The British Embassy at Tokyo
 

The British Embassy Tokyo will reduce its size by 20% in 2014. The British Embassy Tokyo is located at Chiyoda-ku, nearest station is subway Hanzomon station, and occupies 35000 square meter of land. The British Embassy Tokyo has resided at the current location since 1872 where Japanese government owns 100% of the land and the British government has a sole right to rent the land. For 2013 the British government has paid 81 290 000 JPY (478 072 GBP) to Japanese government for land lease.

The British government has indicated to Japanese government that they wanted to reduce expense at the embassy. The British government and Japanese government came to the agreement that the British government will return 20% of the right to rent the land, in exchange Japanese government will transfer the land right of remaining 80% of the land to the British government. Both party has agreed as equal exchange.

The British government will no longer have to pay the rent for the land to Japanese government. Japanese government will gain 7000 square meter of free land, which currently valued at 14 000 000 000 JPY (823 350 00 GBP or US$ 134,531,000).

134 million dollar for 7000 square meter of land, well, sure it is on the prime land in the middle of Tokyo… British government will own the land means British government now have to pay property tax, isn’t it? I am guessing that will be lot less than what British government paid for land lease? Or foreign government exempt from paying property tax on embassy land? How does it work?

The Brits seem bad at negotiating a deal. Apparently the US government pays 2.5 million JPY a year as rent for its embassy grounds, 13,000 square meters. Then again, that's the privilege for having invading, taking over, and running the country from 1945 to 1952.

According to the Japanese language version of Wikipedia, the rent was increased to 7 million JPY p.a. for 1998-2007, 10 million JPY for 2008-2012 and 15 million JPY for 2013-2027. The US government had refused to pay the rent for nearly 10 years until 2007 citing an agreement dating back to 1896. :rolleyes:

According to the government of Japan, the reason for non-payment from 1998 was the lack of mutual agreed fair rent. The law in Japan provides for this state of affairs to exist and although from a landlord's perspective (trust me I know :-) ) it can be hugely irritating, there is a non-confrontational nature to the way courts approach these claims.

Japan suggested a higher rent, the U.S. said that was not appropriate, they go into stalemate until one or the other caves. That is a daily event in the rental market here. The numbers are irrelevant as there is no market price basis in Japan. The closest approximation is called "comparables". Agreeing comparables is an entirely different kettle of sushi.

http://www.japantimes.co.jp/news/200.../#.Uy4V6oWN4TA

Narihodo ! Kind of sounds like non-confrontational squatting......

Well that's much better then! I think mjm can back me up that these are very close to current rental market values in Toranomon/Akasaka for the size of that property.

Heh?

Give or take. ;) As i say, defining comparables are a whole different kettle of sushi.

Are you saying that market rent for a piece of property the size of the American Embassy is 15 million yen per annum. If so I have a bridge I'd like you to sell me.

Sounds about right. Right, mjm?

To answer the questions raised at the end of the OP, there is an exemption from property taxes for embassies and consulates as well as their residential facilities:

地方税法第３４８条９項
市町村は、外国の政府が所有する次に掲げる施設の用に供する固定資産に対しては、固定資産税を課することが できない。ただし、第三号に掲げる施設の用に供する固定資産については、外国が固定資産税に相当する税を当 該外国において日本国の同号に掲げる施設の用に供する固定資産に対して課する場合においては、この限りでな い。
一 　大使館、公使館又は領事館
二 　専ら大使館、公使館若しくは領事館の長又は大使館若しくは公使館の職員の居住の用に供する施 設
三 　専ら領事館の職員の居住の用に供する施設

So if I prove that my cat Smidgen lives in his own little world, and he's the ambassador to Japan from that little world, I can get a break on the rent if I put a nice placard on the outside that says "スミチェン世界大使館"?

A little insight into defining comparables. Show me another building of equivalent size and age, in the same area, and offering the same facilities.

Same would apply to your bridge ;) Way more fun to be the landlord sometimes. Except for when it isn't.

On this does it get applied the same way the deductions do for a Yugengaisha? i.e. you can deduct part of the home but not all of it as you only house part of actually conducting business?

I doubt it. As I understand it, it's a basic convention in diplomacy that embassies and their people don't pay taxes. Period. Even if part of the embassy is used to house someone rather than for office space, does not make a difference.

For many years, London has been trying to negotiate for US diplomats to pay London's congestion charge. No way. The embassy sees it as a tax and refuses - not just for cars on official business.