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Side income

Small scale​

If you earn side income of less than ¥200,000 then you do not need to report it for income tax purposes. However, there is no such rule for residence tax, and side income must be reported to your municipality separately.

Employment at multiple companies​

Social Insurance (Shakai Hoken)​

When you become an employee at multiple companies and are eligible for enrolment in Shakai Hoken, you should submit this form to the pension office within 10 days of the start of employment at the second (or more) workplace. You will need to ask your company’s HR department for your 事業所整理記号 (a code provided by the pension office to all employers) and your 被保険者整理番号 (your employee number, found on your insurance card). You can choose either workplace as your 選択事業所 (main employer) and your 非選択事業所 (sub employer). Note, this is different from your main employer for income tax purposes. Your main employer for Shakai Hoken purposes will be where your health insurance card will be issued and the name of the company which will appear on your pension record.

After submitting this form, the pension office will send a form notifying your employers how much they should pay for social insurance under the new calculation. Usually, companies pay for social insurance using this form (example shown from Kyokai Kenpo in Tokyo for 2022 - this is slightly different for each prefecture, the list can be found here). Your average monthly remuneration (標準報酬月額) is calculated when your company submits a form after your June salary has been paid, and they will declare your remuneration for April, May and June. Your average monthly remuneration will be the average of this number. If you work for two or more companies, the pension office will calculate the total of all of the forms submitted to them. When you work for multiple companies, your premiums will be calculated as 標準報酬月額 (average monthly remuneration) x 保険料率/100 (insurance premium rate) x (your salary / your total monthly remuneration).

Let’s say you work in Tokyo, you are under 40 so your health insurance rate is 9.81%, one company pays you ¥510,000 and another pays you ¥310,000 for a total of ¥820,000.

Your calculations for your health insurance for company A would be ¥830,000 x (9.81/100) x (¥510,000/¥820,000) = ¥50,641 (rounded down)

Your calculations for your pension for company A would be ¥650,000 x (18.3/100) x (510,000/820,000) = ¥73,981 (rounded down)

Your calculations for your health insurance for company B would be ¥830,000 x (9.81/100) x (¥310,000/¥820,000) = ¥30,782 (rounded up)

Your calculations for your pension for company B would be ¥650,000 x (18.3/100) x (¥310,000/¥820,000) = ¥44,969 (rounded up)

The above numbers are the total amount of insurance premiums. Those premiums are then split 50/50 between the employee and the employer. If the number cannot be divided by two, the employer pays the rounded up price. So, for example company A’s health insurance is a total of ¥50,641, therefore the employee would pay ¥25,320 and the employer would pay ¥25,321.

Income tax​

Every year, you submit a form called 給与所得者の扶養控除等(異動)申告書 (2023 version) to your main employer. You can only submit this paper to one employer, and it signifies that employer is the main one. Only the company which you submitted this paperwork to can perform an end of the year tax adjustment (年末調整), and by submitting this paperwork you will be eligible for the lower of two types of income tax withholding called 甲欄. Income tax is withheld using this form (2022 version). The amount shown is your salary after the employees portion of social insurance deductions.

Using the above example of company A, the total salary is ¥510,000. The social insurance deductions are (¥25,320 + ¥36,990) = ¥62,310.

Salary - deductions = ¥510,000 - ¥62,310 = ¥447,690.

Using the income tax chart, and presuming you have zero dependents, you can see the income tax for company A would be ¥21,070.

Company B, on the other hand, hasn’t received the above form (給与所得者の扶養控除等(異動)申告書), and therefore has to calculate income tax using the 乙欄 value.

Using the above example of company B, the total salary is ¥310,000. The social insurance deductions are (¥15,391 + ¥22,484) = ¥37,875.

Salary - deductions = ¥310,000 - ¥37,875 = ¥272,125.

Using the income tax chart, and looking at the 乙欄 section, you can see the income tax for company B would be ¥44,500.

This larger amount of income tax will be paid as a tax refund when you file your final tax declaration (確定申告).

Note, only your main company can perform an end of the year tax adjustment, and your sub company cannot. People who work for multiple companies should file a final tax declaration.