NISA (Nippon Individual Savings Account) is Japan’s tax-advantaged investment account system — the Japanese equivalent of a UK ISA or US Roth IRA. Foreign residents who pay Japanese taxes can open and use NISA accounts. Understanding NISA is one of the most valuable pieces of financial literacy for long-term Japan residents. This guide provides a practical orientation; consult a licensed financial advisor for personalized investment decisions.
What Is NISA?
NISA allows Japanese residents to invest in stocks, investment trusts (mutual funds/ETFs), and other securities with all dividends and capital gains completely tax-free within the account. Outside NISA, investment gains in Japan are taxed at 20.315% (20% income tax + 0.315% special reconstruction tax). Over a long investment horizon, this exemption is enormously valuable.
New NISA System (From January 2024)
Japan’s NISA system was significantly expanded in January 2024:
- Annual contribution limit: ¥3.6 million/year (¥1.2M Tsumitate (“growth investment”) + ¥2.4M Seichо (“general investment”))
- Lifetime contribution limit: ¥18 million per person
- Investment period: Indefinite — no longer limited to 5 or 20 years
- Tax-free period: Indefinite — holdings can remain in NISA permanently
- Account type: One NISA account per person at one financial institution
Two Components of New NISA
Tsumitate Tōshi Waku (積立投資枠) — Growth Investment Slot
- Annual limit: ¥1.2 million
- Products: FSA-approved investment trusts and ETFs only (currently ~300 products); all are low-cost, diversified funds
- Method: Regular automatic purchase (monthly, weekly); dollar-cost averaging
- Best for: Long-term, regular investing; beginners; index fund accumulation
Seichō Tōshi Waku (成長投資枠) — Growth Investment Slot
- Annual limit: ¥2.4 million
- Products: Listed stocks (including foreign stocks), investment trusts, ETFs, REITs
- Method: Lump-sum or regular; single stock selection possible
- Best for: More active investment; individual stock selection; REIT income
Opening a NISA Account
Eligibility for Foreign Residents
- Must have Japanese tax residency (住所を有する者 — person with address in Japan)
- Must be 18 or older
- Must have a Japanese individual number (My Number)
- Foreign residents on valid working visas are generally eligible
- If you leave Japan, NISA investments can remain but no new contributions allowed after departure; consult the broker for specifics
Where to Open
Major online brokerages are the standard choice for residents:
- SBI Securities (SBI証券): Japan’s largest online broker; excellent product selection; low fees; English support improving; recommended for most residents
- Rakuten Securities (楽天証券): Strong Rakuten points integration; good product selection; popular with Rakuten ecosystem users
- Monex Securities (マネックス証券): Good US stock selection; strong research tools
- Traditional bank NISA (Sumitomo Mitsui, MUFG, etc.): higher fees, limited products — generally not recommended
Documents Required
- Residence card (在留カード)
- My Number card or My Number notification letter
- Japanese bank account for fund settlement
- Online application: typically 1–2 weeks for approval
What to Invest In (Orientation)
This section provides general educational context, not personalized investment advice. Consult a licensed financial advisor for decisions suited to your situation.
- Global index funds: Funds tracking global or US stock markets (e.g., “eMAXIS Slim 全世界株式” or “eMAXIS Slim 米国株式 S&P500”) are the most popular NISA investments among long-term investors; low costs (~0.1% annual fee); broad diversification
- Japanese stock funds: Domestic equity funds; some residents prefer domestic exposure for currency alignment
- REITs (不動産投資信託): Real estate investment trusts; income-generating; popular in the Growth slot for dividend income
- Individual stocks: Japanese listed companies or ADR/DR of foreign companies available through Growth slot
NISA and Foreign Residents: Key Considerations
- Tax treaty complications: Dividends from US stocks in NISA may still be subject to 10% US withholding tax under the Japan-US tax treaty; the Japan-side tax exemption applies but foreign withholding tax is separate
- Repatriation: NISA gains are tax-free in Japan; tax treatment in your home country when repatriating depends on your home country’s rules — get country-specific advice
- Currency risk: Investing JPY in foreign assets (US stocks, global funds) means your returns in JPY terms are affected by exchange rate movements