Quick Answer
As a freelancer (個人事業主) in Japan, you MUST file 確定申告 every year. Choose 青色申告 for up to ¥650,000 in extra deductions. Track all business expenses — they directly reduce your taxable income. If revenue exceeds ¥10M, you'll need to charge 消費税.
Getting started as a freelancer in Japan フリーランスの税金入門
Freelancing in Japan as a foreigner is increasingly common -- IT engineers, designers, translators, English teachers on contract, and remote workers all fall under the umbrella of 個人事業主 (kojin jigyōnushi / sole proprietor) or 業務委託 (gyōmu itaku / outsourced contractor). But the moment you earn income outside of a traditional employer-employee relationship, the tax system works very differently.
As an employee, your company withholds income tax (源泉徴収), pays half your social insurance, and handles year-end tax adjustments (年末調整). As a freelancer, all of that responsibility falls on you. You must calculate your own income, track your own expenses, file your own tax return (確定申告), and pay your own social insurance premiums.
The upside? Freelancers can deduct a wide range of business expenses that employees cannot -- your home office, internet, equipment, transportation, and more. Combined with the right filing method (青色申告), you can legally reduce your taxable income by hundreds of thousands of yen per year.
Visa note
This guide walks you through every step: registering as a sole proprietor, choosing the right filing method, tracking expenses, calculating your tax, dealing with consumption tax, and managing your social insurance. By the end, you will understand exactly what you owe and how to minimize it -- legally.
Filing your 開業届 かいぎょうとどけ
The 開業届 (kaigyō todoke) is the "notification of opening a business" -- a one-page form you submit to your local tax office (税務署) to officially register as a sole proprietor (個人事業主). It is required by law within one month of starting your freelance activity. (所得税法第229条)
In practice, there is no penalty for filing late -- and many freelancers file it retroactively when they realize they need it. The real reason to file it promptly is that you cannot apply for 青色申告 (the blue return, which gives you up to ¥650,000 in extra deductions) without first having a 開業届 on file.
How to file the 開業届:
- Get the form -- Download 個人事業の開業・廃業等届出書 from the NTA website, or pick one up at your local tax office. You can also file electronically via e-Tax.
- Fill in the basics -- Your name, address (住所), マイナンバー, the date you started freelancing (開業日), a description of your business (事業の概要), and the location of your business (usually your home address).
- Choose your 屋号 (trade name) -- Optional but useful. This is a business name you can use on invoices, bank accounts, and contracts. It can be anything -- "John's Design Studio" is fine.
- Submit to your tax office -- Bring it in person (with your ID and マイナンバー), mail it, or submit via e-Tax. Ask for a stamped copy (控え) for your records -- you will need it when opening a business bank account.
Pro tip
The entire process takes about 15 minutes. There is no fee. You walk out as an officially registered 個人事業主 in Japan.
青色申告 vs 白色申告: choosing your filing method あおいろ vs しろいろしんこく
When filing 確定申告 as a freelancer, you choose between two methods: 青色申告 (blue return) or 白色申告 (white return). This choice has a massive impact on how much tax you pay. The names come from the original colors of the paper forms.
| Feature | 青色申告 (Blue Return) | 白色申告 (White Return) |
|---|---|---|
| Special deduction | ¥650,000 (with 複式簿記 + e-Tax) or ¥100,000 (簡易簿記) | ¥0 -- no special deduction |
| Pre-registration required? | Yes -- 青色申告承認申請書 must be filed in advance | No -- this is the default |
| Bookkeeping method | 複式簿記 (double-entry) for ¥650K; 簡易簿記 (simple) for ¥100K | 簡易簿記 (simple bookkeeping) |
| Loss carryforward | Up to 3 years -- offset future profits with past losses | Not available |
| Family salary deduction | Yes -- pay family members and deduct as expense (青色事業専従者給与) | Limited to ¥500K-860K (事業専従者控除) |
| Reduced depreciation | Up to ¥300,000 per item can be expensed immediately (少額減価償却資産) | Only items under ¥100,000 can be expensed immediately |
| Required financial statements | 損益計算書 (P&L) + 貸借対照表 (Balance Sheet) for ¥650K | 収支内訳書 (Income and expense summary) only |
The ¥650,000 deduction explained
Bottom line: Unless your freelance income is truly minimal and temporary, you should always choose 青色申告 with 複式簿記. The ¥650,000 deduction alone can save you ¥100,000-200,000+ in income tax and resident tax every year. Cloud accounting software like freee, Money Forward, or 弥生 (Yayoi) handles the double-entry bookkeeping for you -- most have free or low-cost plans for sole proprietors and partial English interfaces.
白色申告 only makes sense in one scenario: you started freelancing mid-year and missed the deadline to apply for 青色申告. In that case, file 白色 for this year and immediately submit the 青色申告承認申請書 so you can switch next year.
Deductible expenses for freelancers 必要経費
As a freelancer, every legitimate business expense (必要経費 / hitsuyō keihi) directly reduces your taxable income. Unlike employees, who get a fixed 給与所得控除 (employment income deduction), freelancers deduct actual expenses. This makes expense tracking one of the most powerful tax optimization tools available to you.
The golden rule: an expense is deductible if it is ordinary and necessary for your business. If the NTA audits you, you must be able to explain how each expense relates to earning income. Keep receipts for everything -- digital scans are accepted.
| Expense Category | Japanese | Examples | Notes |
|---|---|---|---|
| Rent (home office portion) | 地代家賃 | Apartment rent, office rent | Deduct the % of your home used for work (e.g., 30-50% of rent for a 1LDK if one room is your office) |
| Utilities | 水道光熱費 | Electricity, gas, water | Same home-office % as rent. Electricity is the most defensible deduction. |
| Internet & phone | 通信費 | Internet bill, mobile phone plan, server hosting | Deduct business-use % (e.g., 70-100% if you work from home) |
| Equipment & supplies | 消耗品費 | Pens, printer ink, desk, chair, keyboard | Items under ¥100,000 (or ¥300,000 with 青色申告) can be expensed in full |
| Computer & devices | 減価償却費 | Laptop, monitor, camera, tablet | Items over the threshold must be depreciated (減価償却) over their useful life (e.g., PC = 4 years) |
| Transportation | 旅費交通費 | Train, taxi, flights for business, parking | Keep IC card history or receipts. Business trips are fully deductible. |
| Meals with clients | 接待交際費 | Dinner with a client, coffee meeting, gifts to business partners | Must be with a client/business contact. Record who, when, where, and purpose on the receipt. |
| Software & subscriptions | 支払手数料 / 消耗品費 | Adobe, GitHub, AWS, Slack, accounting software, domain names | Monthly subscriptions are fully deductible in the year paid |
| Books & education | 新聞図書費 / 研修費 | Technical books, online courses, conferences, certifications | Must be related to your business. A Japanese language course may qualify if needed for work. |
| Outsourcing & subcontracting | 外注費 | Paying a designer, developer, translator, or VA | Keep invoices and payment records. If paying individuals, you may need to withhold 源泉徴収. |
| Coworking space | 地代家賃 / 雑費 | Monthly coworking membership, drop-in fees, meeting room rental | 100% deductible if used exclusively for work |
| Insurance (business) | 保険料 | Professional liability insurance, equipment insurance | Business-related insurance only. Personal health/life insurance is a separate deduction (所得控除). |
| Tax accountant fees | 支払手数料 | 税理士 fees for filing, bookkeeping services | Fully deductible as a business expense |
家事按分 (Home-office ratio)
Depreciation (減価償却) explained
For assets costing more than ¥100,000 (or ¥300,000 if you file 青色申告), you cannot deduct the full cost in the year of purchase. Instead, you spread the cost over the asset's useful life using 減価償却 (genka shōkyaku / depreciation). The NTA publishes standard useful life tables for common assets.
| Asset | Useful Life | Annual Deduction (¥300K item) |
|---|---|---|
| Computer (PC/laptop) | 4 years | ¥75,000/year |
| Camera / video equipment | 5 years | ¥60,000/year |
| Office furniture (desk, chair) | 8-15 years | ¥20,000-37,500/year |
| Car (普通自動車) | 6 years | Varies by price (business-use % only) |
Remember: with 青色申告, items costing under ¥300,000 can be expensed immediately in full (少額減価償却資産の特例), up to a total of ¥3,000,000 per year. This is a significant advantage -- a ¥250,000 MacBook can be fully deducted in the year you buy it, rather than spread over 4 years.
Step-by-step income tax calculation 所得税の計算方法
Let's walk through a realistic example. Suppose you are a freelance IT engineer who earned ¥8,000,000 in revenue last year.
Step 1: Calculate your 事業所得 (business income)
Revenue (売上): ¥8,000,000
Business expenses (必要経費):
- - Rent (home office 30%): ¥120,000 x 12 x 30% = ¥432,000
- - Internet + phone: ¥8,000 x 12 x 80% = ¥76,800
- - Electricity (30%): ¥10,000 x 12 x 30% = ¥36,000
- - Equipment (MacBook): ¥250,000
- - Software subscriptions: ¥120,000
- - Transportation: ¥80,000
- - Meals with clients: ¥60,000
- - Books & courses: ¥50,000
- - Tax accountant fee: ¥80,000
- - Miscellaneous: ¥40,000
Total expenses: ¥1,224,800
Business income = ¥8,000,000 - ¥1,224,800 = ¥6,775,200
Step 2: Apply 青色申告特別控除
Business income after blue return deduction:
¥6,775,200 - ¥650,000 (青色申告特別控除) = ¥6,125,200
Step 3: Apply 所得控除 (personal deductions)
Deductions:
- - 基礎控除 (basic deduction): ¥480,000
- - 社会保険料控除 (national health insurance + pension): ¥850,000
- - 小規模企業共済等掛金控除 (iDeCo): ¥816,000
- - 生命保険料控除 (life insurance): ¥40,000
Total deductions: ¥2,186,000
Taxable income (課税所得) = ¥6,125,200 - ¥2,186,000 = ¥3,939,200
(Rounded down to nearest ¥1,000 = ¥3,939,000)
Step 4: Apply the progressive income tax rates
| Taxable Income | Tax Rate | Deduction Amount |
|---|---|---|
| ¥1 - ¥1,949,000 | 5% | ¥0 |
| ¥1,950,000 - ¥3,299,000 | 10% | ¥97,500 |
| ¥3,300,000 - ¥6,949,000 | 20% | ¥427,500 |
| ¥6,950,000 - ¥8,999,000 | 23% | ¥636,000 |
| ¥9,000,000 - ¥17,999,000 | 33% | ¥1,536,000 |
| ¥18,000,000 - ¥39,999,000 | 40% | ¥2,796,000 |
| ¥40,000,000+ | 45% | ¥4,796,000 |
Income tax calculation:
¥3,939,000 x 20% - ¥427,500 = ¥360,300
Reconstruction surtax (復興特別所得税 2.1%):
¥360,300 x 2.1% = ¥7,566
Total income tax: ¥360,300 + ¥7,566 = ¥367,866
(Rounded down to ¥367,800)
Step 5: Don't forget resident tax (住民税)
Resident tax (住民税): approximately 10% of taxable income
¥3,939,000 x 10% = approximately ¥393,900
(Billed separately by your municipality from June of the following year. Paid in 4 installments.)
Tax savings summary
Quarterly estimated tax payments (予定納税) よていのうぜい
If your income tax from the previous year exceeded ¥150,000, the NTA will require you to make prepayments on this year's tax -- called 予定納税 (yotei nōzei / estimated tax payments). This catches many first-year freelancers off guard.
The system works like this: the NTA looks at your previous year's tax bill and assumes you will earn the same amount this year. They divide the expected tax into three installments.
| Installment | Due Date | Amount |
|---|---|---|
| 1st installment (第1期) | July 31 | 1/3 of previous year's tax |
| 2nd installment (第2期) | November 30 | 1/3 of previous year's tax |
| Final settlement (確定申告) | March 15 (following year) | Remaining balance (actual tax minus prepayments) |
For example, if your previous year's income tax was ¥360,000, you would prepay about ¥120,000 in July and another ¥120,000 in November. When you file your 確定申告 the following March, the remaining balance is settled -- you either pay more or get a refund if your income decreased.
Reduction request
Cash flow tip: Many freelancers are caught off guard by 予定納税 because the payments are based on last year's income, not this year's. In your first profitable year, you pay nothing upfront. In your second year, you suddenly face two large prepayments plus the final settlement from year one. Set aside 20-30% of every payment you receive in a separate savings account for taxes -- this prevents the cash flow shock.
消費税 (consumption tax) and the インボイス制度 しょうひぜい / インボイスせいど
Japan's consumption tax (消費税) is currently 10% (8% for food and beverages). As a freelancer, you need to understand two critical questions: (1) do you need to charge and remit 消費税, and (2) should you register for the インボイス (invoice) system?
When do you need to pay 消費税?
You become a 課税事業者 (taxable business) and must charge/remit 消費税 when your taxable revenue exceeded ¥10,000,000 in the base period (基準期間 -- generally two years prior). If your revenue stays under ¥10M, you are a 免税事業者 (tax-exempt business) and do not need to collect or remit 消費税. (国税庁タックスアンサー No.6501)
| Situation | Must charge 消費税? | Example |
|---|---|---|
| Revenue under ¥10M (2 years prior) | NO -- you are 免税事業者 | 2024 revenue was ¥7M -- you are exempt in 2026 |
| Revenue over ¥10M (2 years prior) | YES -- you are 課税事業者 | 2024 revenue was ¥12M -- you must charge 消費税 in 2026 |
| Voluntarily registered for インボイス | YES -- regardless of revenue | Registered to keep corporate clients -- must now remit 消費税 |
The インボイス制度 (qualified invoice system)
Since October 2023, Japan's インボイス制度 (invoice system) has fundamentally changed the 消費税 landscape for freelancers. Under this system, businesses can only claim 消費税 input credits on purchases made from registered invoice issuers (適格請求書発行事業者). If you are not registered, your clients cannot deduct the 消費税 they pay you -- which means they may pressure you to lower your rates or register.
The dilemma for small freelancers: If your revenue is under ¥10M, you were previously exempt from 消費税. You could charge clients for it but were not required to remit it to the government -- effectively pocketing the 10% as extra income (a practice known as 益税). Under the invoice system, if you register, you lose this benefit and must remit 消費税. If you don't register, your corporate clients lose their input credit and may stop working with you.
Transitional measures (経過措置)
Should you register? It depends on your clients. If you primarily work with corporations (法人) or large businesses, registering is likely necessary to maintain those relationships. If your clients are individual consumers or overseas companies, the pressure is minimal. Run the numbers: calculate the 消費税 you would need to remit versus the potential revenue loss from not registering.
簡易課税 (simplified taxation)
If your revenue is under ¥50,000,000, you can opt for 簡易課税 (kan'i kazei / simplified taxation) instead of tracking actual input credits. Under this method, you calculate your deductible input tax as a fixed percentage of your sales, based on your industry. For most service-based freelancers (IT, consulting, design), the みなし仕入率 is 50% (Type 5 business). This means you remit only 50% of the 消費税 you collect. Apply by filing 消費税簡易課税制度選択届出書 by the end of the preceding tax year.
Social insurance for freelancers 社会保険
When you leave an employer to go freelance, you lose access to company-sponsored social insurance (社会保険 / shakai hoken). You need to arrange your own health insurance and pension. Here are your options.
Health insurance: 国民健康保険 vs 任意継続
| Option | 国民健康保険 (NHI) | 任意継続 (Voluntary Continuation) |
|---|---|---|
| Who? | Default option for all freelancers and self-employed | Former employees who want to keep their company insurance |
| Duration | Unlimited -- as long as you are a resident | Maximum 2 years after leaving the company |
| Premium basis | Based on previous year's income -- can be very expensive for high earners | Based on your salary at time of leaving (capped) -- you pay the full premium (no employer share) |
| Typical cost | ¥30,000-80,000+/month depending on income and municipality | Usually ¥30,000-50,000/month (double your employee share) |
| Deadline to enroll | Within 14 days of losing previous insurance | Within 20 days of leaving the company |
Which to choose?
Pension: 国民年金
As a freelancer, you are enrolled in 国民年金 (kokumin nenkin / national pension) -- the basic tier. The monthly premium is a flat ¥16,980 (2025 rate, adjusts annually). This is significantly less than what you contributed as an employee to 厚生年金 (employees' pension), but it also means your pension payout in retirement will be lower.
To supplement, consider:
- ● iDeCo (個人型確定拠出年金): Freelancers can contribute up to ¥68,000/month (¥816,000/year) -- the highest limit among all employment types. The entire contribution is tax-deductible (小規模企業共済等掛金控除). This is one of the most powerful tax optimization tools available to freelancers.
- ● 国民年金基金: An additional voluntary pension layer for self-employed individuals. Contributions are tax-deductible. Combined with iDeCo, the total cap is ¥68,000/month.
- ● 小規模企業共済: A retirement savings plan for sole proprietors and small business owners. Contributions up to ¥70,000/month (¥840,000/year) are fully tax-deductible. Payouts at retirement or business closure receive favorable tax treatment.
- ● NISA (新NISA): Not tax-deductible like iDeCo, but investment gains are completely tax-free. Use NISA for liquid savings and iDeCo for locked-in retirement savings.
All social insurance premiums (国民健康保険 + 国民年金) are fully deductible from your income via 社会保険料控除. This is an automatic deduction -- just enter the total amount paid on your 確定申告.
Frequently asked questions よくある質問
Do I need to file 確定申告 even if my freelance income is small?
It depends. If freelancing is your primary source of income and you have no employer doing 年末調整 for you, then yes -- you must file regardless of how much you earned. Even if you had zero income, filing is recommended to establish your loss carryforward (with 青色申告) and to properly declare your social insurance deductions. If freelancing is a side job alongside regular employment, you must file if your net freelance income (revenue minus expenses) exceeds ¥200,000. Below that threshold, you are exempt from national income tax filing -- but you still owe 住民税 (resident tax) on the amount, which requires a separate filing at your ward office.
My client withholds 源泉徴収 (10.21%) from my payments. Do I still need to file?
Yes, absolutely. When a client withholds 源泉徴収 from your payment, they are making an estimated tax prepayment on your behalf. But this withholding is a rough approximation -- it does not account for your business expenses, deductions, or the progressive tax rates. When you file 確定申告, you report your actual income and expenses, calculate the real tax owed, and then subtract the total amount that was already withheld. In most cases, the withholding exceeds your actual tax liability (because your deductions reduce the taxable amount), and you get a refund. Not filing means you leave that overpaid tax with the government. Always file.
What accounting software do you recommend for freelancers in Japan?
The three most popular cloud accounting tools for 個人事業主 in Japan are: freee (フリー) -- the most beginner-friendly with some English interface elements, automatic bank transaction import, and built-in 確定申告 filing; Money Forward クラウド確定申告 -- powerful with excellent bank/card integration, slightly more technical; and 弥生 (Yayoi) の青色申告オンライン -- the most established brand in Japan, first year is free for the basic plan. All three handle 複式簿記 automatically, generate the required financial statements (損益計算書 and 貸借対照表), and can submit directly via e-Tax. If you are doing 青色申告 with the ¥650,000 deduction, using one of these tools is practically mandatory.
Can I be a freelancer and an employee at the same time?
Yes -- this is very common in Japan and is called 副業 (fukugyō / side business). Your employer handles tax on your salary via 年末調整. For your freelance income, you file 確定申告 to report the additional earnings. Your freelance income is classified as either 事業所得 (if it is a substantive, ongoing business with the intent to earn profit) or 雑所得 (if it is occasional or minor). The distinction matters: 事業所得 allows 青色申告, while 雑所得 does not. As a rule of thumb, if your side income is regular, you have multiple clients, and you have filed a 開業届, the NTA is more likely to accept it as 事業所得. Be aware that some employment contracts prohibit or restrict 副業 -- check your 就業規則 (work rules) before starting.
I work remotely for an overseas company. How am I taxed?
If you are a tax resident of Japan (generally, you live in Japan and intend to stay for a year or more), you are taxed on your worldwide income -- including payments from overseas clients. The income is classified as 事業所得 (business income) if you are freelancing. You report it in yen using the exchange rate on the date of receipt (or a reasonable average rate). Your overseas client will not withhold Japanese tax, so you must calculate and pay the full amount yourself via 確定申告. There is generally no double taxation if the overseas company is simply paying you for services -- it is Japanese-source income because you perform the work in Japan. However, if you were taxed in the client's country as well, Japan has tax treaties (租税条約) with many countries that can provide relief. Consult a 税理士 with international experience for complex arrangements. (所得税法第7条)
What happens if the NTA audits me?
Tax audits (税務調査) for freelancers are relatively rare but not unheard of, especially if you report unusually high expenses, consistently show losses, or have large discrepancies. If selected, the NTA will review your books, receipts, bank statements, and invoices -- typically going back 3 to 5 years (up to 7 years in cases of suspected fraud). The best defense is good record-keeping: keep all receipts (paper or digital), maintain organized books using accounting software, and ensure every expense has a clear business purpose. With 青色申告 and proper 複式簿記, your records should withstand scrutiny. If you are audited and mistakes are found, you will be assessed additional tax plus penalties. Having a 税理士 represent you during an audit can be very helpful.
Should I incorporate (法人化) instead of staying a sole proprietor?
The general rule of thumb in Japan is that incorporating becomes advantageous when your taxable income consistently exceeds ¥8,000,000-10,000,000. At that level, the corporate tax rate (approximately 23-30% effective) becomes lower than the top individual income tax rate (up to 55% including resident tax). A corporation also allows you to pay yourself a salary (役員報酬), which receives the 給与所得控除 deduction, and you can split income with family members who are officers. However, incorporation comes with higher compliance costs (決算 / annual accounting, 法人税申告, 社会保険 for the company, and 税理士 fees of ¥200,000-500,000/year). For most freelancers earning under ¥8M, staying as a 個人事業主 with 青色申告 is simpler and more cost-effective.
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Sources
- 所得税法第27条 (事業所得)
- 国税庁タックスアンサー No.2070 青色申告制度
- 国税庁タックスアンサー No.2072 青色申告特別控除
- 国税庁タックスアンサー No.6501 納税義務の免除
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