Getting partly paid in USD (or EUR)

[William]

Hi everyone,

I'm not necessarily looking for a definite answer here, as I think there's no right or wrong response to this question.

Currently, I’m paid entirely in JPY. However, we have the option to receive part of our salary in a foreign currency—either USD or EUR—when we negotiate our contracts. This setup is a fixed split, meaning we agree on a specific monthly amount in JPY (¥XXXXX) and USD/EUR ($/€YYYYY).

My question: As a foreigner living in Japan (with no current plans to leave and only occasional, short trips abroad), is there an advantage to receiving part of my salary in a foreign currency, or is it simpler to negotiate for a full JPY salary?

Here are a few pros and cons I’m considering:

Pros:
- If the JPY continues to weaken, receiving USD or EUR could be advantageous (though predicting currency trends is tricky, of course).
- When traveling, having USD or EUR on hand avoids potential losses from currency exchange.

Cons:
- Since I’ll be spending primarily in Japan, foreign currency may complicate tax reporting.
- If I receive USD/EUR in my SBI account, I could invest it, but transferring it to my Wise account would involve fees.
- If paid directly into Wise, the funds are less accessible for investment, which may leave them underutilized.

I’d appreciate any insights, especially from those who’ve considered or chosen either approach!

[Deep Blue]

I'm paid in a combination of JPY, GBP and USD. I can choose to split my regular salary (denominated in JPY) between my host (Japan) and home (UK) currencies. Since this is a JPY salary, the GBP amount varies each month depending on the exchange rate. However I always earn the same total in JPY so tax is predictable.

My total yearly compensation is denominated in USD (i.e. the salary + bonus figure is planned and communicated in USD). This is a quirk of the company I work for (US based) and they like to be able to plan and compare their staff costs across countries so they do everything in USD at the aggegrate level.

I have the option of receiving the bonus in JPY or USD, which I choose depending on my needs year to year. Mostly I keep it in USD recently as I don't have extra spending needs in Japan and I prefer to keep it out of the Japan where I have a superior range of investment options. Obviously this doesn't reduce Japanese income tax (otherwise everyone would do this) but it does save faffing around with currency exchanges and my employer uses mid-market rate without a spread so I save a few bips on this too.

[adamu]

Is there a risk that if the USD/EUR works out in your favour, they could decide that it's actually quite expensive and ask you to accept JPY anyway? In that case you'd be accepting the risk without the reward, and with extra tax annoyances.

[Deep Blue]

Is there a risk that if the USD/EUR works out in your favour, they could decide that it's actually quite expensive and ask you to accept JPY anyway? In that case you'd be accepting the risk without the reward, and with extra tax annoyances.

I would be surprised if they fixed both parts of the split - it would be more usual to fix one half of it and let the other float i imagine? I guess it isn't in either employer or employees interest to have the JPY salary flucuate every month.

[William]

No, there's (virtually) no risk of that. However, I also need to mention that the converted part is only a fraction of the salary, which mainly remains denominated in JPY. This is also only for one year — this agreement is renegotiated once a year and could be terminated.

I wouldn't describe this as "pocket money" but I don't see it going above $1,000/month either.

[RetireJapan]

No, there's (virtually) no risk of that. However, I also need to mention that the converted part is only a fraction of the salary, which mainly remains denominated in JPY. This is also only for one year — this agreement is renegotiated once a year and could be terminated.

I wouldn't describe this as "pocket money" but I don't see it going above $1,000/month either.

Is it worth the hassle? I'm lazy so I'd probably just take the easy option (yen).

[YouMeWeThem]

I agree that taking JPY seems like the least hassle. FX gains reporting seems like a ridiculous chore.

[Tsumitate Wrestler]

Could you receive the USD directly into your Shinsei account and immediately transfer it to SBI, thus they will take care of all the currency reporting?

[adamu]

Could you receive the USD directly into your Shinsei account and immediately transfer it to SBI, thus they will take care of all the currency reporting?

I don't believe they do this. If you make FX gains based on your balance, you have to report it as miscellaneous income on the tax return.

https://faq.sbisec.co.jp/answer/5ee06fd ... 01220716c/

[Tsumitate Wrestler]

Could you receive the USD directly into your Shinsei account and immediately transfer it to SBI, thus they will take care of all the currency reporting?

I don't believe they do this. If you make FX gains based on your balance, you have to report it as miscellaneous income on the tax return.

https://faq.sbisec.co.jp/answer/5ee06fd ... 01220716c/

It seems you are 100% right, I thought MMF calculated this. That is just annoying.

https://moneykit.net/visitor/others/zei ... 03_02.html