Japan – United States Tax Treaty
The Japan-United States tax treaty caps withholding on dividends at 10% for portfolio investors and 5% for qualifying direct investment, and interest at 10%. Royalties are taxed at a uniform 0% across all categories. Private pensions are taxable only in the country of residence, with no withholding at source. This is one of 47 active treaties in Japan's network and one of 64 in United States's. The general dividend rate of 10% is below the median in both countries' treaty networks (Japan: 15%, United States: 15%).
Verified data
IRS Table 1 - Tax Rates on Income Other Than Personal Service Income (Rev. May 2023)
Withholding Rate Summary
Source: IRS Table 1 (Withholding Rates)| Income Type | Treaty Rate | Statutory Rate (United States) |
|---|---|---|
| Dividends (general) Portfolio investors | 10%saves 20% | 30% |
| Dividends (qualified) Beneficial owner is a company holding >= 10% of voting stock | 5%saves 25% | 30% |
| Interest Bank interest, bonds, loans | 10%saves 20% | 30% |
| Royalties (avg) Patents, copyright, know-how, film/TV | 0% | — |
| Pensions Private pension distributions | 0% | — |
| Social Security Government social security benefits | 0% | — |
“Treaty Rate” is the maximum withholding permitted under this treaty. The actual effective rate may be lower if domestic law provides a more favorable rate independently. “Statutory Rate (United States)” shows the rate that applies when no treaty benefit is claimed. Qualified dividend rate requires: Beneficial owner is a company holding >= 10% of voting stock.
Dividends
The general dividend rate of 10% applies to portfolio investors. A reduced rate of 5% is available when beneficial owner is a company holding >= 10% of voting stock. Without the treaty, the statutory withholding rate on dividends is 30%.
Source: IRS Table 1 (Withholding Rates)
Interest
Interest payments (bank interest, bonds, loans) are subject to 10% withholding under this treaty, compared to the 30% statutory rate. This represents a 20% reduction from the statutory rate.
Source: IRS Table 1 (Withholding Rates)
Royalties
Royalty withholding rates vary by the type of intellectual property. This treaty distinguishes 4 categories, with rates ranging from 0% to 0%.
Source: IRS Table 1 (Withholding Rates)
Pensions & Social Security
Private pension distributions are taxable only in the country of residence, with no withholding at source. Government social security benefits are exempt from source-country withholding.
Source: IRS Table 1 (Withholding Rates)
Comparative Context
🇯🇵Japan's Network
Among Japan's 47 active treaty partners, the 10% general dividend rate ranks 15th (median: 15%).
| Partner | Rate |
|---|---|
| Romania | 10% |
| Saudi Arabia | 10% |
| Sweden | 10% |
| United States (this treaty) | 10% |
| Vietnam | 10% |
| Brazil | 12.5% |
| Australia | 15% |
🇺🇸United States's Network
Among United States's 64 active treaty partners, the 10% general dividend rate ranks 8th (median: 15%).
| Partner | Rate |
|---|---|
| Saudi Arabia | 5% |
| Bulgaria | 10% |
| China | 10% |
| Japan (this treaty) | 10% |
| Mexico | 10% |
| Romania | 10% |
| Austria | 15% |