No.15002 Cases where a gift tax is imposed
A gift tax is imposed when you receive properties donated by individuals.
When you receive properties donated by a corporation such as a company, income tax instead of gift tax is imposed.
In addition, when you receive the proceeds of life insurance for which you did not pay the insurance premium, or when you receive a benefit due to exemption of debt, etc., you will be deemed to be given a gift and therefore imposed a gift tax.
However, when you receive the proceeds of life insurance for which the decedent had paid the insurance premium for you as the insured person, you will be subject to inheritance tax, not gift tax.
There are two taxation methods for gift tax: calendar year taxation system and taxation system for settlement at the time of inheritance. You can choose the taxation system for settlement at the time of inheritance when certain requirements are met.
1 Calendar year taxation system
The gift tax will be imposed after a basic exemption of 1.1 million yen related to taxation for calendar year is subtracted from the total amount of the value of properties donated to a person in one year from January 1 to December 31 of that year. Therefore, the gift tax will not be imposed if the total amount of the value of properties donated in one year is less than 1.1 million yen. (In this case, you are not required to file a return for gift tax.)
2 Taxation system for settlement at the time of inheritance
For gift recipients who selected the “taxation system for settlement at the time of inheritance (Note)”, gift taxes are imposed on the remaining amount after the amount of basic exemption of 1.1 million yen related to taxation by settlement at the time of inheritance is subtracted from the total amount of the value of properties received in one year from January 1 to December 31 of that year and then a special deduction of 25 million yen is subtracted.
This special deduction can be applied only when a taxpayer files a return for gift tax within the statutory due date.
If this special deduction was applied to part of the amount prior to the previous year, the remaining amount after subtracting it from 25 million yen will be the limit for special deduction.
(Note) For more information on the "taxation system for settlement at the time of inheritance," please refer to "15003 Selection of the Taxation System for Settlement at the Time of Inheritance".
3 Tax declaration and payment
Of the total amount of the value of properties received as the gift during the year from January 1 to December 31 of that year, if the amount of the following (i) exceeds 1.1 million yen, or if the amount of the following (ii) exceeds 1.1 million yen, the recipient must file a tax return and pay taxes between February 1 and March 15 of the year following the year in which the property was acquired as the gift.
(i) The total amount of the value of properties under taxation for calendar year subject to additional tax
(ii) The total amount of the value of properties under taxation by settlement at the time of inheritance
*If you received the gift related to taxation by settlement at the time of inheritance before December 31, 2023, the amount of basic exemption under taxation by settlement at the time of inheritance will not be deducted, so you must file a tax return even if the amount in (ii) is 1.1 million yen or less.
Also, when selecting taxation by settlement at the time of inheritance for the first time, the person who received the gift must prepare a "Report on Selection of the Taxation System for Settlement at the Time of Inheritance" for each donor during the gift tax return filing period, attach certain documents, and submit them to the competent tax office director. In addition, when filing a gift tax return, the "Report on Selection of the Taxation System for Settlement at the Time of Inheritance" and certain documents must be attached to the gift tax return and submitted.
While taxes are generally paid in cash at once, postponement of tax payment is allowed as a special tax payment system for gift taxes.
This allows a taxpayer to pay taxes in installments over several years.
Those who wish to postpone tax payment must submit application forms and other documents to Tax Office by the due date for tax return and obtain permission.
- Consultation service for national tax is available at the Phone Consultation Center of the Regional Taxation Bureaus. Please take a look at "IF YOU NEED FURTHER INFORMATION, PLEASE CONTACT" and try the phone consultation service.
