Buying Japanese property from a non-resident seller (mainland China/Taiwan) — the buyer bears the withholding duty

In short: When you buy Japanese land or a building from a non-resident (a seller whose life base is overseas, such as one in mainland China or Taiwan), the party that withholds tax is the buyer, not the seller. The buyer deducts 10.21% (10% income tax plus special reconstruction income tax) at the time of payment and pays it to the tax office by the 10th of the following month. It is unnecessary only if an individual buys the property for their own or a relative's residence and the price is JPY 100 million or less. We handle the sale contract, settlement and property information; the calculation of the tax, preparation of the payment slip, and the refund (final return) are for a tax accountant, and the relationship with registration is for a judicial scrivener — each engaged under a separate contract.

This is written for local professionals in mainland China and Taiwan who support Japanese real estate transactions, and for domestic buyers and their staff who buy from non-residents. We organize "the buyer's withholding duty at purchase" and the often-misunderstood "residential, JPY 100 million or less" exception, from the Income Tax Act, its Order, and the National Tax Agency's guidance. We handle only the Japan-side brokerage and information; we do not determine, pay, or refund the withholding tax, nor make registration judgments. Each of those areas is referred separately, under its own contract.

Why does the buyer, not the seller, withhold when buying from a non-resident?

Because the proceeds a non-resident earns from selling Japanese land are "domestic-source income," and the duty to withhold is placed on the buyer who pays. The system makes the payer collect the tax, to prevent a seller from taking the money abroad and leaving Japan without filing.

Article 161(1)(v) of the Income Tax Act (Act No. 33 of 1965) treats the consideration for the transfer of land in Japan as a non-resident's "domestic-source income." Article 212(1) requires the person who pays domestic-source income to a non-resident in Japan to withhold and pay the tax at payment. So the payer — the buyer — is the withholding agent. Whether the buyer is a company or an individual does not matter; even a private individual buying a home is in principle an agent.

Point	Content
Withholding agent	The buyer who pays the consideration (company or individual; even a non-business individual is in principle covered)
Covered income	Consideration paid to a non-resident for transfer of Japanese land (domestic-source income under Article 161(1)(v))
Basis	Article 212(1) (withholding) and Article 213 (rate) of the Income Tax Act
Covered "land, etc."	Land, rights on land, buildings and their fixtures or structures
Purpose	To prevent a seller from moving the money abroad and leaving Japan without filing before the return is due

The Tokyo District Court judgment of 19 May 2016 held that even where the seller's registered residence is in Japan, if the life base is overseas the seller is a non-resident, and the buyer bears the withholding duty under Article 212(1). The key point for pre-transaction checks is that having a resident registration does not necessarily make someone a resident.

Where is the "residential, JPY 100 million or less" exception drawn?

Withholding is unnecessary when the buyer is an individual, buys the property for their own or a relative's residence, and the consideration is JPY 100 million or less. All three must be met; if even one fails, the duty remains.

Article 281-3 of the Order for Enforcement of the Income Tax Act (Cabinet Order No. 96 of 1965) excludes from withholding those considerations under Article 161(1)(v) where an individual acquires the property for their own or a relative's residence and the price is JPY 100 million or less. If the buyer is a company, withholding is required regardless of amount, because the exception is limited to an individual's residential use.

Requirement	Content	Example that falls outside
Buyer is an individual	A natural person	Buyer is a company → withholding required regardless of amount
Residential use	For the buyer's own or a relative's residence	Investment, rental, business use → not covered by the exception
JPY 100 million or less	Transfer consideration is JPY 100 million or less	Over JPY 100 million → withholding required on the whole amount

According to the National Tax Agency's Q&A, whether the price exceeds JPY 100 million is judged by the transferor's (seller's) consideration. Even with a store-cum-residence, if half or more of the building's floor area is for residence, it is treated as acquired for residence. On the other hand, how the JPY 100 million test applies per share when there are multiple sellers (co-ownership or multiple heirs) varies by case, and the NTA Q&A and private commentary are not fully consistent. We leave this open as [unverified], assuming confirmation by a tax accountant and judicial scrivener. For the side where a non-resident heir sells, see Withholding when overseas heirs sell Japanese property.

Where in the price, when, and by whom is the 10.21% paid?

The rate is 10.21% (10% income tax plus special reconstruction income tax). The buyer deducts it at payment and, in principle, pays it to the tax office by the 10th of the month following payment. The remaining roughly 89.79% is paid to the seller.

The 10% rate is Article 213 of the Income Tax Act, to which the special reconstruction income tax (2.1% of the withheld income tax, under Article 28 of the Reconstruction Funding Act) is added, totaling 10.21%. The special reconstruction income tax applies to withholding from 1 January 2013 to 31 December 2037.

When / who	What	Deadline
Buyer (at payment)	Deduct 10.21% of the consideration and pay the balance to the seller	At payment
Buyer (payment to tax office)	Pay the deducted amount via a "payment slip (income-tax collection statement)"	By the 10th of the month following payment
When paid from abroad	Where the payer has an address, residence, office, etc. in Japan	By the last day of the month following payment

Preparing the payment slip, and deciding which amounts form the consideration for the 10.21% calculation (handling of the deposit, prorated fixed-asset tax, etc.), are tax judgments directly affecting the amount; we do not do them. A tax accountant undertakes them under a separate contract. The NTA page notes that from the 2027 tax year a special defense income tax will be added in addition to income tax, but we do not assert the specific add-on method or rate here and leave it [unverified] — confirm the latest NTA guidance just before payment.

How does the buyer confirm before the transaction whether the seller is a non-resident?

The registered address alone is not enough. It turns on whether the life base is in or outside Japan, so confirm the residence situation, contact point, and any departure before the transaction, and if in doubt, settle on the assumption that withholding applies.

Article 2(1) of the Income Tax Act defines a "resident" as an individual who has an address in Japan or has had a place of residence continuously for one year or more, and a "non-resident" as anyone else. The reference point for the test is, in principle, the time of payment of the consideration. Because a buyer who fails to withhold bears the principal tax, non-payment additional tax, and delinquent tax itself later, the seller's non-resident status should be assessed before the contract.

What to check	Point to watch
Life base	Not just the registered address, but actual residence, days of stay, plans to leave
Contact / tax agent	If living abroad, whether a tax agent is filed and how easy contact is
Residency at payment	Residency may change between contract and settlement (the test is in principle at payment)
Multiple sellers	Whether a non-resident is among co-owners/heirs, and whether per-share testing/apportionment is needed

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How to pin the non-resident test to the delivery/settlement date is set out in Judging non-resident status by the date of delivery. Working with local professionals to confirm the seller's residence situation is covered in Handling Japanese real estate together with local professionals. For borderline cases, we arrange the settlement schedule and refer the tax determination to a tax accountant.

How is the withheld tax settled and refunded in the seller's final return?

Withholding is only a "prepayment." The non-resident seller files a final return in Japan for the capital gain and settles the difference between the 10.21% withheld and the actual tax. If overpaid, a refund follows; if short, additional payment.

Income from a non-resident's transfer of Japanese property (capital gain) is in principle taxed in Japan and requires a final return. On filing, the tax withheld by the buyer is deducted as a prepayment and the balance is settled. A seller living abroad usually appoints a tax agent and files with the tax office for filing and payment.

Stage	Who	Content
At purchase	Buyer	Withhold and pay 10.21% (prepayment)
After transfer	Seller (non-resident)	File the capital gain, settle the withheld amount (refund or additional payment)
Filing prep	Seller	File a tax agent; organize acquisition cost and transfer expenses
Relation to registration	Buyer/seller	Align ownership-transfer registration documents (signature certificate, etc.) with the withholding

Whether and how much is refunded, and the computation of acquisition cost, are tax judgments themselves; we do not do them. A tax accountant undertakes them under a separate contract. Ownership-transfer registration is handled by a judicial scrivener, and how the presence of withholding relates to the registration and settlement documents is worked out with the judicial scrivener and tax accountant. Because a tax treaty may change the treatment, the system of the seller's country of residence is premised on confirmation by a local tax specialist.

We handle the Japan-side property investigation, important-matters explanation, price and terms, brokerage, sale contract and settlement. The calculation of the withholding tax, preparation of the payment slip, and the final return for a refund are for a tax accountant; the relationship between ownership-transfer registration and withholding is for a judicial scrivener; and per-share apportionment where the sellers are multiple heirs is for a tax accountant and judicial scrivener — each an independent business entity, separate from us. Where roles overlap, we clarify before the contract who handles what, and you contract with each separately. Each professional is engaged directly. We neither receive nor pay any referral fee or introduction commission. Consultations are free.

FAQ

Q. I am buying an investment apartment from a mainland Chinese individual. Is withholding unnecessary if it is JPY 100 million or less?
A. No. The exception applies only where the buyer is an individual buying for their own or a relative's residence, with a price of JPY 100 million or less. Investment or rental use is not residential, so 10.21% withholding is required even below JPY 100 million. Confirm the taxable amount and prorations with a tax accountant.

Q. What happens if I forget to withhold and pay the full price to the seller?
A. The buyer is the withholding agent, so the buyer owes the payment even without having deducted it. Principal tax plus non-payment additional tax and delinquent tax follow, and recovering the overpayment from the seller tends to be difficult. That is why the seller's non-resident status should be assessed before the contract and the deduction built into settlement. Consult a tax accountant for the amount and us for the settlement structure.

Q. The sellers are several heirs and only some live abroad. How does the JPY 100 million test work?
A. The per-share JPY 100 million test with co-ownership/multiple heirs, and whether to withhold only on the non-resident's share, vary by case, and the NTA Q&A and private commentary are not fully consistent. We leave it [unverified] here. Confirm the apportionment and the need to withhold with a tax accountant and judicial scrivener individually.

Q. What is the "0.21%" in the 10.21% rate?
A. It is 10% income tax plus special reconstruction income tax (2.1% of the withheld income tax = 10% × 2.1% = 0.21%). The special reconstruction income tax applies to withholding from 1 January 2013 to 31 December 2037. A special defense income tax is indicated to be added from the 2027 tax year, but confirm the specific method with the latest NTA guidance just before payment.

Sources (primary information)

• NTA Tax Answer No. 2879 "When you purchase land, etc. from a non-resident" (the payer of consideration for Japanese land to a non-resident withholds 10.21%; unnecessary if an individual acquires for own/relative's residence at JPY 100 million or less; payment in principle by the 10th of the following month; basis = Income Tax Act 161/164/212/213, Order 281-3, Reconstruction Funding Act 28, etc. As of 1 Apr 2026; accessed 7 Oct 2026)
• e-Gov Law Search "Income Tax Act" (Act No. 33 of 1965; Article 161(1)(v) = domestic-source income for transfer of Japanese land / Article 212(1) = withholding duty / Article 213 = rate / Article 2(1) = definitions of resident and non-resident. Accessed 7 Oct 2026)
• e-Gov Law Search "Order for Enforcement of the Income Tax Act" (Cabinet Order No. 96 of 1965; Article 281-3 = no withholding where an individual acquires for own/relative's residence at JPY 100 million or less. Accessed 7 Oct 2026)
• e-Gov Law Search "Reconstruction Funding Act" (Article 28 = special reconstruction income tax is 2.1% of the withheld income tax; 1 Jan 2013 to 31 Dec 2037; with 10% income tax it totals 10.21%. Accessed 7 Oct 2026)
• Tokyo District Court judgment of 19 May 2016 (even where the registered address is in Japan, if the life base is overseas the seller is a non-resident, and the buyer paying the consideration bears the withholding duty under Article 212(1). Accessed 7 Oct 2026)

• The JPY 100 million test, per-share apportionment with co-ownership/multiple heirs, the store-cum-residence treatment, and the determination of the consideration including acquisition cost and prorations vary with the transaction's substance. This article does not assert a specific tax amount or applicability; such matters are treated as [unverified], assuming confirmation by a tax accountant and judicial scrivener.
• The add-on method/rate of the special defense income tax from the 2027 tax year, and treatment under tax treaties, are not asserted here. Confirmation with the latest NTA guidance and a local tax specialist is assumed just before payment.
• This article is general information, not an individual legal or tax judgment. Calculation, payment and refund of withholding tax are for a tax accountant, ownership-transfer registration for a judicial scrivener, and disputes for a lawyer.
• The Japan-side property investigation, important-matters explanation, brokerage, sale contract and settlement are handled by Yotsuba Real Estate Co., Ltd. (real estate brokerage); the tax accountant and judicial scrivener contract with you separately as independent business entities. There is no exchange of referral fees or introduction commissions. See Investment & commercial real estate.

About the author

Joji Uramatsu — Licensed Real Estate Transaction Specialist (Tokyo Governor registration No. 293544) and Administrative Scrivener (registration No. 25087022). Representative Director of Yotsuba Real Estate Co., Ltd. (real estate brokerage, Tokyo Governor (1) No. 113304) / Head of Yotsuba Administrative Scrivener Office. Kohinata, Bunkyo-ku, Tokyo, about 5 minutes' walk from Myogadani Station. Supporting documents available in Traditional and Simplified Chinese; for Chinese-speaking buyers and local professionals, the need to withhold and the settlement schedule are confirmed side by side. See the author page for the full profile.