This is part of Japan's domestic brokerage and tax system. Non-resident investors and those holding shares through overseas brokers may be subject to different rules.
Four ways to receive dividends in Japan
There are four ways to receive dividends on listed Japanese shares:
- Proportional distribution method: each brokerage pays dividends into your account there, in proportion to the shares you hold with that broker
- Registered dividend account method: dividends on all your holdings, across all brokers, are paid into a single bank account you designate in advance
- Dividend slip method: a payment slip is mailed to you by the issuing company, which you take to a Japan Post Bank branch or post office to cash
- Stock-by-stock designation method: you designate a receiving account for each individual stock (new elections of this method may no longer be available following changes to JASDEC's system)
Only the proportional distribution method makes NISA dividends tax-free
Of these four methods, dividends on shares held in a NISA account are tax-free only if you have elected the proportional distribution method. If you use the registered dividend account method or the dividend slip method instead, dividends on shares in your NISA account remain taxable even though the account itself is a NISA account. If you want the NISA tax exemption to apply to your dividends, you need to change your dividend receipt method to the proportional distribution method through your brokerage.
The setting applies per name, not per account
When you elect the proportional distribution method, Japan Securities Depository Center (JASDEC) matches all accounts registered under the same name and applies the setting uniformly across every one of them, including taxable accounts, not just your NISA account. You cannot set the proportional distribution method for your NISA account only while keeping a different method for your taxable account. Please confirm the exact procedure with your own brokerage.
This article reflects the rules as of the time of writing (September 2026). NISA rules and JASDEC's handling may change in the future, so please check the National Tax Agency or your own brokerage for the latest information.