JapanDifference between lifetime gifts and inheritance?
Lifetime gifts are transfers made while the donor is alive and are subject to gift tax; inheritance occurs after death and is subject to inheritance tax. The tax rates, exemptions, and filing deadlines differ significantly between the two.
What the Law Says
Japanese tax law treats lifetime gifts and inheritance as distinct events with separate tax regimes, definitions, and compliance requirements.
Lifetime gifts (贈与) are voluntary transfers of property from one person to another during the donor’s lifetime. They are taxed under the Gift Tax Act (贈与税法), which applies regardless of family relationship — though special rules exist for spouses and direct descendants.
Inheritance (相続) refers to the transfer of assets upon a person’s death, governed by the Inheritance Tax Act (相続税法). It applies to heirs who acquire property through will, intestacy, or legacy, and includes both real estate and financial assets.
A key distinction is timing: gift tax must be declared and paid within 2 months after the gift is made, while inheritance tax must be filed within 10 months after the date of death. Also, gifts made within 10 years before death may be added back into the deceased’s estate for inheritance tax calculation.
The tax-free thresholds differ: an annual exemption of 1.1 million yen applies to gifts (per recipient per year), whereas inheritance tax uses a basic deduction of 30 million yen plus 6 million yen per statutory heir.
Statutory TextA person who receives property as a gift shall file a gift tax return and pay the tax within two months from the day following the day on which the gift was made.
— Gift Tax Act, s. 24 — Filing and Payment of Tax
Statutory TextThe inheritance tax return shall be filed within ten months from the day following the day on which the inheritor becomes aware of the commencement of inheritance.
— Inheritance Tax Act, s. 27 — Filing Deadline
Statutory TextGifts received from the deceased within ten years prior to the commencement of inheritance shall be included in the value of the inherited property for calculating inheritance tax.
— Inheritance Tax Act, s. 19 — Inclusion of Certain Gifts
What to Do
For lifetime gifts: File a gift tax return with the tax office within 2 months of receiving the gift — even if tax is zero due to the 1.1 million yen exemption.
For inheritance: Calculate total estate value, apply the 30 million yen basic deduction plus 6 million yen per heir, then file inheritance tax return within 10 months of death.
Disclose all gifts received from the deceased within the past 10 years when filing inheritance tax — these may be added to the taxable estate.
Keep records of all gift agreements, bank transfers, and property registrations for both gift and inheritance filings.
Consult a tax accountant or certified tax advisor if the estate includes real estate, foreign assets, or complex trusts.
Sources
Not legal advice. This article is general information based on publicly available sources, written for educational purposes. Laws change and individual situations vary. Consult a licensed attorney in your jurisdiction before acting on anything you read here. Last reviewed: 2026-06-08.