📋 Freelance & Side Job Tax
Tax Guide for Foreign Freelancers & Side Workers in Japan【2026】Taxes / Invoices / Visa
※This article contains promotion.
📋 Contents
More and more foreigners working in Japan are taking on side jobs in addition to their main employment, or working as freelancers or sole proprietors. However, taxation on side jobs and freelance work involves many rules that differ from regular salaried employment — including tax filing (kakutei shinkoku), income classification, and the invoice system (consumption tax) — and for foreigners, there are additional important considerations regarding the relationship between residency status and side work.
This article explains in plain terms the tax rules that foreigners need to know when doing side work or freelancing in Japan.
📌 This article is for informational purposes only. For decisions about individual tax or residency status matters, please consult the National Tax Agency (NTA), your local tax office, the Immigration Services Agency (IMMI), or a qualified professional (tax accountant, administrative scrivener). Tax law and immigration regulations are subject to change.
💡 Key Points
- Before starting a side job or freelance work, you need to check your residence status — for work visas, a side job outside the scope of your main occupation may require permission to engage in activity other than that permitted under your status of residence.
- For company employees with a side job, income tax generally must be filed once side income exceeds 200,000 yen per year, while resident tax may need to be filed even if it is 200,000 yen or less.
- If you keep bookkeeping records, the income is generally classified as business income, and blue-form tax filing may allow a deduction of up to 650,000 yen and a 3-year carryforward of losses.
- Invoice registration is optional; if you do not register and your taxable sales in the base period are 10 million yen or less, you generally do not incur a consumption tax payment obligation.
① What you will learn in this article
- Types of taxes on side-job and freelance income (income tax, resident tax, consumption tax, individual business tax)
- Conditions that require you to file a tax return (the 200,000 yen rule) and notes on resident tax filing
- Differences between business income and miscellaneous income, and the importance of keeping records
- What counts as a deductible expense, and differences between Blue Form and White Form filing
- The invoice system (qualified invoices) and how consumption tax exemption/liability works
- Residency status and side work — notes on permission for activities outside your visa status (immigration risk)
- Procedures when leaving Japan or closing your business
② ⚠️【Check this first】Residency status and side work — Permission for activities outside your visa status
⚠️ Before thinking about taxes, confirm your residency status first. Engaging in side work or freelance activities without proper authorization constitutes illegal employment (fuho shuro) and may seriously affect your visa renewal and any application for permanent residency.
Side-work eligibility by residency status
| Residency status | Side work / Freelance | Notes |
|---|---|---|
| Permanent Resident | No restrictions | No restrictions on type or hours of work |
| Long-Term Resident | No restrictions | No restrictions on type or hours of work |
| Spouse or Child of Japanese National | No restrictions | No restrictions on type or hours of work |
| Spouse or Child of Permanent Resident | No restrictions | No restrictions on type or hours of work |
| Engineer / Specialist in Humanities / International Services (技人国) | Needs checking | Side work outside the scope of your main job category may require permission for activities outside your visa status |
| Skilled Labor / Specified Skilled Worker / Other work visas | Needs checking | Generally limited to the permitted occupation and activities. Side work may require permission for activities outside your visa status |
| Student | Generally not permitted (only within the scope of permission for activities outside your status) | Even with permission, restrictions apply (e.g., no more than 28 hours per week) |
When permission for activities outside your status is required — and the risks of working without it
Work visas (Engineer / Specialist in Humanities / International Services, etc.) are in principle limited to activities within the scope of your permitted residency status (your main job). If you take on side work unrelated to your main job, or work as a freelancer in a different occupation, you will generally need to obtain permission for activities outside your status.
⚠️ Working outside your status without permission is illegal employment：Engaging in employment or freelance activities outside your permitted scope without the necessary permission constitutes illegal employment (violation of the Immigration Control Act). This may result in denial of visa renewal, revocation of your residency status, and serious negative impact on your permanent residency application. Always check before starting any side work or freelancing.
Always check with the Immigration Services Agency or an administrative scrivener
Whether your residency status permits you to do side work or freelance depends on individual circumstances (type of status, nature of main job, nature of side work, employment arrangement). Do not assume "it's probably fine" — always consult the Immigration Services Agency or an administrative scrivener who specializes in residency matters.
💡 For details on residency status procedures, visit Zainichi Life Navi：Detailed procedures such as how to apply for permission for activities outside your status and how to change your residency status are explained on our sister site「在日ライフナビ」.Residency Status Renewal & Change Guide (Zainichi Life Navi) ↗
③ Overview of taxes on side-job and freelance income
Income from side jobs and freelance work is generally subject to the following four types of taxes.
| Tax type | Who it applies to | Where to file / pay |
|---|---|---|
| Income tax | Tax on income after deducting necessary expenses and various deductions. Salaried employees with non-salary, non-retirement income exceeding 200,000 yen per year generally need to file a return | Tax office (annual tax return) |
| Resident tax (Prefectural + Municipal) | Based on the previous year's income. Even if under 200,000 yen, filing may be required in some cases (important) | Municipality (resident tax filing or annual tax return) |
| Consumption tax | If taxable sales in the base period exceed 10 million yen, you become a taxable business and must pay. Invoice registrants also become subject to this | Tax office (consumption tax return) |
| Individual business tax | Applies to those operating certain business categories at a business scale (with a 2.9 million yen business owner deduction per year). Tax rates vary by industry | Prefectural tax office (assessed automatically by notice) |
Salaried employee with side work vs. full-time freelancer
| Category | Salaried employee + side work | Full-time freelancer / sole proprietor |
|---|---|---|
| Income tax filing | If non-salary, non-retirement income exceeds 200,000 yen/year, a tax return is generally required | A return is required when income exceeds total deductions and tax is owed |
| Resident tax | Even if side income is below 200,000 yen, resident tax filing may be required in some cases | Filing a tax return automatically triggers calculation of resident tax |
| Social insurance | Continues to be covered by employer's social insurance (health insurance + employees' pension) | Must enroll in National Health Insurance and National Pension |
| Year-end adjustment | Main employment handled by employer's year-end adjustment; side income must be declared via tax return | No year-end adjustment; everything is declared via annual tax return |
④ Who needs to file a tax return (the 200,000 yen rule / resident tax)
The 200,000 yen rule for salaried employees (income tax)
If you receive salary from one employer and your total non-salary, non-retirement income is 200,000 yen or less per year, you are generally not required to file an income tax return. This is commonly called the「200,000 yen rule」.
📌 Income = Revenue − Necessary expenses. Even if your side-job revenue (sales) exceeds 200,000 yen, if the income after deducting expenses is 200,000 yen or less, the exemption applies.
Resident tax follows different rules (Important)
⚠️ 「Under 200,000 yen means nothing is required」is incorrect：Even when an income tax return is not required (under 200,000 yen per year), you may still be required to file a resident tax return with your municipality in some cases. Resident tax filing is done at your municipal office window or through the annual tax return (February 16 to March 15 of the following year). Failing to file may result in additional resident tax assessment and late-payment penalties.
Full-time freelancers
For full-time freelancers or sole proprietors whose main income is not from employment, a tax return is required when annual income exceeds total deductions and tax is owed. Even if income is low and tax owed is zero, a return is required if you wish to claim deductions such as the housing loan deduction, medical expense deduction, or furusato nozei contribution deduction.
Risks of not filing
⚠️ Risks of non-filing and unreported income：If you fail to file when required, you may be subject to a non-filing penalty (generally 15–20%), late-payment penalties, and substantial additional tax. Furthermore, for foreigners, tax payment status may be checked during visa renewal screening, and non-payment or non-filing may disadvantage your renewal application.
⑤ Income classification: Business income vs. Miscellaneous income
Which「income classification」your side-job or freelance income falls under has a major impact on available deductions and how losses are handled.
| Category | Business income | Miscellaneous income |
|---|---|---|
| Main requirements | Maintaining accounting records (regardless of income amount); conducting continuous, repeated, and independent business activities | No accounting records and side income is generally below 3 million yen → miscellaneous income as a rule (NTA 2022 circular) |
| Blue Form filing | Available (up to 650,000 yen deduction) | Not available |
| Loss carryforward | 3-year carryforward available | Cannot offset against other income types |
| Salary for working family members | Blue Form: family member salary permitted | Not available |
| Bookkeeping / records | Generally required (Blue Form requires double-entry bookkeeping) | Recording income/expenses is optional but recommended |
💡 Keeping accounting records is the key to business income status：Under the NTA's 2022 circular, if you「maintain accounting records」regardless of income level, the income is classified as business income as a rule. It is recommended to start recording income and expenses using accounting software or a ledger as soon as you begin your side work.
📌 Whether income qualifies as business income or miscellaneous income also depends on the「actual nature of the business」— assessed holistically based on continuity, repetitiveness, independence, income scale, and whether it constitutes a business in the commonly understood sense. If unsure, consult a tax accountant.
⑥ What is and isn't deductible as a business expense
Claiming expenditures related to your business or side work as「necessary expenses」reduces your taxable income.
Common expense categories
| Expense type | Details and notes |
|---|---|
| Communications | Phone and internet costs for work. If shared with personal use, prorate by business-use ratio |
| Transportation | Travel costs for work (train, bus, taxi, etc.). Keep receipts, noting date, time, and purpose |
| Consumables | Stationery, printer ink, work equipment (computers, etc. Items 100,000 yen or more may require depreciation) |
| Outsourcing / subcontracting fees | Fees paid to others to perform part of your work |
| Books / information | Books, materials, seminar fees relevant to your work |
| Software / service fees | Subscription fees for accounting software, cloud services, etc. used for work |
| Rent / utilities (home office prorated) | If you use your home as a workplace, prorate by business-use ratio (floor area, hours, etc.) |
| Entertainment / client meals | Dining, etc. with business partners related to your work. Full deductibility requires documented business purpose |
⚠️ What cannot be deducted：Personal spending (private meals, travel, household goods, etc.) and expenditures with no clear connection to your work are not deductible. When prorating, calculate at a reasonable ratio and keep a record of the basis for that ratio.
📌 Record-keeping obligations：Receipts, invoices, and similar documents must generally be retained for 5 to 7 years from the tax return deadline (7 years for Blue Form filers). Electronic storage is also recognized if requirements are met (Electronic Bookkeeping Act). Check the NTA for the latest requirements.
⑦ Blue Form (青色申告) vs. White Form (白色申告) filing
There are two types of tax returns:「Blue Form」and「White Form」. If you have business income, choosing the Blue Form can provide significant tax-saving benefits.
| Category | Blue Form | White Form |
|---|---|---|
| Special filing deduction | Up to 650,000 yen (e-Tax and other conditions required) · 550,000 yen · 100,000 yen (3 tiers) | None |
| Loss carryforward | 3-year carryforward (net loss carryforward deduction) | Not available |
| Salary for working family members | Full salary paid to family members in the same household can be deducted | Only a limited special deduction for family workers |
| Bookkeeping | Double-entry (for 650,000/550,000 yen deduction) or simplified bookkeeping (for 100,000 yen deduction) | Must prepare an income/expense summary form |
| Advance procedures | Must submit a business registration notice + Blue Form approval application | No special advance procedures required |
Steps to set up Blue Form filing
1
Submit your business registration notice (Individual Business Opening/Closing Notice)
Submit to your local tax office within one month of starting your business. You will need your My Number card (or number confirmation document + photo ID). Online submission via e-Tax is also available.
2
Submit your Blue Form approval application
To apply the Blue Form from the current tax year, you must submit it to your local tax office by March 15 of that year as a rule (for new businesses, within two months of opening). Missing this deadline means you must use the White Form for that year.
3
Keep records (double-entry or simplified bookkeeping)
To claim the 650,000 yen (or 550,000 yen) deduction, double-entry bookkeeping is required. Using accounting software automatically generates double-entry ledgers, which is efficient.
4
Prepare and submit your tax return (Blue Form financial statement)
File your annual tax return from February 16 to March 15 of the following year. To claim the 650,000 yen deduction, electronic filing via e-Tax or electronic bookkeeping is required.
📌 Even when the scale of your side work is small and it is unclear whether it qualifies as business income, submitting the business registration notice and Blue Form approval application early is recommended (there are almost no downsides to doing so).
⑧ The invoice system and consumption tax
What is a consumption tax-exempt business?
A business whose taxable sales in the base period (the year before last, or the fiscal year before last) are 10 million yen or less is generally exempt from paying consumption tax — this is called a「tax-exempt business」. Most people who have just started side work or freelancing fall into this category.
The invoice system (Qualified Invoice Storage Method)
The invoice system launched on October 1, 2023. To issue a「qualified invoice (invoice)」, you must register with the tax office as a「qualified invoice issuer」and obtain a registration number (T + 13 digits).
| Category | Not registered (tax-exempt) | Registered (taxable business) |
|---|---|---|
| Consumption tax payment | Generally exempt (sales 10 million yen or less) | Must file and pay consumption tax included in sales |
| Issuing qualified invoices | Cannot issue (may be disadvantaged with clients who require invoices) | Can issue |
| Impact on clients | Clients (taxable businesses) may have difficulty claiming input tax credits | Clients can claim input tax credits |
| Whether registration is needed | If mainly BtoC or transacting with exempt businesses, may not be necessary | Often advantageous if you have many BtoB transactions or corporate clients |
📌 Invoice registration is voluntary：Whether to register should be based on your client situation (BtoB vs BtoC, whether your counterpart is a taxable or exempt business) and your sales scale. Once registered, you become a taxable business and incur the obligation to file and pay consumption tax.
The 20% Special Rule (applicable through fiscal year 2026)
For those who newly became taxable businesses by registering for the invoice system (converting from tax-exempt), a 「20% Special Rule」that reduces the consumption tax payable to 20% of the tax on sales is available. For individual business owners, it is applicable through fiscal year 2026 (tax periods including September 30, 2026).
⚠️ Confirm the rules for 2027 and beyond：After the 20% Special Rule expires (from 2027 onward), you will need to consider options such as the simplified tax system (the deadline to file a simplified tax system election is December 31, 2026) or any successor transitional measures. For full details and the latest information, always confirm with the NTA's dedicated invoice system page or a tax accountant. This article avoids making absolute statements about provisions that remain subject to change.
⑨ Steps for filing your tax return · Documents needed
1
Tally your income and expenses, and organize your records
Organize your income and expenses for the full year (January to December). Sort through invoices and receipts and enter them into accounting software or a ledger. Freelancers should also check the amount of withholding tax deducted (this will be reconciled in the tax return).
2
Prepare the required documents
Your My Number card (or number confirmation document + photo ID), your Residence Card, income/expense records and receipts, payment notification forms from clients (if any), and deduction certificates for social insurance premiums and life insurance premiums.
3
Prepare your tax return
Use the NTA's「Tax Return Preparation Corner」(web-based) or accounting software to complete your return. For Blue Form filers, you also need to prepare the Blue Form financial statement.
4
Submit your return (February 16 to March 15 of the following year)
Submit via e-Tax (online), by post, or in person at your local tax office window. Submitting via e-Tax meets the requirement for the 650,000 yen Blue Form special deduction (e-Tax filing condition).
5
Confirm payment or refund
If additional tax is owed after filing, pay by March 15 (installment payment or bank transfer payment options are also available). If tax was over-withheld, a refund will typically be issued within several weeks to about two months (subject to conditions).
📌 Tax filing procedures in Japan are conducted in Japanese. Some tax offices may provide guidance in other languages, but the return forms themselves are in Japanese. Using accounting software or consulting a tax accountant is recommended.
For those anxious about tax-return calculations and paperwork. Some services let you complete everything online, from data entry to filing (e-Tax). Useful if you have multiple income sources or are filing for the first time.
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💡 Which filing software? Money Forward Cloud vs. freee Accounting
The two cloud accounting services most widely used by foreign residents filing a tax return in Japan are Money Forward Cloud and freee Accounting. Both offer a free trial, so you can choose based on how you work and what you prefer. Pricing plans and features may change, so please check each official site for the latest information.
| Comparison | Money Forward Cloud | freee Accounting |
|---|---|---|
| How you enter records | Links with your bank and cards to import transactions automatically (based on double-entry bookkeeping) | Easy to work through by answering yes/no style questions |
| Bank & card linking | Supported | Supported |
| Preparing the tax return | Guided on screen; supports e-Tax integration | Guided on screen; supports e-Tax integration |
| Smartphone app | Yes | Yes |
| Pricing | Mainly paid plans (free trial available; check the official site for the latest) | Mainly paid plans (free trial available; check the official site for the latest) |
| Who it suits | People who want to make use of other Money Forward services or bank linking, and who understand bookkeeping to some extent | Beginners who are not very familiar with bookkeeping and want to be guided by questions |
- Money Forward Cloud suits you if: you place importance on automatic linking of bank accounts and credit cards, or you also want to use other Money Forward products.
- freee Accounting suits you if: you are not confident in your bookkeeping knowledge and want to be guided through to filing by answering questions.
Both can be tried for free. We recommend trying them out first and choosing whichever suits you.
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※This article contains promotion. Pricing plans, features and supported services are subject to change. Please check each official site for the latest information.
⑩ Notes on leaving Japan or changing your residency status
When closing your business, leaving Japan, or changing your residency status, the following procedures may be required.
1
Submit a business closure notice
When closing your business, submit the「Individual Business Opening/Closing Notice」to your local tax office (as a rule, within one month of the closure date). Blue Form filers must also simultaneously submit a「Notice to Discontinue Blue Form Filing for Income Tax」.
2
Final tax return (or pre-departure tax return)
Income for the year of closure or departure must be reported in the tax return filed from February 16 to March 15 of the following year. If the filing deadline falls after you leave Japan, you must either file before departure or appoint a tax agent (nozei kanrinin) to handle filing and payment on your behalf (you must notify the tax office of your tax agent before leaving Japan).
3
Settling your resident tax
Because resident tax is based on the prior year's income, you may still owe resident tax for the following year even after leaving Japan. Resident tax for the year you leave employment or close your business may need to be paid in a lump sum or converted to a different collection method (→Resident Tax Guide).
4
Submit an invoice registration cancellation notice
If you were registered as a qualified invoice issuer, submit a「Notice Requesting Cancellation of Qualified Invoice Issuer Registration」to your tax office. The cancellation date is the day following the last day of the tax period that includes the date of submission (see NTA for details).
5
Withdrawal from National Pension and National Health Insurance (confirm details)
For information on health insurance and pension procedures when leaving Japan or closing your business, please refer to Zainichi Life Navi (life.m-ri.co.jp) ↗ (residency status and social insurance are the primary focus of our sister site).
📌 Procedures when leaving Japan can be complex depending on your situation. We recommend making use of free consultations offered by tax accountants, administrative scriveners, and tax offices (during the tax filing period).
⑪ Frequently Asked Questions (FAQ)
If my side income is under 200,000 yen, do I not need to file a tax return?
If you receive salary from one employer and your total non-salary, non-retirement income is 200,000 yen or less per year, you are generally not required to file an income tax return. However, you may still be required to file a resident tax return with your municipality even if income is under 200,000 yen (you need to either file a resident tax return with your municipality or confirm with them). Please note that「not required to file income tax ≠ nothing required at all」.
Can foreigners with a valid residency status freely do side work or freelancing?
It depends on the type of residency status. Permanent Residents, Long-Term Residents, Spouses or Children of Japanese Nationals, and Spouses or Children of Permanent Residents have no work restrictions and can freely do side work and freelancing. On the other hand, work visas such as Engineer/Specialist in Humanities/International Services, Skilled Labor, and Specified Skilled Worker are in principle limited to their permitted scope of activities, and depending on the nature of side work, permission for activities outside your status may be required. Working without this permission is illegal employment and can seriously affect your visa renewal and permanent residency application. Always confirm with the Immigration Services Agency or an administrative scrivener. Details →Zainichi Life Navi Residency Status Guide ↗
Which is more advantageous — business income or miscellaneous income?
If you maintain accounting records, your income is classified as business income as a rule, and you can take advantage of Blue Form filing (up to 650,000 yen deduction) and a 3-year loss carryforward, making it more advantageous in terms of taxation in many cases. However, to be classified as business income, your activities must demonstrate「the substance of a business (continuity, repetitiveness, independence)」. If you have no accounting records and side income is generally below 3 million yen, report it as miscellaneous income. Consult a tax accountant based on your specific situation.
Do I have to register for the invoice system?
Registration is voluntary. Tax-exempt businesses with taxable sales in the base period below 10 million yen have no obligation to pay consumption tax even without registering for the invoice system. However, if you have many BtoB transactions and your clients (taxable businesses) require invoices, not registering may put you at a disadvantage. The 20% Special Rule applies to individual business owners through fiscal year 2026, so confirm the latest information with a tax accountant or the NTA's invoice system page regarding how to handle things from 2027 onward (e.g., electing the simplified tax system).
What can I claim as expenses?
Costs necessary for your business can be claimed as expenses. Main examples include business-related communications, transportation, consumables, outsourcing fees, books, software fees, and workplace rent (prorated by business use ratio). Personal spending and costs with no clear business connection cannot be claimed. For home-office prorations, it is important to record the reasoning for the ratio used. Receipts and records must be retained (generally 5 to 7 years).
What happens to health insurance and pension when I become a freelancer?
When you leave employment and become a freelancer or sole proprietor, you leave your employer's social insurance (health insurance + employees' pension). You will generally need to enroll in National Health Insurance and National Pension (the target is within 14 days of the day after your last day of employment). For details on the enrollment procedure and how premiums are calculated, please refer to our sister site「Zainichi Life Navi」. →Zainichi Life Navi (health-insurance / pension-guide) ↗
What procedures do I need to take care of when leaving Japan?
The main procedures include: ①Submit a business closure notice (within one month of the closure date), ②File your final tax return (February–March of the following year, or file a pre-departure return / appoint a tax agent before leaving), ③Settle your resident tax, ④Submit an invoice registration cancellation notice (if registered). If the tax filing deadline falls after you leave, you must appoint a tax agent and notify the tax office before departing. If your situation is complex, consult a tax accountant or tax office.
Sources / References
- NTA「No.1900 Salaried employees who need to file a tax return ↗」
- NTA「No.2100 Overview of depreciation ↗」
- NTA「Circular on business income / miscellaneous income (classification of side-job income) (2022) ↗」
- NTA「No.6498 Qualified Invoice Storage Method (Invoice System) ↗」
- NTA「Invoice System Dedicated Page ↗」
- Immigration Services Agency of Japan「IMMI Official Site ↗」