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Direct clients in Japan and their tax obligations
Thread poster: Juan Perello

Juan Perello  Identity Verified
Chile
Local time: 07:42
Member (2005)
Japanese to Spanish
+ ...
Feb 9, 2006

hello everybody

A direct client I have in Japan says that they have to discount the agreed upon price with a 20% tax. That is to say, they will reduce my payment on 20%.
They also say they're willing to bear this expense for the first job (because they didn't realize it before) but not on subsequent jobs.

Is this normal? should I accept this?

Other agencies I work for don't even discount the 源泉 because I live outside Japan, so this 20% sounds a bit strange. I thought I better learn something about it before replying.

Thanks in advance

Juan Luis


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Katalin Horváth McClure  Identity Verified
United States
Local time: 05:42
Member (2002)
English to Hungarian
+ ...
You should not have to pay taxes in Japan Feb 9, 2006

juanluis wrote:

Other agencies I work for don't even discount the 源泉 because I live outside Japan


This is the point.
You will be declaring your income in your country and pay the taxes there. They are not paying you wages, but they are paying for a service (so they should expense it that way, and not as wages).
None of my Japanese clients deduct taxes from my translation fees, ever. Perhaps your client has not done this before and doesn't know how it should be done.
Hope this helps.
Katalin


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#41698 (LSF)
Malaysia
Local time: 18:42
Japanese to English
+ ...
Witholding Tax Feb 9, 2006

Japan works on witholding tax system for payment of wages and services by individuals (inclusive of freelancers that are not employees) which is deducted at source but this does not apply to overseas residents who are not liable to tax in Japan.

The thing is not all companies may be aware of this especially those that normally deal with those resident in Japan only.

I don't have this problem yet. My occasional problem is huge deduction (not every one though) in wire transfer fees as Paypal is not normally used in Japan.


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Juan Perello  Identity Verified
Chile
Local time: 07:42
Member (2005)
Japanese to Spanish
+ ...
TOPIC STARTER
thank you Feb 10, 2006

Thanks a lot for your answers.
Now I have something to tell them.
Cheers
Juan Luis


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#41698 (LSF)
Malaysia
Local time: 18:42
Japanese to English
+ ...
Copyright Law! Feb 13, 2006

I think there might have been a change. I'm also starting to get notification that I'm liable to withholding tax in Japan. But it seems that they treat the translation fees as royalties payment in Japan under the copyright law. In most countries, royalties and patent payments to non-residents are subject to witholding tax but not translation fees!

[Edited at 2006-02-13 04:14]


***************************************************************
Japan side directed me to this link at the National Tax Agency.
非居住者に支払う翻訳料(源泉徴収)
http://www.nta.go.jp/category/tutatu/shitsugi/gensen/06/06.htm

***************************************************************[Edited at 2006-02-14 14:00]

[Edited at 2006-02-14 14:14]


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Juan Perello  Identity Verified
Chile
Local time: 07:42
Member (2005)
Japanese to Spanish
+ ...
TOPIC STARTER
really? Feb 13, 2006

They just told me that they checked with the tax office and that there was no need to withold tax, so they excused themselves for causing alarm...
complicated, ne.

juanluis


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#41698 (LSF)
Malaysia
Local time: 18:42
Japanese to English
+ ...
国税庁-非居住者に支払う翻訳料 (源泉徴収) Feb 13, 2006

I was directed by the Japan side to this link at the National Tax Agency in Japan: http://www.nta.go.jp/category/tutatu/shitsugi/gensen/06/06.htm


Any comments?


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Katalin Horváth McClure  Identity Verified
United States
Local time: 05:42
Member (2002)
English to Hungarian
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This is a special case where copyright applies Mar 3, 2006

Lew Shiong Fong wrote:

I was directed by the Japan side to this link at the National Tax Agency in Japan: http://www.nta.go.jp/category/tutatu/shitsugi/gensen/06/06.htm


Any comments?


I read this page, and I think this is an example of a special case where the translation is:
- requested by Company A in Japan
- done in England by an English professor
- a paper (white paper, dissertation, thesis)
- done under a purchase contract.

The original paper is copyrighted (by the author) and therefore the translation generates secondary copyrights, but those are sold to Company A in the means of the purchase contract.
So, the translation is not done as "work for hire", but rather, the translation as a product is being sold from England to Japan.
It is the Japanese copyright law, and also the tax treaty between England and Japan that requires withholding tax in this case (the example has the exact reference for the applicable articles of these).

I don't think translation in general falls under this case, most translation is done as "work for hire", and there is no copyright involved.


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Juan Perello  Identity Verified
Chile
Local time: 07:42
Member (2005)
Japanese to Spanish
+ ...
TOPIC STARTER
If copyright applies.... Mar 3, 2006

...then shouldn't the translator be the owner of the translation copyright? If that the case, maybe the translator would have the right to be paid everytime the work gets republished and so on?
(specially if he/she has paid the tax "chanto"...).

I have no idea, maybe I'm talking nonsense.

The article also mentions the treaty with England...but what about those countries where there is no such a treaty?


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#41698 (LSF)
Malaysia
Local time: 18:42
Japanese to English
+ ...
Interpretation of the law Mar 8, 2006

Katalin Horvath McClure wrote:

I read this page, and I think this is an example of a special case where the translation is:
- requested by Company A in Japan
- done in England by an English professor
- a paper (white paper, dissertation, thesis)
- done under a purchase contract.

The original paper is copyrighted (by the author) and therefore the translation generates secondary copyrights, but those are sold to Company A in the means of the purchase contract.
So, the translation is not done as "work for hire", but rather, the translation as a product is being sold from England to Japan.
It is the Japanese copyright law, and also the tax treaty between England and Japan that requires withholding tax in this case (the example has the exact reference for the applicable articles of these).

I don't think translation in general falls under this case, most translation is done as "work for hire", and there is no copyright involved.




The differentiation here would probably be the contract. Some of my translations from Japan are on a yearly contract basis although the actual items are on normal piecemeal basis.

Normally, all writings are automatically copyrighted without the need for registration (different from patents). The "secondary copyright" here refers to that of the translation instead of the original version.

All countries are subjected to the tax under the Japanese law. The witholding tax treaty is for the purpose of avoidance of double-taxation where the actual tax rate is specified (differs by country, default being 20%, mine is 10%) and the amount taxed can then be deducted in the tax submission in the country of residence (mutual recognition of tax).

juanluis wrote:

If copyright applies.... Mar 3

...then shouldn't the translator be the owner of the translation copyright? If that the case, maybe the translator would have the right to be paid everytime the work gets republished and so on?
(specially if he/she has paid the tax "chanto"...).



Rate and terms are normally quoted in contract. This secondary copyright is likely to be transferred back to end client.

[Edited at 2006-03-08 17:44]


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Masami Matsuyuki
Local time: 05:42
English to Japanese
+ ...
Receiving payment from Japanese individual clients and paying tax in US Apr 13, 2006

Hi, all:

Thanks for sharing very useful information in this thread.

I'm a Japanese citizen and will be a US permanent resident soon. I anticipate receiving payment from Japanese clients in Japan and paying tax in US next year. What can be declared as "business expenses" in the US tax system?

Also, if you work for Japanese companies that withhold tax for non-residents, do you have to do some "kakutei shinkoku" paperwork for tax return in Japan?

I would appreciate any advice.

Masami


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