Taxes In Japan & Living Comfortably

[Solong]

Afaik the employer does not have to pay the employer's share of the social security fees by enrolling them into the pension system if the teachers do not work a certain amount of hours per week (Part-time employees must enter the pension system if their working hours and days exceed three-quarters of the working time of a full-time worker in the company). There is a minimum contribution of 15020 yen per month though, although I have no idea how the Kokumin Nenkin enforces that. From time to time the weeklies report that a tarento or politician has been slacking on his contributions, although I think that the My-number-system will change that.

It's possible for some nationals to receive a lump-sum payment of their fees when leaving Japan. After doing some paperwork it's also possible to add the contribution period in Japan to one's contribution period to the German national pension system, although I'm not familiar with the details. There may be similar bilateral treaties with other countries which also have a national pension insurance.

Immigration would never issue a work visa to a person being paid less than 3,000,000 yen. So you are referring to somebody who is a permanent resident or has a marriage visa, or a person with a work visa that has a 2nd job.

Yes, funds you put into the Japanese pension system is transferable to social security plans of other countries. However, usually when you are leaving Japan and your visa has expired. You can't do it while your Japanese visa is valid or has any significant amount of time on it. You must pay into the Japanese pension system, then when or as you are leaving, attempt to withdrawal or transfer the money into another social security plan.

My understanding is that immigration focuses on taxes, then considers your health and pension relative to your pay and job. There appears to be the assumption that the company you work for will take care of this, because they are offering this as required by Japanese law. So immigration wouldn't look into this, unless they suspect something. And if they investigate you and you have not paid into the Japanese health and pension plans, then that can cause problems in getting your visa renewed or permanent residency. Keep in mind that people under marriage visas is a different situation than those under work visas, because immigration will look at your spouse. If you are married, they are looking at if your spouse is paying health and pension, and total household income of over 4,000,000 yen.

For example on how a foreigner can have a problem. If you apply for permanent residency from a work visa, but have never paid health and pension plus have a relatively low salary than the application can be denied. Remember, paying for health and pension is a requirement for Japanese, so nobody should think that a foreigner trying to become a permanent resident would be exempt.

 

[Solong]

Would that be z=$yy-$xx?

I second that you should get a tax accountant or at least consult with the tax office directly if you have a simple income structure. The US tax law is very complicated and the penalties for non-compliance are severe. If one is an expat though, the company they are working for may provide tax consultancy services automatically.

I do remember reading that some US residents who are living abroad long-term are just giving up their US citizenships due to the new tax requirements which came to effect with FATCA (Foreign Account Tax Compliance Act).

I've heard this too, where U.S. or other foreign citizens give up their citizenship and become Japanese citizens, due to tax complications/being hassled, or for convenience (living in Japan a long time; marriage or kids with a Japanese).

 

[split]

And if they investigate you and you have not paid into the Japanese health and pension plans, then that can cause problems in getting your visa renewed or permanent residency.

No (visa-wise).
“enrollment in the social system will in no way be tied to visa renewal.”
A group of foreigners fought this and reversed this.

http://www.freechoice.jp/


On another note, as mentioned previously here, the lack of requirement of the employer to pay the insurance if the employee works less than three quarters of a regular full time employee started the whole 29.5 hour "semi full-time" bullshit status.

 

[Solong]

NO.
“enrollment in the social system will in no way be tied to visa renewal.”
A group of foreigners fought this and reversed this.

http://www.freechoice.jp/

You are not paying attention to the previous posts, and are putting up old information, that can cause other foreigners problems. There is health insurance and pension plans. These are separate. The Japanese law requires enrolling in both. However, special consideration was won on not requiring foreigners to enroll into the HEALTH insurance plans ONLY, not to avoid the pension plans (actually read the website). This was primary to avoid the issue of back payments.

1) Companies will usually and automatically enroll you in both health and pension plans.

A large percentage of foreigners on work visas will not ever get the opportunity to avoid them, as relative to a condition or expectation of their employment.

2) Immigration will usually not provide you a work visa to a company that does not offer health and pension plans, or doesn't pay enough money for you to enroll in them.

This means they have a calculation on minimum salary, before issuing a work visa. Considered to be at least 3,000,000 yen but can be significantly higher.

Nothing stops immigration from investigating the company that they will issue the visa for or setting the minimum salary requirement higher, before approving a work visa.

3) Reasons for why you don't have health insurance or paid into the pension plan can be investigated.

This isn't the same as them outright denying you a visa for not having health insurance. They can simply deny it for other reasons, per their investigation, like salary requirements or the company not meeting certain requirements. Also keep in mind that immigration rulings on exactly why they are denying a visa can be secret or they avoid telling the foreigner any specific reason why.

These issues can pop up during visa renewal or application for permanent residency. Don't be the fool that attempts to apply for permanent residency from a work visa that has not enrolled in neither health or pension plans, and falls below their minimum salary calculations. If applying from a marriage visa, see how that will work out for you if your spouse isn't enrolled in health and pension plans, and/or household income is below 4,000,000. It's an extra 500,000 yen per kid. Have 2 kids then the minimum household income is often considered 5,000,000 yen.

Oh, and this is straight from the mouths of immigration lawyers and other expats, who had issues, that I have talked to. Ignore the advice at your own peril.

4) Even minus the health insurance, your Japanese tax and pay deductions can be about or over 40%

Depends on your salary, but the more money you make, the more they take.

 

[split]

Sorry, I should have made that more clear. Visa respective to solely the health insurance and not the pension plan is what I was inferring to. But yeah, I wonder if that law hasn't been reinstated since then.

 

[Goiter]

Some pretty terrible tax understanding and advice on this thread. From amongst the low hanging fruit:

1. Japan has a progressive tax system that tops out at 40%. Statements like income tax is 20% are just plain wrong. You pay a different rate for the first 1st mil JPY than for pay for the 31st mil JPY

2. Prefectural and local taxes do not vary by location. Prefectural is always 4% and local is always 6%. This is not Switzerland where you are able to cherry pick your cantonal tax rate.

3. Capital gains tax is 20%

4. If you are a US citizen and give up your citizenship, you are in theory responsible for paying exit tax on unrealized gains as you pass through the door - if you have more than 2 mil USD in assets. There is an exclusionary amount for about the first 600k in gains.

5. Guess what. Japan also now has an exit tax regime, even if you aren't a Japanese citizen. If you have investments in Japan, I would sure as shit investigate it.

Anyway, I'm not a tax expert. I just know what I pay and why.

 

[MossBoss]

By the way, does anyone know any tax accountants who offer reliable advice about picking up prostitutes?

 

[Expired Beef!]

The article merely states that if you owe $50,000 that the IRS can go after your passport. It is an option. Any good tax lawyer won't let that happen and people who owe that much have millions anyway and thus the passport will never be taken away unless the person pulls a Eduardo Saverin. That is why they want to go after passports, but he is not a US citizen anymore so, well they can't really stop him from travelling around. And finally it says this at the end of the article, "It is not clear that this measure will pass the constitutional test if it is challenged."

 

[Solong]

Some pretty terrible tax understanding and advice on this thread. From amongst the low hanging fruit:

1. Japan has a progressive tax system that tops out at 40%. Statements like income tax is 20% are just plain wrong. You pay a different rate for the first 1st mil JPY than for pay for the 31st mil JPY

2. Prefectural and local taxes do not vary by location. Prefectural is always 4% and local is always 6%. This is not Switzerland where you are able to cherry pick your cantonal tax rate.

3. Capital gains tax is 20%

4. If you are a US citizen and give up your citizenship. You are in theory responsible for paying exit tax on unrealized gains as you pass through the door - if you have more than 2 mil USD in assets. There is an exclusionary amount for about the first 600k in gains.

5. Guess what. Japan also now has an exit tax regime, even if you aren't a Japanese citizen. If you have investments in Japan, I would sure as shit investigate it.

Anyway, I'm not a tax expert. I just know what I pay and why.

You are very wrong, and I'm in doubt that you actually live or work in Japan. That, or not supporting yourself or filing your own taxes. Please don't pretend to know what you are talking about, when you don't.

I'm telling it like it IS. Like how expats and people working in Japan can actually look at their tax and pay deductions, or how tax or company accounts will tell you. ASK them, they will tell you the same as what I'm saying.

1) While the Japanese tax system is progressive, your health and pension is deducted.

At an income of 10,000,000 (or above 9,000,000) the tax rate is actually 33%, but is reduced because of medical and pension are ALSO taken out. So the actual tax rate is then reduced to 20%, per your (full employment and under work visa) pay stub in Japan or asking your company accountant.

https://www.jetro.go.jp/en/invest/setting_up/laws/section3/page7.html

2) The local taxes DO vary. Can be between 4% to 10%.

This is very indicative that you attempted to get cloudy Internet information, and have NOT gone to a Japanese tax office or city office. The Internet often lists it as 10%, for simplification purposes, not what the actual Japanese prefecture and ward will charge you.

You have a prefecture, called -ken or -to, and then a ward which is -ku. For Americans, this is like state and city. The tax rate of each -ken and -ku can be DIFFERENT. It depends on where you live in Japan AND your personal income. The more you make, the higher it is.

Thus combined, can vary from and be between 4% to 10%. If it was always 10% for local taxes, that just makes the overall tax percentage higher.

Furthermore, you destroyed your own argument, and don't even realize it. If you add 10% (local taxes) + 33% (progressive income tax above 9,000,000 yen) = 43%. So exactly what the hell are you arguing with me about?

It's 20% (reduced because health/medical and pension also taken out) + between 4% to 10% (I put at 7.5% as what many can expect around this and if in Tokyo) = 27.5%

Then add 5% (health) + 9% (pension/like Social Security for Americans) = 14%. So, 27.5% + 14% = 41.5% in taxes and pay deductions.

Thus, those who are single and making over 9,000,000 yen, shouldn't be surprised to see more than 40% of their money snatched. And that's before consumption taxes (8%).

3) I posted about personal income and national income tax rate. You are confusing yourself.

4 and 5. I didn't post any points that were an argument to those.

 

[Goiter]

Thanks for the Japanese lesson on the meaning of -ku, -to, and -ken. Super helpful. Does this mean -fu and -do aren't included? I just want to be clear. Does this mean there are no local taxes in Osaka and Hokkaido? That's so cool, but I'm so confused.

 

[Solong]

Thanks for the Japanese lesson on the meaning of -ku, -to, and -ken. Super helpful. Does this mean -fu and -do aren't included? I just want to be clear. Does this mean there are no local taxes in Osaka and Hokkaido? That's so cool, but I'm so confused.

Didn't say those can't be included. It was to help you understand that there is variation in local tax rates. You instead ran away from that argument, then presented a frivolous one. Look, this is for the foreigners planning on living in Japan or are confused about taxes and deductions, not just slinging mud for the sake of it.

Also, knowing how much money will be taken out in taxes and pay deductions means how much left on prostitutes or whatever people are doing, how much you can save, and how comfortably you can live in Japan.

 

[Goiter]

Please dear god tell me don't work in finance. Actually please do tell me so I know what to short tomorrow (20% capital gains tax in Japan).

Anyway, whatever. Good luck with your taxes this year. I hope someday I get a chance to live in Japan like you.

 

[Solong]

Please dear god tell me don't work in finance. Actually please do tell me so I know what to short tomorrow (20% capital gains tax in Japan).

Anyway, whatever. Good luck with your taxes this year. I hope someday I get a chance to live in Japan like you.

20% is the national income tax rate you will see (I explained why above), and can expect to be taken out of your pay, if making an income above 6,650,000. Capital gains tax is a very different discussion.

 

[Solong]

Thank you. A very informative post. So if I apply for permanent residency and have no trouble obtaining it...will my situation be the same since I'm still a spouse visa holder or will it be a different ball game?

If you become a permanent resident, you have more leeway and they usually won't dig into you so much. It's a once per every 7 years check, under normal circumstance. It's more a matter of if you get divorced or live by yourself. You are expected to be able to support yourself, do legal work, and pay all required taxes.

Usually they do a strong investigation before giving you permanent residency, so if you did get it, it's usually because they think you are an acceptable risk or in a stable financial situation.

 

[Goiter]

I've never been to Japan, but I hear the PR application process is a joke. You fill out some forms, get a bank statement, one from the cops, file the papers and a few months later it comes in the mail.

 

[Solong]

I've never been to Japan, but I hear the PR application process is a joke. You fill out some forms, get a bank statement, one from the cops, file the papers and a few months later it comes in the mail.

Please don't tell people bad information like that. A huge percentage of foreigners are denied permanent residency or it takes them years to get it, and they applied 2 or 3 times before getting it.

And when they are denied permanent residency, it can be over tax issues or lack of financial stability, in addition to any legal problems they might of had.

 

[TokyoJoeblow]

If you become a permanent resident, you have more leeway and they usually won't dig into you so much. It's a once per every 7 years check, under normal circumstance. It's more a matter of if you get divorced or live by yourself. You are expected to be able to support yourself, do legal work, and pay all required taxes.

Usually they do a strong investigation before giving you permanent residency, so if you did get it, it's usually because they think you are an acceptable risk or in a stable financial situation.

Well, I have also read that they are stricter on those unmarried and on work visas. I assume that I won't be able to apply for a Japanese passport until after I have obtained permanent residency and have become naturalized as well?

The reason I want to try to get a Japanese passport as soon as possible is because this little gem right here:

http://www.forbes.com/sites/robertwood/2015/12/04/irs-power-over-passports-signed-into-law/

 

[RandomTokyoGuy]

@TokyoJoeblow
So you already got a tax debt of more than 50k? You must be running some good side business

 

[TokyoJoeblow]

@TokyoJoeblow
So you already got a tax debt of more than 50k? You must be running some good side business

No, I'm not in debt at all. It is those penalty fees that worry me. I don't really want to have to file a damn tax return on principle alone. I'm married, work and pay taxes here in Japan and I have a new non-US life here...why does the greedy US government have to go digging into everyone's pockets all the time? It is ridiculous and a giant pile of bullshit. Our forefathers (speaking about us from the US) went to war over a tax system much less terrible that what we have today!

The only way out of the corrupt US tax system is to just obtain Japanese citizenship and renounce my US citizenship...

 

[Solong]

Well, I have also read that they are stricter on those unmarried and on work visas. I assume that I won't be able to apply for a Japanese passport until after I have obtained permanent residency and have become naturalized as well?

The reason I want to try to get a Japanese passport as soon as possible is because this little gem right here:

http://www.forbes.com/sites/robertwood/2015/12/04/irs-power-over-passports-signed-into-law/

It is said that it can be easier to obtain Japanese citizenship than permanent residency. You do NOT need to become a permanent resident first, but can apply for it directly. Japanese citizenship is possible after living in Japan for 5 years. However, they will: inspect your home, make sure you don't have any type of criminal past, make sure that you renounced the citizenship of your country, that you can support yourself, and give you crazy amounts of paperwork to fill out.

Another advantage of Japanese citizenship over permanent residency is that they supposedly have a 99% approval rate. Which is a bit shocking, but might be related to the issues they have with Koreans and Chinese living here, and trying to encourage them to become Japanese citizens. Many Koreans refuse to switch over to Japanese citizenship, because the Japanese government after WW2 forced them to take special permanent resident status or leave, and the history over it is a mess. More recently, there seems to have been a strong push to encourage Koreans to become Japanese citizens, though some right-wing groups rather they leave.

If you are an unmarried person on a work visa trying to obtain permanent residency, immigration is known to give people hell and there is a high application rejection rate. So, if you don't want to keep the citizenship of your country and rather renounce it, then becoming a Japanese citizen is an option. Do keep in mind though that you are still required to pay all Japanese taxes and enroll in the health and pension plans. There is no escaping that, but at least you won't have to deal with taxes for 2 countries at the same time.

 

[KJos]

You are very wrong, and I'm in doubt that you actually live or work in Japan. That, or not supporting yourself or filing your own taxes. Please don't pretend to know what you are talking about, when you don't.

I'm telling it like it IS. Like how expats and people working in Japan can actually look at their tax and pay deductions, or how tax or company accounts will tell you. ASK them, they will tell you the same as what I'm saying.

1) While the Japanese tax system is progressive, your health and pension is deducted.

At an income of 10,000,000 (or above 9,000,000) the tax rate is actually 33%, but is reduced because of medical and pension are ALSO taken out. So the actual tax rate is then reduced to 20%, per your (full employment and under work visa) pay stub in Japan or asking your company accountant.

https://www.jetro.go.jp/en/invest/setting_up/laws/section3/page7.html

2) The local taxes DO vary. Can be between 4% to 10%.

This is very indicative that you attempted to get cloudy Internet information, and have NOT gone to a Japanese tax office or city office. The Internet often lists it as 10%, for simplification purposes, not what the actual Japanese prefecture and ward will charge you.

You have a prefecture, called -ken or -to, and then a ward which is -ku. For Americans, this is like state and city. The tax rate of each -ken and -ku can be DIFFERENT. It depends on where you live in Japan AND your personal income. The more you make, the higher it is.

Thus combined, can vary from and be between 4% to 10%. If it was always 10% for local taxes, that just makes the overall tax percentage higher.

Furthermore, you destroyed your own argument, and don't even realize it. If you add 10% (local taxes) + 33% (progressive income tax above 9,000,000 yen) = 43%. So exactly what the hell are you arguing with me about?

It's 20% (reduced because health/medical and pension also taken out) + between 4% to 10% (I put at 7.5% as what many can expect around this and if in Tokyo) = 27.5%

Then add 5% (health) + 9% (pension/like Social Security for Americans) = 14%. So, 27.5% + 14% = 41.5% in taxes and pay deductions.

Thus, those who are single and making over 9,000,000 yen, shouldn't be surprised to see more than 40% of their money snatched. And that's before consumption taxes (8%).

3) I posted about personal income and national income tax rate. You are confusing yourself.

4 and 5. I didn't post any points that were an argument to those.

@Solong knows what he is talking about. The information provided by him is quite accurate based on my experiences. The actual tax rate and calculation is quite complex depending upon income slab, dependents declared, their income, other deductions like insurance etc.

Inhabitant tax (prefectural tax) varies by location. It is probably highest in Tokyo 23 ku and lower in surrounding Kanagawa, Chiba etc.

I am not so sure about capital gains, but I had heard during forex trading days that one need not declare until 200,000 yen a year in gains. But beyond that one had to declare and pay 20% on it. Not sure if the 20% was just a withholding or the actual tax rate.

In many cases, when a company pays (e.g. When a person is not an employee but on short term contract scenario), they just withhold 20% tax since they don't have enough information to calculate actual tax rate. Individual is then supposed to file their own taxes at end of the year and pay (or refund) the differential.

 

[Sudsy]

What Solong is saying is somewhat accurate based on a taxable income of 10 million yen, which is markedly different from a gross salary of 10 million yen.

Keep in mind that basic deductions, dependents, insurance premiums, and social insurance contribution all reduce your taxable income, so that a gross salary of 10 million yen will usually result in a taxable income around 5.5 million yen at the national tax level, and the overall tax and social insurance burden on a 10 mil gross salary will be around 23-27%, depending on the number of dependents. To get to the point where your social insurance and tax liabilities equal 40% of your gross salary you would need to be making more than 30 million a year (and have a completely inept personal accountant).

If you want to work out your approximate tax burden, HTM (a local payroll company) has a relatively accurate though somewhat simplistic calculator on their site.

http://www.htm.co.jp/calculators-monthly-payroll-japan.htm

 

[Goiter]

Lots of good stuff here. I'd be keen to see the list of different prefectural/local tax rates by jurisdiction. Could someone please post a list in Japanese or English? It would be a big help to those of us with less experience in Japan. It might also help some folks in making a decision where to live. Thanks!

 

[just4fun]

Will Japan tax foreign social security income?

 

[Wwanderer]

give you crazy amounts of paperwork to fill out.

That's the God's truth. Japanese bureaucrats love making people do mind numbing paperwork the way mongers love BBBJs... I think that Japan probably consumes more wood in the form of paper for govt forms to fill out than for disposable chopsticks.

-Ww