Harry Potter Translator Claims Swiss Residency In Tax Row With Japan

by Ulrika Lomas, Tax-News.com, Brussels

31 July 2006

The Swiss-based Japanese translator of the global best-selling 'Harry Potter' series is reportedly facing a multi-million dollar claim for unpaid taxes by Japan's tax authorities.

Although Yuko Matsuoka claims to spend most of her time living in Switzerland, the Japanese tax authorities are of the view that she remains a Japanese resident for tax purposes, and have issued her with a bill for back taxes of about 700 million yen (US$6 million) on 3.5 billion yen of undeclared income in the three years to 2004, according to reports in the Japanese media.

Yuko Matsuoka won the rights to translate the Harry Potter novels into Japanese in 1999, but she has been registered as a Swiss resident since 2001. She argues that it is to the Swiss government, not the Japanese, that she pays tax.

A person is deemed resident in Switzerland if they live in Switzerland for not less 180 days in any one year. If, however, they remain in the same abode, the time required to be a resident for tax purposes drops to 90 days. Residence for tax purposes is also granted if a person carries on a business in Switzerland.

In Switzerland, tax is levied at federal, cantonal and communal level, but the total rate does not usually exceed 30%. However, there is considerable variation in tax rates between the Swiss cantons, and wealthy non-nationals are able to cut fiscal deals with cantonal authorities if they are not engaged in any substantial economic activity in the country.

By contrast, in Japan, Matsuoka faces paying about 50% of her income in tax, reports have suggested.

Matsuoka is said to be appealing the tax claim, and is urging the Swiss and Japanese tax authorities to hold discussions to prevent the double taxation of income.

There is already a double taxation avoidance agreement in force between Switzerland and Japan.

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