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working freelance/self employed in Japan


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I'm a web developer and my boss is talking about going 100% virtual and having staff work from home. I would effectively be self employed and responsible for my own tax and so on, although I would be getting paid a regular 9-5 salary.

 

I'm wondering if anyone has a similar situation like this set up, and particularly any info they have on the tax situation (ie. can I get away with paying no tax, or if I have to pay japanese tax how much is it?).

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if you're living/working in Japan and self-employed, I think the basic rule for taxes is 10% of the invoice if it's less than 1 million yen a month. If it runs over (1.5 million yen) then you have to lop off 20%. Depending on how much you can deduct for expenses, you may or may not get a chunk of it back. But if you deduct too much and show a really low income, you may have problems qualifying for housing loans, kodan housing, etc.

 

Besides taxes, you should discuss who is going to pay for the other stuff (eg health, pension, etc). Also, you will probably have to file your own taxes year-end.

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whats a cba? and what is kodan housing?

 

10% is decent, better than the 22% income tax and all the other crappy taxes (17.5% vat, council tax) I pay in the UK. I was also quite stunned to see how cheap houses are in japan away from the urban centres, and also mortgage rates seem to be only 2.5% unless I am mistaken.

 

I guess one expense will be health insurance, is anyone here covering their own insurance?

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High?

This place compared to OZ is a tax haven!

Remeber you go heaps of deductions and depending on your style of business you might ba able to do alot of cash jobs which might not make it to the books.

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Can you tell me a bit about that as its nigh impossible for me to get info on this. Ive looked at the tax sites but its hard enough trying to work out what class of taxpayer I would be (ie. non-resident etc).

 

Looking at the info I have seen, it seems I would be paying about 33% tax. In the UK I pay about the same, however I get tax credits for having a child which brings it down to about 25%, but then on top of that 10% of that 25% is national insurance (state pension contribution).

 

Basically I would be self employed but my boss would pay me a regular salary at the end of each month. So no cash jobs. I'd be working at home.

 

I thought a few people on here were self employed so I was hoping for some sort of general remarks like 'in my case Im paying about 20% tax in total' etc etc.

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May not be much help but.....

 

We run a small company here in Japan so we have company tax and indivdual tax to deal with.

 

Company tax for us is about 30% of the profit, so the idea is to have as smaller profit as possible, and so almost everything we do, we try to get through as expenses (nights out are "entertaining clients" etc). Basically we get a ryoshusho (offical receipt) for everything.

 

The company pays us a salary which we manipulate to get the best results. My wife draws the maximum she can while still being counted as dependent on me.

 

Good thing is that as 1 have 4 kids and a wife dependent on me I can earn something like 400,000yen a month and pay almost no income tax, and the local authority sends me another 120,000 - 140,00yen every 3 months as income support for dependants.

Other benefits are that as long as we keep ourselves in the low tax paying grade until the littlest kids are in school, we pay minimal chidlcare expenses.

 

On the negative side, we tried running the company at a small loss to save on that tax, but the banks are not happy to loan you money (to the company or personally) if you are declearing a loss.

 

As a New Zealander, I pay no tax in NZ except for on the interest on investments.

 

Good news is that we have finally got things mastered and I recently bought a house on a loan from the housing loan corp at ......wait for it ......

 

 

2.5% flat rate for 30 years. \:\)

Guess who is one very happy chappy.

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Bobby 33% sounds highly unlikely especially once you take off the deductions for wife and child (same as the UK).

If you are self empolyed then you and work from home you can claim your home expenses as deductions. I can claim my rent, utilities, anything for my home especially pizza and sake (for those important meetings ;\) )

If you did the blue form you get a 500,000 yen credit plus your family credits. At the end of the day you may on paper only just be making enough to survive.. Benefits, little or no tax payable, low health insurance, low or free hoikuen fees etc. Down side - as miso said, banks don't like to give you money.

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Bobby 33% sounds highly unlikely especially once you take off the deductions for wife and child (same as the UK).

If you are self empolyed then you and work from home you can claim your home expenses as deductions. I can claim my rent, utilities, anything for my home especially pizza and sake (for those important meetings ;\) )

If you did the blue form you get a 500,000 yen credit plus your family credits. At the end of the day you may on paper only just be making enough to survive.. Benefits, little or no tax payable, low health insurance, low or free hoikuen fees etc. Down side - as miso said, banks don't like to give you money.

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 Quote:
Originally posted by misorano:

and the local authority sends me another 120,000 - 140,00yen every 3 months as income support for dependants.


2.5% flat rate for 30 years. \:\)
Guess who is one very happy chappy.
Wow, I nnly get 5000 a kid so 4 man for 4 months. I'm moving to your town!
Congrats on the house miso, is it in Japan?
One thing with the low rates here is the money you save in interest you will still have to use in 30 years to rebuild the house... that's if it's in Japan...
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Great info - thanks. Very useful to hear that there is child benefit in japan, i didnt know that.

 

Congrats on the house. I was looking at the hachijuni ginko website and I noticed mortgage rates are only 2.5%, thats pretty decent, especially if the property market is finally starting to pick up as I read somewhere. I did look at some houses in Hakuba on the net, I couldnt believe how cheap they were (compared to tokyo/anywhere in the UK). I guess no-one wants to live in hakuba, I'd love it for the skiing and hiking, but it would be hard having no access to decent shopping and restaraunts etc. Nowhere is perfect though.

 

>> Bobby 33% sounds highly unlikely especially once you take off the deductions for wife and child (same as the UK).

 

Well my wife is Japanese which means that the UK government basically ignores her - she is 'not eligible for public funds' which means she effectively doesnt exist unless she starts working in which case she will suddenly start to exist again in order to pay income tax. You can see I dont like the UK much. So I get no deductions for her, but I do get child benefit (£17/week) and tax credits (still dont kow how much yet, probably about £250/month).

 

So in Japan, if my wife wasnt working, I could kind of pay her a salary or something in order to reduce my taxes?

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Yeah I know, i just took as it a chance to moan about the UK taxes because they dont give me deductions \:\)

 

Im interviewing for a fulltime job now anyway in Japan so I may not end up freelance. But again Im having a nightmare finding out tax rates in Japan.

 

The official website (http://www.mof.go.jp/english/tax/taxes2005e.htm) seems to suggest income tax is as follows:

 

"...if the income recievable is between 3,300,000yen - 6,600,000yen, the deduction is 540,000yen plus 20% of salary"

 

ie. craploads of tax.

 

However another site (http://www.worldwide-tax.com/japan/japan_tax.asp) says:

 

INCOME: 1 - 3,300,000 / TAX: 10%

INCOME: 3,300,001 - 9,000,000 / TAX: 20% of base exceeding 3,300,000

 

ie. significently less tax.

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Bobby, if tax was so bad, half of us wouldn't be here! the average english teacher earning 250,000 doesn't pay that much tax. When I was doing that gig I don't think I paid more than 10% tax. and I got some back at the end of the year ( a few man)

I'll ask a mate, and get back to you.

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OK I'm gonna assume a salary of 4,500,000 would work out like this:

 

3,300,000 at rate of 10% = 330,000 tax

 

+

 

1,200,000 at rate of 20% = 240,000 tax

 

= total of 570,000 tax per year.

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