- What NISA and iDeCo are and how their tax benefits work
- Whether foreigners can use NISA and iDeCo (spoiler: most can)
- Contribution limits for both accounts in 2025
- NISA vs iDeCo: which one is better for your situation
- How to open each account as a foreigner in Japan
Japan’s two main tax-advantaged investment accounts — NISA and iDeCo — are often overlooked by foreigners. That’s a mistake. Both are open to most foreign residents, both offer real tax savings, and both work with low-cost index funds. Here’s a clear breakdown of what each offers and which one makes sense for you.
What Is NISA?
NISA (少額投資非課税制度) is Japan’s version of a tax-free investment account — similar to an ISA in the UK or a Roth IRA in the US.
The key benefit: investment returns (capital gains and dividends) are completely tax-free within the NISA account. Normally in Japan, investment gains are taxed at 20.315%.
New NISA (Shin NISA) from 2024
In January 2024, Japan’s NISA system was overhauled significantly:
| Feature | Old NISA | New NISA (2024+) |
|---|---|---|
| Annual limit | ¥1,200,000 | ¥3,600,000 |
| Lifetime limit | No lifetime cap | ¥18,000,000 |
| Tax-free period | 5 years | Permanent (no expiry) |
| Account types | Tsumitate or General | Both combined |
| Flexibility | Limited | Sell and re-invest in same year |
The new NISA is dramatically more flexible and generous than the old system. Gains are tax-free permanently — not just for 5 years.
NISA Annual Limits (2025)
| Account | Annual Limit | Purpose |
|---|---|---|
| Tsumitate (積立) Investment | ¥1,200,000 | Monthly recurring investments |
| Growth (成長) Investment | ¥2,400,000 | Lump sum / flexible investments |
| Combined Total | ¥3,600,000/year | — |
What Is iDeCo?
iDeCo (個人型確定拠出年金) is Japan’s defined contribution pension plan — similar to a 401(k) in the US or a SIPP in the UK.
The tax benefits of iDeCo are powerful:
- Contributions are tax-deductible — reduces your taxable income every year
- Investment returns grow tax-free inside the account
- Withdrawals are taxed at a reduced rate compared to normal income
iDeCo Contribution Limits (2025)
| Employment Status | Monthly Limit | Annual Limit |
|---|---|---|
| Company employee (with company pension) | ¥12,000–20,000 | ¥144,000–240,000 |
| Company employee (no company pension) | ¥23,000 | ¥276,000 |
| Self-employed / freelancer | ¥68,000 | ¥816,000 |
| Homemaker (spouse) | ¥23,000 | ¥276,000 |
The big catch with iDeCo: you cannot withdraw until age 60. It’s truly a retirement account.
Can Foreigners Use NISA and iDeCo?
NISA — Yes, Most Foreigners Can
Eligible if:
- You have a valid residence card (在留カード)
- You are 18 or older
- You pay taxes in Japan (住民税 registered)
- You have a Japanese securities account
Not eligible if:
- You are on a short-term visa (tourist, 90-day stay)
- You are a non-resident for tax purposes
Visa type doesn’t specifically disqualify you — work visas, spouse visas, and even some long-term student visas are eligible as long as you’re resident in Japan for tax purposes.
iDeCo — Foreigners Are Eligible With Some Conditions
Eligible if:
- You are enrolled in Japan’s national pension system (国民年金 or 厚生年金)
- You are between 20 and 60 (soon to be extended to 65)
- You have a Japanese bank account for monthly contributions
Most foreigners on work visas are automatically enrolled in Japan’s pension system through their employer (厚生年金). This makes you eligible for iDeCo.
Key issue: When you leave Japan, your iDeCo balance is locked until age 60. You can choose to:
- Leave it and collect at 60
- Request a lump-sum withdrawal (脱退一時金) under specific conditions for short-stay foreigners
NISA vs iDeCo: Key Differences
| Feature | NISA | iDeCo |
|---|---|---|
| Tax benefit | Tax-free gains | Tax deduction on contributions |
| Contribution limit | ¥3.6M/year | ¥144,000–816,000/year |
| Withdrawal | Anytime | Age 60+ only |
| Best for | Flexible long-term investing | Retirement savings with upfront tax break |
| Investment options | Broad (funds, stocks) | Limited to approved funds |
| When you leave Japan | Can sell and take money | Locked until 60 (or small lump sum) |
Which Is Better for Foreigners?
Use NISA if:
- You might leave Japan before age 60
- You want flexibility to access funds
- You prioritize simplicity
- You’re focused on long-term wealth building (not just retirement)
Use iDeCo if:
- You plan to stay in Japan until retirement
- You’re in a high tax bracket (30%+ effective rate) — the deduction saves significant money upfront
- You’ve already maxed your NISA contribution
- You’re self-employed and have the higher ¥68,000/month limit
For most foreigners on work visas, NISA comes first. The flexibility to withdraw before 60 matters when your future in Japan is uncertain. Start NISA, then layer in iDeCo once you’re committed to staying long-term.
What to Invest In
Both NISA and iDeCo work best with low-cost index funds:
Popular choices among Japan residents:
- eMAXIS Slim 全世界株式 (オール・カントリー) — global index fund, extremely low fees (0.05774%)
- eMAXIS Slim 米国株式 S&P500 — US market index, low fees
- 楽天・全米株式インデックス (Rakuten Total Market) — US total market
These funds are available through most Japanese brokerages and are the most cost-efficient options for long-term investing.
How to Open a NISA Account as a Foreigner
Step 1 — Choose a Brokerage
| Brokerage | NISA | iDeCo | Foreign Friendly |
|---|---|---|---|
| SBI Securities | ✅ | ✅ | Medium |
| Rakuten Securities | ✅ | ✅ | Medium |
| Matsui Securities | ✅ | ✅ | Medium |
SBI and Rakuten are the most popular for index fund investing. Both have strong fund selections and near-zero trading fees for designated funds.
Step 2 — Open a Securities Account First
Before opening a NISA account, you need a standard securities account (特定口座) with the brokerage. Apply online with:
- Residence card (在留カード)
- My Number card or notification
- Japanese bank account for fund transfers
Step 3 — Open NISA Within the Account
After the securities account is approved, open the NISA account inside it. Only one NISA account per person is allowed in Japan — you cannot have NISA at two different brokerages.
Step 4 — Choose Funds and Set Up Monthly Investment
For the Tsumitate portion, set up automatic monthly investment. ¥33,333/month fills the ¥400,000 annual Tsumitate NISA limit.
Tax Filing Considerations for Foreigners
NISA gains are tax-free and don’t need to be reported. iDeCo contributions need to be included in your year-end tax filing (確定申告) or year-end adjustment (年末調整 through your employer) to claim the deduction.
See our tax guide for foreigners for filing details.
Frequently Asked Questions
Can foreigners open a NISA account in Japan? Yes — most foreigners with a valid residence card, a Japanese address registered for tax purposes, and a securities account can open a NISA account. Short-term visitors and non-residents are not eligible.
What happens to my NISA when I leave Japan? You can sell your NISA holdings and withdraw funds before leaving. NISA accounts must be closed when you lose Japanese residency status. There’s no penalty for early sale within NISA.
What happens to my iDeCo if I leave Japan? iDeCo is locked until age 60. In some cases, foreigners who enrolled in Japan’s pension for fewer than 10 years can request a lump-sum withdrawal (脱退一時金), but this eliminates the pension contribution credit. Consult a tax advisor if you’re planning to leave.
Is NISA better than iDeCo? For most foreigners, yes — NISA offers more flexibility (withdraw anytime), higher limits, and simpler administration. Use iDeCo as a supplement once you’re committed to staying in Japan long-term and have a high enough income to benefit significantly from the tax deduction.