Hi,
Im currently in Japan on a Japanese spouse visa. My savings from Canada help pay for our life along with the wife works part time at a gym and at an english school.
Our monthly spending is around $1000-$1500 usd a month. We are living rent free in a spare house wifes dad has.
That $1000 I withdraw from the atm every month from my savings account in Canada. I came to japan 6 months ago and havent declared any income here.
My question is if I do accounting for my parents company back in Canada, and I get paid about $1000/month for it, I'd like to declare that money as income in Japan as I will be here while I do that work. I spend about 40-50 hours a month doing it. I would then get that $1000 transferred from Canada into my Japanese bank account.
The amount would increase as I spend more time on it, especially during tax season time, upto I'd say $2000/month for around 100 hours a month.
How would I go about getting this set up? I have searched online, and they have suggested the steps on becoming a freelancer in japan, which is to register your company to tax office, get the blue tax return done, and apply for the national pension and health insurance.
Does this sound about right? Does it matter that its a family business, and operating in Canada?
Is there a certain amount I should try and earn under? Wife currently earns around 100,000Yen a month.
Will this income be considered by banks later on when I want to apply for a mortgage, and/or when I renew my visa to get a longer visa? Currently I just get a 1 year visa. But would like to get a 3 or 5 year so I can apply for PR.
by kokopups
5 comments
I think there are multiple issues.
1. Money that you transfer to Japan is taxable. Did you know this?
2. Setting up your own entity is nontrivial, but doable.
3. It would be a headache for your family’s company to pay an international entity. There could be lots of issues.
4. You can sign up for health insurance and pay in to the national pension even if unemployed.
To get everything you want from it, I think the easiest route is to use an EOR (Employer of Record) since they can help get both sides set up and going, with you having an employee status with all the payroll deductions. Unfortunately it isn’t cheap, at over $500/month.
So my understanding of this situation is that right now, you’re living off of savings?
Someone said “money transferred to Japan is taxable”, which isn’t quite right. More specifically, money you earn while you’re a tax resident of Japan is taxable.
I think your current situation is fine.
With regards to the future idea, I think that should be relatively easy and simple. Assuming you don’t need any visa sponsorship, you can create a sole proprietorship and then do work for your parents’ company as a contractor. There’s no issue with working as a contractor for a company that isn’t based in Japan.
You don’t need an EOR. This old topic might be helpful:
https://www.reddit.com/r/JapanFinance/comments/17glkqv/employer_of_record_eor_questions/?utm_source=share&utm_medium=mweb3x&utm_name=mweb3xcss&utm_term=1&utm_content=share_button
The biggest pain (IMO) is doing the taxes. Hopefully you have the Japanese ability or assistance to get that all sorted.
u/kokopups
1. Purchase a consultation with a certified an accountant in Japan. Specifically someone with international tax experience. Otani or Matchpoints come to mind.
2. Unless I’m mistaken, you are on the 5year rule ie. You only declare what you transfer to Japan. What you get paid into your Canada bank account is non-taxable until you bring it over to Japan.
3. You/wife can or your accountant can set you up as a (個人事業 – kojin jigyo) and register you for the blue form ¥650k deduction.
>register your company to tax office
I suspect what you’ve read about is notifying the tax office of starting business activities as a sole proprietor – see [this](https://www.nta.go.jp/taxes/tetsuzuki/shinsei/annai/shinkoku/annai/04.htm). There is no need to setup a company unless you have a reason to want to incorporate.
> get the blue tax return done
Tax returns for individuals (which includes sole proprietors) can be filed from the beginning of the year and are due by the middle of March. However, around the time you start your business you can file for permission to file as a blue filer which comes with some responsibilities and some benefits. See [this](https://www.nta.go.jp/taxes/tetsuzuki/shinsei/annai/shinkoku/annai/09.htm).
>Will this income be considered by banks later on when I want to apply for a mortgage
Yes, if you have filed a tax return to prove the income via a proof of income certificate, banks will generally consider it (sometimes they’ll take the tax return as proof directly even though they aren’t supposed to do this). They may want to see multiple years to prove it is stable income since it is not fixed like a salaried employee.
>The amount would increase as I spend more time on it, especially during tax season time, upto I’d say $2000/month for around 100 hours a month.
That’s 250 hours per week. Just sayin. Not going to affect your tax plan but I would question what your on if you said that to me.