NISA and leaving Japan

[abr1234]

I am doing some research on what happens to a NISA account when you leave Japan. Any tax or finance ninjas out there who can help?

I have found out some things, but other things are unclear.

What is clear:

- To open a NISA account you need to reside in Japan, i.e. your domicile or legal address is in Japan.

- To hold a NISA account it seems you also need to, in principle, reside in Japan. Thus, when you leave Japan, you need to file a "I am leaving the country notice" (出国届出書) with your bank, and the bank will close your NISA account (source: National Tax Agency’s Q&A on NISA). I suppose that, if you file such a notice, the bank will also close all your other accounts, as you are no longer a resident. This means you have no Japanese account that can hold the stock that used to be on your NISA account. The upshot is that, before you leave Japan, you have to sell the stock on your NISA account, then transfer the proceeds to a foreign bank account. There seems to be a narrow exception to the requirement to file a 出国届出書 in cases such as when your employer orders (sic) you to transfer abroad (転任の命令等) for a short while but let's leave that scenario aside for simplicity.

Now, the fact that you have to sell your NISA stock before leaving Japan may be a rather unwelcome scenario, for various reasons. Perhaps the stocks are just slumping when you leave, or perhaps you just want to hang onto your investment because it is a good investment.

Hence, the question: is there any (economical) way to keep the stock?

 

[ffidy]

@abr1234 That's a problem many face when leaving Japan, but unfortunately the only practical solution seems to be to go through a long process of transferring your stock to an international broker like IB (NISA->IB Japan-> IB international). Thing is, I haven't heard from anyone on this sub who has actually done it. In addition, the process itself maybe too tedious to be justified for relatively small stock holdings (such as the kind you'd have on NISA).

I'm mainly writing this in the hope that someone here has new information on if this can be done painlessly.

(just as a note, its very unlikely the global stock market will move a lot in the time you dissolve your NISA, send the money overseas, and then reinvest. If you can do this relatively quickly, your losses should only be the difference in price of stock (if negative), plus the broker fees for buying. If its not a lot of money, this doesn't seem too bad)

 

[eliaharr]

@ffidy Transfers of Japanese stock from Japanese brokers into IB Japan are permitted, but the question is whether that stock could then be transferred into IBLLC or an equivalent foreign IB entity if you leave Japan.

Japanese residents are restricted from trading Japanese stock except in their IBSJ account, but those who have lost their residence should be able to trade Japanese stock in an IBLLC account.

In any case, NISA holdings need to be moved to a taxable account before being eligible for transfer to another broker, which will require procedures at the holding broker.

 

[daisym]

@eliaharr I have actually called IB and asked them about this point and they said that they can transfer out shares from IB Japan but that it takes very long. I didn’t ask in too much detail though, now I’m thinking I should call them back…

 

[eterna]

@ffidy A thread on IB might be in order indeed. It is a good broker but not usual in the traditional bank landscape and people might be confused by the international/local account. They recently dropped their monthly fee witch make them more cost efficient.

I hope someone can launch this, or I can also do so.

edit : found this review made by Ben, it seems he updated it quite recently too : https://www.retirejapan.com/blog/review-interactive-brokers/

 

[ozora]

@ffidy

ts very unlikely the global stock market

Timing the market is never a good hobby to take up, but this is the one time I'd be wary of making a comment like this. We're reaching dangerous levels of reverse repo, and various other factors that are pointing towards another '08-esque collapse. Again, not wanting to time anything, but if there were ever a time to be a little wary, now would be it in my opinion.

 

[faithisking]

@abr1234 I don’t believe you can transfer stock in kind to a foreign broker. One way might be if company still issues paper stock certificates and Japanese broker will help you convert stocks, they have custody of, into paper certificates. Long time ago, US brokers used to provide this service for a fee.

The practice of direct transfer to foreign broker most probably is discouraged since Goldman Sachs was reprimanded for helping sanctioned Russian oligarchs move money through transfer of stocks across international borders. Also, Canadian snowbirds used stock transfer between Canadian and US brokers to save on currency exchange fees and currency restrictions in the past.

 

[resjudicata]

@abr1234 For these exact reasons, if you are planning to leave Japan it is probably best to invest using your home country broker and/or IBKR.

It would not be a bad idea to consider a Tsumitate Nisa and Index funds for a fairly low-risk investment over a 5 year + timeframe. There are no bond funds unfortunately (to smooth out possible market slumps), but you can use and 8-asset fund that are usually very stablee (Mix or bonds, stocks and REITs).