Japanese Financial Glossary

The annual tax return filed between February 16 and March 15. Required for freelancers, people with multiple income sources, or those claiming deductions beyond the standard year-end adjustment.

An employer-handled process in November/December that reconciles your tax withholdings for the year. Most salaried employees do not need to file 確定申告 if this is completed.

Income tax automatically deducted from your salary or payment before you receive it. Your employer remits it directly to the tax office on your behalf.

National income tax levied on your annual earnings. Japan uses a progressive rate structure from 5% to 45%, depending on your taxable income bracket.

Local tax (approximately 10%) charged by your city/ward based on the previous year's income. Billed from June, either deducted from salary or paid in quarterly installments.

A universal deduction of up to 480,000 yen applied to all taxpayers. The amount phases out for very high earners (income above 24 million yen).

A deduction available when your spouse earns 1.03 million yen or less per year. Reduces your taxable income by up to 380,000 yen.

If your household medical expenses exceed 100,000 yen in a year, you can deduct the excess. Requires filing 確定申告 with receipts.

An advanced tax filing method for self-employed individuals offering a special deduction of up to 650,000 yen. Requires double-entry bookkeeping and prior registration.

The simpler tax filing method for self-employed individuals. No special deduction, but requires less detailed bookkeeping than blue form filing.

A system that lets you donate to regional municipalities in exchange for gifts and a near-full tax deduction. Effectively redirects your resident tax to the region of your choice.

An automatic deduction applied to salary income, similar to a standard deduction for employees. The amount varies based on your gross salary.

Income from a trade or business operated as a sole proprietor. Eligible for blue form filing benefits and deduction of all legitimate business expenses.

A catch-all income category for earnings that do not fit other classifications, such as side-job income, crypto gains (in many cases), or foreign pension payments.

Japan's value-added tax, currently 10% (8% on food and certain items). Businesses above a revenue threshold must register and remit this tax.

The Qualified Invoice System (適格請求書) introduced in October 2023. Businesses need a registration number to issue invoices that allow buyers to claim input tax credits.

A designated person in Japan who handles your tax affairs after you leave the country. Required if you have outstanding tax obligations when departing Japan.

Advance income tax payments required in July and November if your previous year's tax exceeded a certain threshold. Each installment is one-third of the prior year's tax.

A tax-free investment account for Japanese residents. Under the new NISA (2024+), investment gains and dividends are permanently tax-free within annual contribution limits.

The accumulation (dollar-cost averaging) portion of the new NISA with a 1.2 million yen annual limit. Limited to approved low-cost index funds and balanced funds.

The flexible portion of the new NISA with a 2.4 million yen annual limit. Allows individual stocks, ETFs, REITs, and a wider range of mutual funds.

A private pension plan with tax-deductible contributions, tax-free growth, and taxed withdrawals after age 60. Contribution limits vary by employment type.

A standard taxable brokerage account where the broker calculates your gains and losses. With 源泉徴収あり, taxes are automatically withheld.

A basic brokerage account with no automatic tax calculation or withholding. You must track all gains/losses yourself and file 確定申告.

An option on 特定口座 where the broker automatically withholds 20.315% tax on gains. This eliminates the need to file taxes on investment income in most cases.

A licensed brokerage firm where you open investment accounts. Major online brokers in Japan include SBI Securities, Rakuten Securities, and Monex.

A pooled investment fund managed by a professional. In Japan, popular options include low-cost index funds tracking global or US stock markets.

Cash payments distributed by companies to shareholders from their profits. In taxable accounts, dividends are taxed at 20.315% (income tax + resident tax).

Profit from selling assets such as stocks or real estate. Investment capital gains in Japan are taxed at a flat 20.315% under separate taxation.

A tax method where certain income (investment gains, real estate sales) is taxed separately from regular income at a flat rate, rather than being added to your progressive income tax.

A loan for purchasing residential property. Japanese mortgages often have terms up to 35 years with interest rates that can be fixed, variable, or a mix of both.

An annual municipal tax of 1.4% on the assessed value of land and buildings. Paid in quarterly installments, usually starting in April or June.

An additional municipal tax of up to 0.3% on properties in designated urban planning areas. Billed alongside the fixed asset tax.

A one-time prefectural tax charged when you acquire property. Significant reductions are available for residential properties meeting certain criteria.

The fee paid to a real estate agent, legally capped at 3% of the purchase price plus 60,000 yen (plus consumption tax) for properties over 4 million yen.

The legal process of registering property ownership and mortgage rights with the Legal Affairs Bureau (法務局). Requires a judicial scrivener (司法書士) and registration taxes.

A legally required disclosure document presented by a licensed agent before a property transaction. Covers zoning, structural details, legal restrictions, and contract terms.

A monthly fee for condominium (マンション) common area maintenance, covering cleaning, security, elevators, and building management services.

A monthly contribution to the condominium's long-term repair fund. Used for major maintenance like exterior repainting, waterproofing, and elevator replacement.

A government-backed 35-year fixed-rate mortgage product offered through private banks and the Japan Housing Finance Agency. Popular for its rate stability.

A tax credit for mortgage holders that reduces your income tax (and resident tax) based on your outstanding loan balance. Available for the first 13 years of a new home purchase.

Japan's basic pension system covering all residents aged 20-59. The flat monthly premium (approximately 16,980 yen in 2024) provides a base retirement benefit after 10+ years of contributions.

The earnings-related pension for company employees, paid on top of the national pension. Premiums are 18.3% of salary, split equally between employee and employer.

A partial refund of pension contributions available to foreign nationals who leave Japan after contributing for 6 months or more. Must be claimed within 2 years of departure.

A booklet containing your pension number, now being replaced by a simple notification letter. Your pension number is essential for tracking contributions and claiming benefits.

Bilateral treaties between Japan and other countries that prevent double pension contributions and allow combining contribution periods. Japan has agreements with about 23 countries.

Private pension insurance products sold by insurance companies. Premiums may be partially tax-deductible under the individual pension insurance deduction.

A voluntary supplementary pension for self-employed individuals (Category 1 insured) who want pension benefits beyond the basic national pension.

Municipal health insurance for self-employed, freelancers, and anyone not covered by employer insurance. Premiums are based on your previous year's income and vary by municipality.

The package of employer-sponsored insurance including health insurance, pension, and employment insurance. Premiums are split roughly 50/50 between employee and employer.

The health insurance component of social insurance for company employees. Provides the same 70% coverage as NHI but often includes additional benefits through the employer's health association.

Insurance that provides unemployment benefits, childcare leave benefits, and job training subsidies. Required for employees working 20+ hours per week.

Mandatory insurance for residents aged 40 and over that covers nursing and long-term care services. Premiums are added to your health insurance bill.

Property insurance covering fire, wind, water damage, and theft. Typically required by landlords for rental properties and by banks for mortgaged homes.

Government-backed insurance that covers earthquake, volcanic eruption, and tsunami damage. Must be purchased as an add-on to fire insurance; premiums are partially tax-deductible.

Insurance that pays a benefit upon death or diagnosis of serious illness. Premiums are partially tax-deductible under Japan's life insurance premium deduction.

Mandatory insurance for all motor vehicles in Japan covering injury to others. Does not cover property damage or your own injuries, so most drivers also carry optional auto insurance.

A system that caps your monthly out-of-pocket medical expenses. Once you exceed the threshold (varies by income), the excess is covered by health insurance or reimbursed.

A domestic bank transfer, the most common payment method in Japan for rent, utilities, and business transactions. Transfer fees vary by bank and method (ATM vs online).

A bank account. Opening one as a foreigner usually requires a residence card, phone number, and a seal (印鑑) or signature, depending on the bank.

A standard savings/checking account for daily transactions. Offers minimal interest but provides ATM access, debit card functionality, and automatic bill payments.

A time deposit with a fixed term (3 months to several years) offering slightly higher interest than a regular savings account. Early withdrawal may result in reduced interest.

Credit cards are widely accepted in Japan. Foreigners may find it easier to get approved through certain issuers like Rakuten Card, EPOS Card, or their employer's bank.

Japan's 12-digit taxpayer identification number assigned to all residents. Required for tax filing, opening investment accounts, and various government procedures. Foreigners receive one upon registering their address.

A permanent, full-time employee with full benefits including social insurance, bonuses, and strong legal protections against dismissal. The most common and secure employment type.

An employee on a fixed-term contract (typically 1-3 years, renewable). Receives social insurance but may have fewer benefits than regular employees. After 5 years, can request conversion to permanent status.

A service contract where you work as an independent contractor, not an employee. No social insurance from the client; you must handle your own taxes, pension, and health insurance.

A self-employed individual working independently for multiple clients. Must register as a sole proprietor (個人事業主), file 確定申告, and pay their own national pension and health insurance.

An individual registered as a business operator with the tax office. This is the official status for freelancers and independent contractors in Japan.

A form submitted to your local tax office to register as a sole proprietor. Should be filed within one month of starting a business. Also submit the blue form filing application at the same time.

Your monthly salary statement showing gross pay, deductions (taxes, social insurance), and net pay. Understanding each line item is essential for verifying correct withholdings.

Semi-annual bonus payments, typically in June and December. Common for regular employees, usually equivalent to 1-3 months' salary. Subject to income tax and social insurance premiums.

Extra pay for hours worked beyond the standard 40-hour work week. By law, overtime is paid at 125% of the base hourly rate (150% for work exceeding 60 hours/month).

A tax-free allowance (up to 150,000 yen/month) covering your commute to work. Most employers reimburse the actual cost of your train pass or a mileage-based amount for driving.