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Japan Investment Income Tax Guide (投資所得)

Japan taxes investment income broadly at 20.315% withholding (15.315% national + 5% inhabitant). Dividends can be aggregated with other income for a potentially lower effective rate. Interest is taxed at 20.315% by default. NISA (NISA/新NISA) accounts offer tax-free treatment on dividends and capital gains within annual contribution limits.

Japan's investment income taxation rules are administered by the NTA and apply to both residents and non-residents. For related guidance, see our Capital Gains Tax Guide →, Personal Tax Guide →, and Corporate Tax Guide →.

Dividend Taxation (配当所得)

  • Default rate: 20.315% withheld at source (15.315% national IIT + 5% inhabitant tax) on dividends from listed Japanese companies.
  • Aggregation election (総合課税): Taxpayers in lower IIT brackets can elect to include dividends in their aggregate income (総合課税). If the effective progressive rate is lower than 20.315%, a refund of the over-withheld amount can be claimed.
  • Excluded from aggregation: Dividends below JPY 100,000 per company (minor holdings) cannot be aggregated and are final withholding.
  • Dividends from foreign companies: Generally taxed as miscellaneous income at progressive rates unless they meet certain criteria for separate taxation.

Interest Taxation (利子所得)

  • Flat rate: 20.315% withholding tax (15.315% national + 5% inhabitant) on interest from bank deposits, bonds, and debentures.
  • This is a final withholding — no need to declare the interest on the annual tax return (separate from other income).
  • Interest on JGBs and municipal bonds held by residents is generally subject to the same 20.315% withholding, though some government bonds have special tax treatment.
  • Interest from foreign banks and foreign bonds is generally declared as miscellaneous income at progressive rates.

NISA / 新NISA (Tax-Free Investment Accounts)

  • NISA (少額投資非課税制度): Launched in 2014, replaced by 新NISA (New NISA) from January 2024.
  • New NISA features:
    • Tsumitate (積立) Investment: Up to JPY 1.2M/year — long-term, small-amount investment in qualifying mutual funds.
    • Growth (成長) Investment: Up to JPY 2.4M/year — broader range of listed shares, ETFs, and REITs.
    • Combined annual limit: JPY 3.6M. Lifetime non-taxable limit: JPY 18M.
  • All dividends, interest, and capital gains within NISA accounts are tax-free permanently (no time limit on holding).
  • Losses within NISA cannot be used to offset gains outside NISA.
  • Only Japanese residents aged 18+ can open a NISA account. One account per person.

Other Investment Income

  • REIT distributions: Taxed at 20.315% withholding, similar to dividends. A portion may be treated as return of capital.
  • Capital gains on securities: See our Capital Gains Guide — flat 20.315% rate (separate from dividend/interest treatment).
  • Foreign tax credits: Withholding tax paid on foreign dividends/interest may be credited against Japan tax (limited to the Japan tax due on that income).

Filing Requirements

  • Most investment income is subject to withholding at source, so no separate filing is needed if the taxpayer has only investment income and no other taxable income.
  • Taxpayers electing aggregation for dividends must file an annual return by 15 March.
  • Income from foreign investments must generally be declared even if tax was withheld abroad.