Gift Tax in Japan (贈与税) — Annual ¥1.1 Million Exemption
Japan's gift tax (贈与税, zouyo-zei) is designed to prevent people from avoiding inheritance tax by giving away their assets before death. Understanding gift tax rules is essential for anyone planning intergenerational wealth transfers in Japan. This guide covers the basics, exemptions, and strategies.
The Annual ¥1.1 Million Exemption
Under the calendar-year gifting system (暦年贈与), each recipient can receive gifts totaling up to ¥1,100,000 per year from all sources combined without incurring gift tax. This exemption resets every January 1st.
Example: A parent gives ¥1,000,000 to their child in 2026. The child also receives ¥500,000 from a grandparent. Total received: ¥1,500,000. Taxable amount: ¥1,500,000 - ¥1,100,000 = ¥400,000. Gift tax on ¥400,000 at the lowest rate (10%): ¥40,000.
Gift Tax Rates
Gift tax uses a progressive rate structure. Rates differ depending on whether the gift is from a lineal ascendant (parent/grandparent) to an adult child/grandchild ("special rates") or between other parties ("general rates"):
| Taxable Amount | Special Rate | General Rate |
|---|---|---|
| Up to ¥2M | 10% | 10% |
| Up to ¥4M | 15% | 20% |
| Up to ¥6M | 20% | 30% |
| Up to ¥10M | 30% | 40% |
| Over ¥30M | 55% | 55% |
The 7-Year Lookback Rule
Starting January 2024, gifts made within 7 years before the giver's death are added back to the taxable estate for inheritance tax purposes. This was previously a 3-year lookback period. The change is being phased in gradually:
- Deaths in 2024-2026: Still effectively a 3-4 year lookback (transitional period)
- Deaths from 2031 onward: Full 7-year lookback applies
- Gift tax already paid on these gifts is credited against inheritance tax
- For gifts in the 4th-7th years before death, a total deduction of ¥1,000,000 applies
Alternative: Settlement Taxation System (相続時精算課税)
Japan offers an alternative gifting system where gifts from parents/grandparents (age 60+) to children/grandchildren (age 18+) are taxed at a flat 20% after a lifetime exemption of ¥25,000,000. Key features:
- Once elected, you cannot switch back to the calendar-year system for that giver-receiver pair
- All gifts under this system are added to the estate at the giver's death (at the value when gifted)
- From 2024, a new annual ¥1,100,000 exemption was added within this system
- Useful for transferring assets expected to appreciate significantly
Special Exemptions for Specific Purposes
Education Funds (教育資金一括贈与)
Up to ¥15,000,000 per grandchild for education expenses when deposited in a designated trust account. Available through March 2026.
Housing Purchase (住宅取得等資金)
Up to ¥10,000,000 for purchasing or renovating a home (amount varies by property type and energy efficiency). Available through December 2026.
Marriage/Childcare (結婚・子育て資金)
Up to ¥10,000,000 for marriage and childcare expenses through a designated trust account. Available through March 2025.
FAQ
How much can I give tax-free per year in Japan?
Each recipient can receive up to ¥1,100,000 per calendar year from any number of givers without paying gift tax. This is the basic gift tax exemption (暦年贈与の基礎控除).
What is the 7-year lookback rule for gifts?
Gifts made within 7 years before the giver's death are added back to the taxable estate for inheritance tax purposes. This was extended from 3 years to 7 years starting January 2024, with a transitional phase-in period.
Is gift tax higher than inheritance tax in Japan?
Yes, for the same amount. Gift tax rates are generally higher than inheritance tax rates. The top gift tax rate is 55%, the same as inheritance tax, but it kicks in at a lower threshold (¥30 million vs ¥600 million).
Related Guides
This guide provides general information only. It does not constitute tax advice or tax filing services. Please consult a licensed tax professional (税理士) for accurate calculations.