Real Estate Taxation in Japanfor Japanese and foreign company

※ For further details, please consult a certified tax accountant.

Tax Item Acquisition Possession Disposition Administrative Body
Registration and License Tax Legal Affairs Bureau / Tax Office
Real Estate Acquisition Tax Local Tax Bureau
Stamp Duty Tax Office
Consumption Tax Tax Office
Corporation Tax Tax Office
Local Tax
(Business Tax・Special Local Corporation Tax・Corporate Inhabitant Tax)
Local Tax Bureau
Municipal Office
Fixed Asset Tax・City Planning Tax Municipal Office
  • Taxed
  • Taxed but there are exceptions
  • Applicable to Japanese companies only
  • No taxation

Summary of Tax

Registration and License Tax Registration and License Tax is levied on ownership preservation and transfer registrations when construction is completed or land and building are bought.
● Tax amount = Tax base x Tax Rate (Land 1.5%, building 2.0%)
Real Estate Acquisition Tax Real Estate Acquisition Tax is levied by prefectures on acquisition, new construction and addition of property.
● Tax amount = Assessed Value of Fixed Asset x 4% (Standard tax rate)
   Based on special provisions, reduced tax rate and tax base apply in the following cases;
・Land and residential properties 3% (Up till March 31, 2018)・Other properties 4%
・Special provision on tax base of residential land (Assessed Value x 1/2)
Stamp Duty Stamp Duty is levied on taxable document. In real estate related transactions, sales and purchase agreement, construction contract and loan agreement fall under taxable document and are taxed based on the contract amount.
● Tax amount = JPY 0 - JPY 480,000
Consumption Tax Consumption Tax is levied on domestic transaction conducted by businesses. Examples are transfer of building and brokerage based on the cost and fee. As an exception, Consumption Tax does not apply to transfer and leasing of land.
● Tax amount = Tax base x 8% (Out of the 8%, 1.7% is Local Consumption Tax)
Corporation Tax Corporation Tax is levied on the company’s taxable income, which is revenue less expense. When a company leases real estate, rent income is added into other revenue in calculating Corporation Tax.
● Tax amount = Taxable income x 15% or 25.4%
(Foreign corporations are not subject to Local Tax if real estate investment is the only business in Japan.)
(Refer below for effective tax rates of Japanese corporations.)
Local Tax
(Business Tax・Special Local Corporation Tax・Corporate Inhabitant Tax)

Local Tax comprises Business Tax, Special Local Corporation Tax and Corporate Inhabitant Tax levied by prefectures and municipalities on corporations.
The effective tax rate taking into account both Corporation Tax and Local Tax is as follows:

Status Tax rate
SME with taxable income of JPY 4 million or less 21.42%
SME with taxable income of more than JPY 4 million and JPY 8 million or less 23.20%
SME with taxable income of more than JPY 8 million 33.80%
All other companies 29.97%+Size-base Business Tax
Fixed Asset Tax・
City and Planning Tax
Fixed Asset Tax and City and Planning Tax are levied on the owner of real estate property as of January 1 every year. Both taxes are based on the Assessed Value of Fixed Asset, which is re-assessed every three years.
● Fixed Asset Tax = Tax Base x 1.4% (Standard tax rate)
● City and Planning Tax = Tax Base x 0.3% (Maximum tax rate)

Based on Annual Tax Revision Plan of 2016