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Tax Reduction : Board Member Company Housing Deduction

Disclaimer : Please note the information provided on this website does not, and is not intended to, constitute legal advice. All the information, content, and materials available on this site are for general informational purposes only.

For the official word and tax rules for Japan, always remember to consult a licensed tax attorney in Japan or the website of the National Tax Agency of Japan (the NTA).

Let’s dive into some possible ways you can reduce your corporate taxes in Japan.

Board Members 役員 : Tax Reduction through Company Housing

One way to reduce both your Japanese corporate taxes and your income taxes is to enroll yourself in company housing as a board member 役員. Company housing does not have to be a location owned by the company. It can be an apartment that your company registers, pays the rent for, and provides to you, a board member.

Who does it apply to?

  • Kabushiki Kaisha
  • Goudou Kaisha – which has established a board of directors

The board member company housing benefit applies to the board members of a corporate entity. You could have a corporate entity where you are a board member and the only person in your company. However, this benefit does not apply to a normal salaried employee because company housing allowance is treated as additional income. This benefit also does not apply to someone who is self-employed, 個人事業主.

How does it work?

The company will sign the lease on your apartment contract on your behalf and make the monthly payments to the landlord. Your company then has to deduct 50% of the rent costs from your paycheck. If the company deducts less than 50%, your company will get in trouble when the company is audited in the future. In my experienced, I had an existing apartment agreement under my name that we switched to the company. However, the company had to pay the real estate agency fee, which was one month’s rent again despite only having paid for it 2 months early.

※ I am not sure if the company can deduct this amount from you, but they can pay on your behalf.

Here is how a board member like you can benefit from this situation. You and your company could agree to a salary of a certain amount let’s say 800,000 yen a month. You have an apartment that costs 200,000 yen a month. Your company could provide you company housing and set your salary at 700,000 yen. The company would deduct 100,000 yen, or 50% of 200,000 yen each month from your salary and pay the remaining 100,000 yen.

Your income tax and social insurance calculation would be based on 700,000 yen and not 800,000 yen. With this method you can increase your take home pay by several hundred dollars a month.

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Considering an Accountant in Japan?

While our guide provides valuable insights into reducing your Japanese company taxes, navigating the intricate tax landscape can be challenging. An experienced accountant in Japan can offer tailored strategies, ensure compliance, and optimize your tax situation. For a comprehensive understanding and to find the right tax accountant for your needs, head to our Ultimate Guide to an Accountant in Japan.

Please note : The following links are provided only for your convenience. I do not recommend or endorse the contents of any third-party sites.

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