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Paying taxes in Japan and working for an overseas agency
Thread poster: Carmen Álvarez

Carmen Álvarez  Identity Verified
Spain
Local time: 05:33
English to Spanish
+ ...
Nov 9, 2005

Hello,

It seems the procedures for the tax payment is quite complicated for someone in my situation: working in Japan as freelancer for an overseas agency and receiving the money into a bank account overseas as well.

I have heard the taxes are very high and moreover I have to calculate myself how much of my private expenses are intended for my job (electricity, software, computer, etc.), because it makes the taxable amount lower.

Any comment on this?

Thanks in advance.


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Tommy Konishi  Identity Verified
Local time: 13:33
Member (2003)
English to Japanese
Basically, Yes. Nov 9, 2005

And, maybe I can assist you
because I'm a Japanese and have some experiences.

Regards.


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Carmen Álvarez  Identity Verified
Spain
Local time: 05:33
English to Spanish
+ ...
TOPIC STARTER
ありがとうございました Nov 10, 2005

Hello Tommy,

thanks a lot for your answer and for being ready to help me. Maybe I have further questions later

I asked my agency and they said they have some kind of partner in Japan, and they will ask them for advice. I hope I hear from them soon.

Have a nice day,

Carmen


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Mario Cerutti  Identity Verified
Japan
Local time: 13:33
Italian to Japanese
+ ...
Taxes and deductions Nov 10, 2005

Carmen Alvarez wrote:
It seems the procedures for the tax payment is quite complicated for someone in my situation: working in Japan as freelancer for an overseas agency and receiving the money into a bank account overseas as well.


This is what many freelance translators do when working for companies abroad. I would say no problem as long as your local tax office starts realizing this. Possibly it may also depend on your residence status in Japan. As far as I know, if you are a long-term resident you are obliged by law to declare your income, whether you are living in Japan or in any other country.


I have heard the taxes are very high and moreover I have to calculate myself how much of my private expenses are intended for my job (electricity, software, computer, etc.), because it makes the taxable amount lower.


If you are not paying taxes in Japan, you cannot deduct any expense. If you want to be able to deduct your translation-related expenses, you should declare *at least* some income to the Japanese tax authorities.

Personally, I don't think taxes in Japan are high, at least compared to European countries. Besides, tax authorities here are much more *generous* than many other countries'.

Mario Cerutti
http://www.aliseo.com


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Carmen Álvarez  Identity Verified
Spain
Local time: 05:33
English to Spanish
+ ...
TOPIC STARTER
My residence status Nov 11, 2005

Thanks Mario for your comments.

Maybe I should explain better my situation. I am married to a Japanese man and I have a spouse visa since July 2004. I started working in July 2005. It seems that people living here less than 5 years (non-permanent residents) and receiving the payments abroad do not need to pay taxes? It may be not so simple but I have read this in an official link of the Tokyo Metropolitan Government:

http://www.metro.tokyo.jp/ENGLISH/RESIDENT/LIVINGIN/contents7.htm

In fact, the problem is that since I am married to a Japanese man, it is supposed that I intend to live here forever. So, although I have been here only 1,5 years, I am considered "permanent resident". But I would like very much to go back to live in Europe, so I do not want to be considered a permanent resident.

What do you colleagues think?


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Momoka  Identity Verified
Local time: 13:33
Japanese to Spanish
+ ...
Some coments Nov 11, 2005

Hello, Carmen.

As you, I'm a foreign wife in Japan, working as a freelance translator and language teacher. I don't know how it is for money made abroad from here but, in Japan, there is a minimum year income set for a person to become a tax payer (ask your city office's tax section about it). If you earn less than that in a year, you don't have to worry about taxes.
On the other hand, if you earn at least that amount in a year (and of course, are honest and start paying due taxes, which I recommend), you'll automatically stop being "dependent" on your husband and will have to pay by yourself you own taxes, pension and welfare insurance, etc. This means taxes, pension and welfare insurance fees, etc., will be higher for him for not having any "dependents" anymore. This reality stops many Japanese wives from working (part-time) as much as they would like to or can, since this minimum year income is too low (I think so, too) and you'll end up having more income, yes, but many more expenses. What we do here is 1) try to keep our year income under this limit or 2) work really hard to make money enough to make it worth getting, under the law, "economically independent" from our husbands.


In fact, the problem is that since I am married to a Japanese man, it is supposed that I intend to live here forever. So, although I have been here only 1,5 years, I am considered "permanent resident". But I would like very much to go back to live in Europe, so I do not want to be considered a permanent resident.


I don't really understand what you mean here; anyway, paying taxes is done on a year basis; if you earn a lot of money this year, you pay the corresponding taxes...if next year you don't get as much as the minimum I've mentioned, you don't have taxes to pay...at least, that's what I've been said by my Japanese family. This is just fine but, in my case, my husband works for a company and, if I were to keep changing from tax payer to non-tax payer every year, he would have to go through all the procedures with his company every year for me. Working on translations is great, but at least for me is not a steady job, that's why so far I prefer staying under the limits.
If you make enough money as a translator, then no problem at all!
Anyway, I recommend you first go to your city offices and inform yourself better...maybe it's too soon for you to worry about taxes and the like.

Buena suerte!


[Edited at 2005-11-11 13:02]


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Carmen Álvarez  Identity Verified
Spain
Local time: 05:33
English to Spanish
+ ...
TOPIC STARTER
Thanks Nov 11, 2005

Hello,

thanks a lot for your comments.

I am surprised, I had always thoguth that Japanese women were mostly housewifes as a personal decission driven by social customs. I had not imagined it had something to do with taxes or having a lot of expenses as "non-dependent".

Anyway, the minimum limit of year income is indeed very low. It is what I can earn normally in 2 months, so I will not try to keep under the limits Anyway, for Japan my income is not very high (I get paid in Spain), so if the expenses of being "independent" are so high as you say, I have a serious dilemma, because Translation is the job that I always wanted. I do not want to leave it!

Asking in the city office is a good idea, however I do not speak Japanese and are not familiar either with the tax procedures (not even in Spanish: I am a "novice"). I hope my husband can get a free day and come with me.

One last remark is that I am a foreigner, and I think I do not have the same tax obligations as the Japanese. Just think that I want to leave after 4 years. Why should I pay for a pension? I will not be here then...

It is very complicated... Thanks a lot everybody for the helpful comments.


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Mario Cerutti  Identity Verified
Japan
Local time: 13:33
Italian to Japanese
+ ...
All residents are taxable in Japan Nov 11, 2005

Carmen Alvarez wrote:

It seems that people living here less than 5 years (non-permanent residents) and receiving the payments abroad do not need to pay taxes?


Hello,

The Tokyo site you mentioned says:

"A resident is a person who has an address in Japan and has resided in Japan *continuously for more than one year*. Non-permanent resident is a person who has had an address or lived in Japan for five years or less, and does not intend to become a permanent resident."

If I am not wrong, it means that after living *continuously for more than one year* in Japan you will become a resident, and *all* residents, whether they are permanent or not, have to pay taxes. However, as the other collegue in this thread rightly said, whether you have to pay taxes or not also depends on your declared earning.

So, besides taking it easy during your first year of stay in Japan, for the subsequent years at the end it all boils down to how much you will *decide" to work as a resident.

Buona fortuna

Mario Cerutti
http://www.aliseo.com


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Momoka  Identity Verified
Local time: 13:33
Japanese to Spanish
+ ...
Inform yourself better Nov 12, 2005

Hello, again.
I insist you first go to your city offices and inform yourself better. Even though I'm not a tax payer I have a pension insurance paid by my husband; I was said at my city office that I would be paid that money even in the event I decided to leave Japan.
On the other hand, if you earn in two months this minimum year income, you're making pretty good money (much more than the first salary for most new company employees), in which case even if you pay taxes you'll be left with a good amount.
Anyway, go to the city offices and explain your situation; they should be able to help. Ask what will happen with your money if you decided to leave Japan, etc. If you live in central Tokyo much better, since they are more used to foreigners and this kind of thing there.
Another thing: sad to say, there is not much information available in languages other than Japanese; whenever you want to be sure of something, have your husband or someone who can speak the language help you.
Some cities have set a day every week, month, etc., to offer information on a variety of subjects (visa, health, work, taxes, etc.) to foreigners in different languages; try to find out. Maybe your city does, too. You can also do a search on the internet ("hotline", "foreigners in Japan", "information", etc.); I can see you've already found some information on taxes by yourself.
As for city offices, depending on where you live, some of them have special office hours for people who work; since you might have to ask for your husband's help many more times from now on, knowing about this would help.
All I can say for know. Hope it helps.
And enjoy Japan! Paying taxes is just a part of your life here.
Best regards.


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Carmen Álvarez  Identity Verified
Spain
Local time: 05:33
English to Spanish
+ ...
TOPIC STARTER
Depend on which amount of the money I send to Japan as well... Nov 12, 2005

Mario Cerutti wrote:

If I am not wrong, it means that after living *continuously for more than one year* in Japan you will become a resident, and *all* residents, whether they are permanent or not, have to pay taxes. However, as the other collegue in this thread rightly said, whether you have to pay taxes or not also depends on your declared earning.




Thanks, Mario. Well, looking at the link that I posted, it seems that it depends not only on my declared earning, but on which amount of it I receive and use in Japan. But I receive and keep all the money in Spain, and I use it when I go there or my husbands goes to Germany (twice a year). So looking at that tabulation, I get no money in Japan and am a non permanent resident... Please correct me if I am wrong.


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Carmen Álvarez  Identity Verified
Spain
Local time: 05:33
English to Spanish
+ ...
TOPIC STARTER
Limit of income Nov 12, 2005

Momoka wrote:

Hello, again.
I insist you first go to your city offices and inform yourself better. Even though I'm not a tax payer I have a pension insurance paid by my husband; I was said at my city office that I would be paid that money even in the event I decided to leave Japan.


Seems a good advice, I will do it. I live in a small town but I will go to Tokyo, it will be a nice trip

Momoka wrote:

On the other hand, if you earn in two months this minimum year income, you're making pretty good money (much more than the first salary for most new company employees)



Well, maybe I am wrong about the income limit to be dependant on someone. My husband told me it is some 2700 euro (370000) per year. I get some 1500 euro (200000 yen) per month but I am working full time as translator. I am a freelancer but luckily the agency sends me one job after the other and sometimes my husband comes back home late at night and I am still working. I mean, looking it that way, I do not earn so much. I work as much as my husband (salary man) and I get about 75% percent of his income.

I mean, if my husband decided to leave his job (for example, if we move to Europe), my salary would not be enough fot the two of us... In this sense, I am still dependent of my husband although I am working.

Well, that has nothing to do with taxes, I just wanted to explain a little bit better my situation for the people who is here giving me so kindly their advices.

Thanks a lot.


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Katalin Horváth McClure  Identity Verified
United States
Local time: 00:33
Member (2002)
English to Hungarian
+ ...
A few comments Nov 12, 2005

Carmen,
I think the key question is: are you paying taxes in Spain based on the money you earn from the Spanish agency deposited to your account in Spain?
Japan has a double-taxation prevention treaty with Spain, that means you only have to pay taxes in one country. (Well, this is a simplification, because it means you can offset the taxes you paid in one country against what you would need to pay in the other, and if the tax rates are significantly different, you may still need to pay the difference.)
See more at:
http://www.worldwide-tax.com/japan/jap_double.asp

The point is, you are supposed to pay taxes on your income SOMEWHERE. If you are paying taxes in Spain, and that is your only source of income, then you are probably OK staying as a dependent of your husband from the point of taxation in Japan. If you are not paying taxes in Spain, then you will have to do it in Japan.
You definitely need to talk to a tax specialist about this, somebody familiar with foreign tax credits, etc.

You also mentioned you don't understand the point of paying the pension taxes, as you will not stay there to enjoy the benefits of it. Well, I was thinking the same way when I lived in Japan, but I had to pay it anyway. When I left Japan, I got part of that money back, but not the whole thing. There is a formula they use to calculate the amount you will get back, based on your earnings during the years you spent in Japan. You have to file a request to get it, it is not automatic.


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Carmen Álvarez  Identity Verified
Spain
Local time: 05:33
English to Spanish
+ ...
TOPIC STARTER
Double taxation Nov 12, 2005

Katalin Horvath McClure wrote:

http://www.worldwide-tax.com/japan/jap_double.asp

The point is, you are supposed to pay taxes on your income SOMEWHERE. If you are paying taxes in Spain, and that is your only source of income, then you are probably OK staying as a dependent of your husband from the point of taxation in Japan. If you are not paying taxes in Spain, then you will have to do it in Japan.


Thanks a lot, Katalin. That is exactly what my intuition told me.

Yes, I have heard about that treaty, but did not investigate much further because I am just getting a net price per word as it is, nothing more or less, in Spain. So I was never afraid of paying double taxes.

Now it seems like one could choose the country in which to pay taxes?! I thought that by legal prescription I was forced to pay in the country where I live, and not in the country where my agency is. This was my conclusion because the agency just asked me for a proof of residence here "to avoid the 16% "base imponible" (Spanish)". So I just thought: "OK, in Spain I do not have to pay taxes". Some official Spanish web sites confirmed that.

Can one really choose where to pay the taxes? One country will be surely cheaper than the other one. I really will talk to a professional. This is much more complicated than I thought.

Nice weekend for all.

Carmen


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Momoka  Identity Verified
Local time: 13:33
Japanese to Spanish
+ ...
The limit Nov 12, 2005

Hello, Carmen.
I was told at my city's tax section that this minimum taxable year income was 1.030.000 yen; either way, you are well above that, and so supposed to pay your taxes (under the Japanese system).
Since I'm not a tax payer, I can't give any more information or advice; really hope you find out soon.
Best regards.

[Edited at 2005-11-12 15:03]


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