The buyer generally withholds 10.21% at payment
Under National Tax Agency guidance reflecting the law as of April 1, 2026, a person paying consideration in Japan for land or buildings purchased from a non-resident individual or foreign corporation generally must withhold 10.21% of the payment. The obligation normally falls on the payer, meaning the buyer, and is not restricted to corporate purchasers. An important exception applies where the consideration is ¥100 million or less and an individual buyer acquires the property for use as a residence by the buyer or the buyer's relatives. As a result, two transactions with the same sale price can have different settlement procedures depending on the identity and purpose of the purchaser.
Withholding is not the seller's final capital-gains tax rate
A common misunderstanding is that 10.21% represents the ultimate tax on the seller's profit. It does not. Japanese taxable gain on a property disposition is generally determined from the sale proceeds after deducting acquisition cost, eligible selling expenses and any applicable special deductions. A transaction can therefore be subject to withholding at closing even when the seller's actual taxable gain is small or potentially negative. The non-resident seller can subsequently file a Japanese tax return and reconcile the final tax liability with the amount already withheld. If withholding exceeds the final liability, a refund may be available through the filing process.
Non-resident sellers should separate settlement cash flow from final tax
For an owner living overseas, the rule can materially affect the cash received on closing day. Where withholding applies, the buyer pays the seller the consideration net of the withheld amount. Brokerage fees, title-related expenses, repayment of secured debt and other transaction costs can further reduce the immediate net proceeds. The NTA also explains that non-residents may file returns in connection with Japanese property sales and provides procedures relating to tax agents in relevant cases. Residence status for tax purposes and eligibility for deductions depend on individual facts. Sellers should therefore distinguish the mechanical withholding at settlement from the later calculation of actual capital-gains tax rather than assuming that 10.21% is the final tax cost.