China-source income (rental income, dividends from Chinese companies, capital gains on Chinese assets), you should file in China for that income. For your Japan salary and Japan-source income, while technically reportable in China if you retain a domicile there, the practical reality is that most Chinese citizens in Japan do not file Chinese returns on their Japanese income. This may change as China's enforcement evolves.

I have less than 10 years of Japanese pension contributions. What are my options?

Without totalization, your options are limited. If you leave Japan, you can claim the pension refund (脱退一時金) — this refunds a portion of your contributions (currently up to 5 years' worth, with reforms potentially increasing this). The refund is significantly less than what you paid in, especially for long-term contributors. Alternatively, if you can stay in Japan for 10 years total, you qualify for the old-age pension, which provides a lifetime annuity. Consider this carefully when planning whether to extend your stay in Japan.

Can I send more than $50,000 from China to Japan?

Yes, but it requires justification and documentation. For amounts above the $50,000 annual individual quota, you must provide the Chinese bank with proof of the purpose (e.g., property purchase documentation, university acceptance letter for tuition, employment contract showing living expenses). The bank submits the application to SAFE for approval. For proceeds from selling Chinese property, a separate process exists that can accommodate larger amounts. Start early — the process can take weeks to months.

What about my Chinese social insurance (五险一金)?

China's "five insurances and one fund" (五险一金) — pension, medical, unemployment, work injury, maternity insurance, plus the housing provident fund (住房公积金) — all pause when you leave Chinese employment. The China-Japan social insurance agreement only covers the pension component (基本养老保险) for double coverage prevention. Your medical insurance (医疗保险) and housing provident fund (住房公积金) accounts remain in China. The housing fund can typically be withdrawn when you leave China permanently — check with your local 住房公积金管理中心.

I came to Japan as a student. Are there special tax provisions?

Yes. The China-Japan tax treaty includes a student exemption (Article 21). Chinese students and trainees in Japan are exempt from Japanese tax on payments received from outside Japan for education and living expenses. Additionally, remittances from family in China for living expenses and tuition are not taxable income in Japan. Once you transition from student status to employment, this exemption no longer applies to your salary, but it can be valuable during your study period. Note that this exemption applies to your tax filing — you may still need to register for residence tax and health insurance in Japan.

I am planning to return to China. What should I prepare?

File your final Japanese 確定申告 (or appoint a 納税管理人 to file after you leave). Claim the pension refund (脱退一時金) if you contributed to 厚生年金 or 国民年金 for at least 6 months and do not plan to return to Japan. The refund is taxable in China. Close or decide what to do with Japanese bank and brokerage accounts (you can maintain them, but access may become complicated from China due to network restrictions). Sell or keep your NISA investments — your brokerage will guide you on maintaining an account as a non-resident. Send any funds to China well in advance, as transfers can take time. See our Leaving Japan tax guide for the complete checklist.