fbpx

Furusato Nozei: Pay your Tax Smartly in Japan !

Instead of paying only taxes, turn the Tax Payments into Free Goods.

Furusato nozei is a system that allows you to redirect your tax payments to a rural community in exchange for gifts. As you have to pay tax anyway, this is an opportunity for free stuffs. This article will cover everything you need to know to use your taxes payment wisely in Japan.

What is furusato nozei, aka hometown tax payment?

The Furusato Nozei Program is a tax system that exempts taxpayers from income and resident tax if they make donations to a municipality outside of central Tokyo that they wish to support. The goal is for donors to support local governments while receiving gifts for their tax money they donate.

The program was rolled out to support and revive rural areas in Japan that suffer from ( Shoushika )dwindling populations.

Simply put: pay the same amount of tax, but to a different part of Japan, and get free gifts in return !

Are foreigners eligible for furusato nozei?

Yes, everyone is eligible as long as you keep paying taxes. Every tax-paying resident in Japan is eligible to participate in the system.

What do I get?

In fact many luxury items! Offerings range from local produce that can be as fancy as king crabs or high-end sake, or quite simple like a crate of apples or a bag of rice. On the other end of the spectrum, there were gifts like Amazon gift cards.

These are some interesting gift options we found on Rakuten included:

[商品価格に関しましては、リンクが作成された時点と現時点で情報が変更されている場合がございます。]
【ふるさと納税】【お届け月が選べる】都城産「前田さん家のスウィートポーク」肉肉肉4kgセット – ブランド豚 ロース バラ 切り落とし ミンチ 合計4kg 送料無料 MJ-8913【宮崎県都城市は令和2年度ふるさと納税日本一!】
価格:15000円(税込、送料無料) (2021/12/22時点)楽天で購入
4 KG of Pork
[商品価格に関しましては、リンクが作成された時点と現時点で情報が変更されている場合がございます。]
【ふるさと納税】【訳あり】 牛肉 ハラミ 牛ハラミ タレ漬け 1.6kg 焼肉 BBQ 肉厚 ジューシー コロナ 支援
価格:10000円(税込、送料無料) (2021/12/22時点)楽天で購入
1.6KG of Beef Harami
[商品価格に関しましては、リンクが作成された時点と現時点で情報が変更されている場合がございます。]
【ふるさと納税】日本一の牛肉!鹿児島県産黒毛和牛ロースステーキ4枚セット(4枚・計800g)ゆず胡椒付き【ナンチク】
価格:30000円(税込、送料無料) (2021/12/22時点)楽天で購入
Wagyu

There are many more !

My company does my tax for me, can I still participate in furusato nozei?

Yes, you can. Most people that participate in the scheme are salaried employees and typically don’t do their own tax. In that case, you can still do your own Tax [Kakutei Shinkoku].

If you do your own tax (as most freelancers and contractors do), you first do your hometown tax donation and then claim back what you donated later for the following year.

One flaw in the system is that you have to put your donation for furusato nozei in by December 31st. However, you won’t receive your final tax statement for the whole year until January. So you have to make your calculations based on last year’s salary, if there were no big changes. There are online tools (Its in Japanese though ) that let you punch in the numbers from your pay stubs and calculate how much of your tax is eligible for a furusato nozei donation, or you can also check on this table as below :

※Please note the limit of your furusato nozei might vary depending on other Tax deductions applied to you.

Salary

300万円
You

28,000円
Husband & Wife
with 1 Child
19,000円
Husband & Wife
with 1 Child
15,000円


11,000円


7,000円


325万円31,000円23,000円18,000円14,000円10,000円3,000円
350万円34,000円26,000円22,000円18,000円13,000円5,000円
375万円38,000円29,000円25,000円21,000円17,000円8,000円
400万円42,000円33,000円29,000円25,000円21,000円12,000円
425万円45,000円37,000円33,000円29,000円24,000円16,000円
450万円52,000円41,000円37,000円33,000円28,000円20,000円
475万円56,000円45,000円40,000円36,000円32,000円24,000円
500万円61,000円49,000円44,000円40,000円36,000円28,000円
525万円65,000円56,000円49,000円44,000円40,000円31,000円
550万円69,000円60,000円57,000円48,000円44,000円35,000円
575万円73,000円64,000円61,000円56,000円48,000円39,000円
600万円77,000円69,000円66,000円60,000円57,000円43,000円
650万円97,000円77,000円74,000円68,000円65,000円53,000円
700万円108,000円86,000円83,000円78,000円75,000円66,000円
750万円118,000円109,000円106,000円87,000円84,000円76,000円
800万円129,000円120,000円116,000円110,000円107,000円85,000円
850万円140,000円131,000円127,000円121,000円118,000円108,000円
900万円151,000円141,000円138,000円132,000円128,000円119,000円
950万円163,000円154,000円150,000円144,000円141,000円131,000円
1000万円176,000円166,000円163,000円157,000円153,000円144,000円
1100万円213,000円194,000円191,000円185,000円181,000円172,000円
1200万円242,000円232,000円229,000円229,000円219,000円206,000円
1300万円271,000円261,000円258,000円261,000円248,000円248,000円
1400万円355,000円343,000円339,000円343,000円277,000円277,000円
1500万円389,000円377,000円373,000円377,000円361,000円361,000円
1600万円424,000円412,000円408,000円412,000円396,000円396,000円
1700万円458,000円446,000円442,000円446,000円430,000円430,000円
1800万円493,000円481,000円477,000円481,000円465,000円465,000円
1900万円528,000円516,000円512,000円516,000円500,000円500,000円
2000万円564,000円552,000円548,000円552,000円536,000円536,000円
2100万円599,000円587,000円583,000円587,000円571,000円571,000円
2200万円635,000円623,000円619,000円623,000円607,000円607,000円
2300万円767,000円754,000円749,000円754,000円642,000円642,000円
2400万円808,000円795,000円790,000円795,000円776,000円776,000円
2500万円849,000円835,000円830,000円835,000円817,000円817,000円

How does furusato nozei work?

Quite simple, take the amount that you calculated as eligible for deduction and go shopping on the furusato nozei sites for gifts. Keep the receipts and when you do your annual tax return, put the amount you spent down as a donation and submit the receipts together with your tax return.

So even though your company does your taxes, you will now need to do a tax return to claim back the donation you made through furusato nozei (i.e. have it deducted from your tax payments for the following year). You can hand in your tax return at your ward’s tax office until mid-March every year. The cut-off date is slightly different each year. If you are unsure how to fill out the forms in Japanese, check your ward’s website. They offer English assistance where someone will sit down and fill out the forms with you. You need to get an appointment for this, so don’t leave it until the last day!

Each municipality has a slightly different method of processing hometown tax donations, so make sure to familiarize yourself with the steps on their website. If that sounds too cumbersome, especially if you are not fluent in Japanese, there are also several sites that coordinate furusato nozei. Instead of applying directly through a muncipality’s website, you just apply through the coordinating website in a process that is very similar to online shopping—and they take care of the rest for you. The website will issue you a receipt that is needed to claim your tax deduction and also coordinate the gift-sending to you.

Is Furusato Nozei free?

Furusato Nozei is not free. It costs 2,000 yen per year.

Paying 2,000 yen means that if you donated 60,000 yen, only 58,000 yen would be deducted from your tax, which is a really good deal.

In general, the procedure for Furusato Nozei is:

  • Make the Hometown Tax payment through a municipality’s or coordinating website. You will be sent both the thank-you gift and a receipt of your donation that will be needed later for your tax return.
  • File your income tax return at your ward’s tax office by mid-March of the following year. You need to submit the receipt as proof of your donation.
  • For income tax exemption: When filing your tax return, income tax will be deducted for the year in which you made a furusato nozei donation.
  • For resident tax exemption: When filing your tax return, resident tax will be deducted for the following calendar year after you made a furusato nozei donation.

There is a limit to tax deductions depending on your income and number of people in your household. Punch your details into a simulator to calculate the right amount. As a rule of thumb, you can use 20% of your resident tax for furusato nozei.

A one-time processing fee of ¥2,000 will be due. You can decide to donate your tax to only one town or spread it among several, the processing fee will only be due once. If you use one of the organizing websites, they will collect the fee, organize the shipping of all the goods and send you one invoice for all the donations made, which makes things a bit easier come tax-return season.

When is the deadline?

While tax returns are due each year in mid-March, furusato nozei closes in December! So if you want to take advantage of your tax paid during 2020, start looking at how much you can write off and “spend” on hometown tax before the end of the calendar year.

This site uses Akismet to reduce spam. Learn how your comment data is processed.