Yes, generally speaking you don't charge sales tax to overseas companies even if you have revenue over 10mil in a year. There are exceptions but when I read the rules, they seem pretty unlikely for most people.
Resigning from seishain position, going freelance
Re: Resigning from seishain position, going freelance
Re: Resigning from seishain position, going freelance
I posted this to a thread about redundancy, but think it is equally relevant to your situation:
(Sorry for double post)
Some of the Money Stuff, you need to know:
...
2. You will be on the hook for Residents' Taxes - You are currently still paying Residents' Taxes for 2022 income, and you still owe (as of April) a couple of months, for which City Hall will send you payment slips... and you will receive the bill for 2023 Residents' Taxes in June, at 10% of total 2023 Taxable Income, payable in one shot or 4 quarterly installments, unless you find a new job and start paying it monthly again from payroll.
10% of 2023 Income payable in June/July 2024,
or
10% of 2023 Income / 4 payable in July, Sept, Jan and April 2025.
If you leave after June, you will still owe the outstanding tax for 2023 that hasn't already been paid through Payroll, and you will see a bill for Residents' Taxes at 10% of 2024 Total Taxable Income in June 2025.
3. You currently pay half of your Household Health Insurance Premium and your Employer Pays Half, up to a maximum of about Y1M per year (about Y500k each), divided by 12 (or max about Y43,000 per month)... This is currently based again on 2022 Income, and will be reassessed in May on 2023 Income at about 12% of Household Income up to a maximum of about Y1M (or about Y86,000 per month)...
If your employer provides Private Health Insurance Union coverage, you may have a narrow window to take the opportunity (60 days) to apply to continue with that provider, or you can switch to the National Health Insurance Plan, until you find another job, when the new employer may offer another plan.
Both Premiums, Private or National, will be based for the next year (May to April) on 2023 Total Taxable Income. You will have to pay the total premium, so double what you are currently paying, as you will also have to pay the employer's half, up to the maximum of about Y1M (or about Y86,000 per month)...
If you are still with the Private Provider, the premiums are payable every month (12 months of the year) and will stay high for the maximum of 2 years' extended coverage.
If you go with the National Health Insurance, the premiums are payable every month (but only 10 months of the year - June to March) and will remain high until March 2025, but will then fall from June 2025 as they will then be based on 2024 Total Household Income, which will probably be lower...
You would need to do the calculations, but it may be cheaper to stick with your current provider for the first year, and then switch to NHI for the second year, when the NHI Premiums will drop, assuming you haven't found a new job and switched to the new employer's plan.
Remember, you are comparing 12 payments of Private against 10 payments of NHI for the same 1 Full Year of coverage.
4. You will be responsible for your own Pension Payments - Your Employer currently pays Half of your 18.3% of Gross Income National Employee Pension Insurance - Kosei Nenkin, and you pay half (9.15% each). While you are unemployed, you will switch to the National Basic Pension - Kiso Nenkin, and the monthly contribution is currently Y16,520 per month. You can opt for the addition cover - Fuka Nenkin at an additional Y400 per month if you wish. There is a slight discount if you pay in bulk. Oh, and Gaijin86 pointed out, for you Spouse as well, if not employed...
Additionally, you should arrange your own Additional Pension, iDeCo, maximum contributions Y68,000 per month.
6. If you receive any Taishokukin - Retirement Lump Sum, including any payout of company pension, etc., it will be taxed completely separately than any other Income Tax calculations for any tax year...
You are entitled to the Special Tax Deduction of Y400,000 per year, so anything up to that amount would be completely Tax Free.
Anything over that amount, you would then divide by 2, and apply standard Marginal Tax Rates, so the taxation is very low compared to normal salary income tax rates.
Income Tax Rates 総所得金額の合計、復興特別所得税、住民税の税率
Band (Taxable Income) = Marginal Tax rate (％) National + Reconstruction + Residents' Taxes = Total
Under 1,950,000 = 5% + 0.105% + 10% = 15.105%
1,950,000 to 3,300,000 = 10% + 0.21% + 10% = 20.21%
3,300,000 to 6,950,000 = 20% + 0.42% + 10% = 30.42%
6,950,000 to 9,000,000 = 23% + 0.483% + 10% = 33.483%
9,000,000 to 18,000,000 = 33% + 0.693% + 10% = 43.693%
18,000,000 to 40,000,000 = 40% + 0.84% + 10% = 50.84%
Over 40,000,000 = 45% + 0.945% + 10% = 55.945%
(Sorry for double post)
Some of the Money Stuff, you need to know:
...
2. You will be on the hook for Residents' Taxes - You are currently still paying Residents' Taxes for 2022 income, and you still owe (as of April) a couple of months, for which City Hall will send you payment slips... and you will receive the bill for 2023 Residents' Taxes in June, at 10% of total 2023 Taxable Income, payable in one shot or 4 quarterly installments, unless you find a new job and start paying it monthly again from payroll.
10% of 2023 Income payable in June/July 2024,
or
10% of 2023 Income / 4 payable in July, Sept, Jan and April 2025.
If you leave after June, you will still owe the outstanding tax for 2023 that hasn't already been paid through Payroll, and you will see a bill for Residents' Taxes at 10% of 2024 Total Taxable Income in June 2025.
3. You currently pay half of your Household Health Insurance Premium and your Employer Pays Half, up to a maximum of about Y1M per year (about Y500k each), divided by 12 (or max about Y43,000 per month)... This is currently based again on 2022 Income, and will be reassessed in May on 2023 Income at about 12% of Household Income up to a maximum of about Y1M (or about Y86,000 per month)...
If your employer provides Private Health Insurance Union coverage, you may have a narrow window to take the opportunity (60 days) to apply to continue with that provider, or you can switch to the National Health Insurance Plan, until you find another job, when the new employer may offer another plan.
Both Premiums, Private or National, will be based for the next year (May to April) on 2023 Total Taxable Income. You will have to pay the total premium, so double what you are currently paying, as you will also have to pay the employer's half, up to the maximum of about Y1M (or about Y86,000 per month)...
If you are still with the Private Provider, the premiums are payable every month (12 months of the year) and will stay high for the maximum of 2 years' extended coverage.
If you go with the National Health Insurance, the premiums are payable every month (but only 10 months of the year - June to March) and will remain high until March 2025, but will then fall from June 2025 as they will then be based on 2024 Total Household Income, which will probably be lower...
You would need to do the calculations, but it may be cheaper to stick with your current provider for the first year, and then switch to NHI for the second year, when the NHI Premiums will drop, assuming you haven't found a new job and switched to the new employer's plan.
Remember, you are comparing 12 payments of Private against 10 payments of NHI for the same 1 Full Year of coverage.
4. You will be responsible for your own Pension Payments - Your Employer currently pays Half of your 18.3% of Gross Income National Employee Pension Insurance - Kosei Nenkin, and you pay half (9.15% each). While you are unemployed, you will switch to the National Basic Pension - Kiso Nenkin, and the monthly contribution is currently Y16,520 per month. You can opt for the addition cover - Fuka Nenkin at an additional Y400 per month if you wish. There is a slight discount if you pay in bulk. Oh, and Gaijin86 pointed out, for you Spouse as well, if not employed...
Additionally, you should arrange your own Additional Pension, iDeCo, maximum contributions Y68,000 per month.
6. If you receive any Taishokukin - Retirement Lump Sum, including any payout of company pension, etc., it will be taxed completely separately than any other Income Tax calculations for any tax year...
You are entitled to the Special Tax Deduction of Y400,000 per year, so anything up to that amount would be completely Tax Free.
Anything over that amount, you would then divide by 2, and apply standard Marginal Tax Rates, so the taxation is very low compared to normal salary income tax rates.
Income Tax Rates 総所得金額の合計、復興特別所得税、住民税の税率
Band (Taxable Income) = Marginal Tax rate (％) National + Reconstruction + Residents' Taxes = Total
Under 1,950,000 = 5% + 0.105% + 10% = 15.105%
1,950,000 to 3,300,000 = 10% + 0.21% + 10% = 20.21%
3,300,000 to 6,950,000 = 20% + 0.42% + 10% = 30.42%
6,950,000 to 9,000,000 = 23% + 0.483% + 10% = 33.483%
9,000,000 to 18,000,000 = 33% + 0.693% + 10% = 43.693%
18,000,000 to 40,000,000 = 40% + 0.84% + 10% = 50.84%
Over 40,000,000 = 45% + 0.945% + 10% = 55.945%
Last edited by Tkydon on Mon Apr 08, 2024 12:08 pm, edited 1 time in total.
:
:
This Guide to Japanese Taxes, English and Japanese Tai-Yaku 対訳, is now a little dated:
https://zaik.jp/books/472-4
The Publisher is not planning to publish an update for '23 Tax Season.
:
This Guide to Japanese Taxes, English and Japanese Tai-Yaku 対訳, is now a little dated:
https://zaik.jp/books/472-4
The Publisher is not planning to publish an update for '23 Tax Season.
Re: Resigning from seishain position, going freelance
This is absolutely outstanding information. Thank-you very much for all of the detail.
I actually saw that redundancy thread, but hadn't followed it closely. Thank-you for re-posting your information from that thread to this one.
There's so much useful information here.
You are so very helpful, Tkydon.
Re: Resigning from seishain position, going freelance
kojinkigyo 個人企業:
downsides:
- probably unstable income,
- health insurance (as others have said, you may be able to continue on your former companies health insurance scheme for a while)
- national pension: 16k+ per month for yourself also also for spouse. The kokumin nenkin generally pays out much less than the company pension 厚生年金
upsides:
- once you register as 個人企業 you get larger tax deduction
- you can also claim many extra deductions (e.g., rent for your new premises/office (even home office), "work" related travel, even "health maintainance" (sports club), "entertainment expenses" ("meeting possible clients" for your business, etc. It would probably best to employ a tax accountant to do your tax returns, as he/she should tell you about all the deductions you are entitled to. Tax accountant might cost 50k a year but this amount is also tax deductable.
downsides:
- probably unstable income,
- health insurance (as others have said, you may be able to continue on your former companies health insurance scheme for a while)
- national pension: 16k+ per month for yourself also also for spouse. The kokumin nenkin generally pays out much less than the company pension 厚生年金
upsides:
- once you register as 個人企業 you get larger tax deduction
- you can also claim many extra deductions (e.g., rent for your new premises/office (even home office), "work" related travel, even "health maintainance" (sports club), "entertainment expenses" ("meeting possible clients" for your business, etc. It would probably best to employ a tax accountant to do your tax returns, as he/she should tell you about all the deductions you are entitled to. Tax accountant might cost 50k a year but this amount is also tax deductable.
Re: Resigning from seishain position, going freelance
The Basic Pension - Kiso Nenkin is just the same price as the absolute minimum Kosei Nenkin @ Y16,000 per month...gaijin86 wrote: ↑Mon Apr 08, 2024 11:53 am kojinkigyo 個人企業:
downsides:
- probably unstable income,
- health insurance (as others have said, you may be able to continue on your former companies health insurance scheme for a while)
- national pension: 16k+ per month for yourself also also for spouse. The kokumin nenkin generally pays out much less than the company pension 厚生年金
upsides:
- once you register as 個人企業 you get larger tax deduction
- you can also claim many extra deductions (e.g., rent for your new premises/office (even home office), "work" related travel, even "health maintainance" (sports club), "entertainment expenses" ("meeting possible clients" for your business, etc. It would probably best to employ a tax accountant to do your tax returns, as he/she should tell you about all the deductions you are entitled to. Tax accountant might cost 50k a year but this amount is also tax deductable.
Granted the Employer pays half of the Kosei Nenkin...
But that is why the iDeCo allowance goes up from Y23,000 per month when you are employed and paying in to the Kosei Nenkin, up to Y68,000 per month when you are Self Employed, etc., to compensate, assuming you remember to make the contributions.
And all Social Insurances; Health Insurance, National Pension, iDeCo, etc. are all tax deductable, so you don't pay any taxes on those payments.
:
:
This Guide to Japanese Taxes, English and Japanese Tai-Yaku 対訳, is now a little dated:
https://zaik.jp/books/472-4
The Publisher is not planning to publish an update for '23 Tax Season.
:
This Guide to Japanese Taxes, English and Japanese Tai-Yaku 対訳, is now a little dated:
https://zaik.jp/books/472-4
The Publisher is not planning to publish an update for '23 Tax Season.
Re: Resigning from seishain position, going freelance
Sorry, another cross-post...
More Money Stuff
If your company has a Corporate Defined Contribution Plan - Japan 401k - You will not be able to withdraw it at this time, but you will have to leave it to ride until 60 or later retirement, but you can transfer the whole amount of a Japan 401k Corporate DeCo to an iDeCo. You have I think 6 months to do the transfer, or they will put it in some crappy default option...
Do it soon, so that you regain control over those assets, and you can continue to fund the iDeCo at Y68,000 per month.
It will then be Tax Free Transfer - Tax Free Switching - Entirely Tax Free until retirement... Taxable only on Disbursements in Retirement.
More Money Stuff
If your company has a Corporate Defined Contribution Plan - Japan 401k - You will not be able to withdraw it at this time, but you will have to leave it to ride until 60 or later retirement, but you can transfer the whole amount of a Japan 401k Corporate DeCo to an iDeCo. You have I think 6 months to do the transfer, or they will put it in some crappy default option...
Do it soon, so that you regain control over those assets, and you can continue to fund the iDeCo at Y68,000 per month.
It will then be Tax Free Transfer - Tax Free Switching - Entirely Tax Free until retirement... Taxable only on Disbursements in Retirement.
:
:
This Guide to Japanese Taxes, English and Japanese Tai-Yaku 対訳, is now a little dated:
https://zaik.jp/books/472-4
The Publisher is not planning to publish an update for '23 Tax Season.
:
This Guide to Japanese Taxes, English and Japanese Tai-Yaku 対訳, is now a little dated:
https://zaik.jp/books/472-4
The Publisher is not planning to publish an update for '23 Tax Season.
Re: Resigning from seishain position, going freelance
Lots of excellent additional information. Thank-you very much, everyone.
Some info confirmed what I had researched, and got some new knowledge.
The company I was seishain with did not have a Japan 401k. I think when I start my freelancing, I will need to get accustomed to the different lifestyle, as well as different taxation. I'll probably use my first year as practical learning and then refine things the following year, like iDeco contributions.
As @gaijin86 had stated, my income as a freelancer may be unstable, so getting clients and stabilizing that part would probably be my first priority.
Thanks again, all.
Some info confirmed what I had researched, and got some new knowledge.
The company I was seishain with did not have a Japan 401k. I think when I start my freelancing, I will need to get accustomed to the different lifestyle, as well as different taxation. I'll probably use my first year as practical learning and then refine things the following year, like iDeco contributions.
As @gaijin86 had stated, my income as a freelancer may be unstable, so getting clients and stabilizing that part would probably be my first priority.
Thanks again, all.