- May 6, 2024
- Posted by: legaleseblogger
- Category: Related News
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### Employing a Full Time Domestic Helper as an Expat
Is it possible to deduct the salary of a full-time domestic helper as an expense on my tax return? This is my first year employing one as an expat, and I am unsure about the tax implications. I have consulted with a Big 4 tax accountant, but they did not address this specific question in their questionnaire. I will follow up with them to clarify.
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### Responsibilities and Tax Obligations
In addition, what are the necessary steps to handle the taxes for the domestic helper? As an employer, do I bear any responsibility if she fails to file her taxes? Where should we begin in filing her taxes, especially if she is not well-versed in the process? I assume that she is required to pay taxes on at least the minimum mandated monthly salary of 200,000, but I would appreciate further guidance on this matter.
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I assume you are referring to the benefit of a HSP visa. We considered going through that but ended up hiring a local one, so my answers might not be completely accurate. So I apologize beforehand.
1. No, unless you are either a business manager and the company is paying her directly, which is not possible as the requirement for the visa requires a personal contract. As a sole proprietor you can’t deduct employees salaries when it employs two or fewer people at any given time, and they are classified as “domestic servants”.
2. She or he will be here on a designated visa 2, if I remember correctly. They will have to go to the municipal office and sign for pension and health and they are responsible for paying taxes on their own with the slips sent monthly according to their category. You will pay at least 200,000 as basic salary, which combined to overwork/bonuses etc is the basis for their taxes. Since they have to renew their visa yearly, they will struggle to do so if they aren’t paying accordingly so is better to track it.
https://www.mikagecpa.com/archives/4390/
1) she is working for you in your personal capacity so not a business expense
2) Typically they have enough overseas dependents to declare that they are not liable for local or national income tax. For NHI, technically she is responsible for paying, but in practice it is common for the employer to cover that cost. (Though it will not be tax deductible for you)
> Will I get to deduct her salary as an expense on my return?
No. As others have said, it’s considered a personal expense.
> how should we go about her taxes?
There is an exception to the normal income tax withholding rules for domestic workers (as long as they are tax residents of Japan), so you don’t really need to do anything regarding her taxes. There is also an exception to the unemployment insurance rules (i.e., you don’t need to enrol domestic workers). The Labour Standards Law doesn’t apply to domestic workers, either. In short, it is very simple to employ a domestic worker, from a legal/compliance point-of-view.
If she will not be a tax resident of Japan, however, the exception for domestic workers won’t apply, and you will need to withhold 20.42% income tax from all payments (unless she claims an exemption under a tax treaty).
> Do we need to take responsibility if she fails to file?
No.
> Where do we even begin, to file her taxes?
Assuming she will be a tax resident of Japan, she will need to file an income tax return for each calendar year (or part thereof) that she is in Japan. The filing/payment deadline is March 15. See the [Tax Return Questions Thread](https://www.reddit.com/r/JapanFinance/comments/19aajt1/tax_return_questions_thread_filing_deadline_march/) for more information about how to file. If her only source of income is the salary you pay her, filing an income tax return should be extremely simple.
After she files an income tax return she will need to immediately pay the income tax due on the income she received in the previous year. (In case it’s useful, the income tax due on an annual salary of 2.4 million yen is a little under 40,000 yen, assuming minimum deductions.)
In June, after she has filed an income tax return, she will receive a residence tax bill from her municipality. The bill is typically payable in a few instalments over a 9-10 month period. (The residence tax due on an annual salary of 2.4 million yen is a little under 90,000 yen, assuming minimum deductions).
Once she enrols in the national pension (which is mandatory for pretty much everyone whose 住所 is in Japan), she will receive bills for monthly pension contributions of roughly 16,500 yen per month. Given her low salary, however, it is likely she would qualify for a premium reduction (probably a 25% reduction). That’s something she would need to discuss with the national pension desk at her municipal office.
Once she enrols in national health insurance (which, again, is basically mandatory), she will receive bills according to her municipality’s billing cycle (typically 9-10 bills every 12 months). Her premiums will be based on the income she declared on her most recent income tax return, but until she has filed an income tax return, they will be the municipality’s default premiums for people who didn’t have any income in the previous year. Depending on the municipality’s procedures, she may need to actively declare that she had no income (for NHI purposes) in the previous year, in order to access the default premiums.
Once she has filed an income tax return and her NHI premiums are based on her income, the premiums will be somewhere in the vicinity of 190,000 yen per year. But NHI premiums vary significantly between municipalities, so you can get a more accurate estimate using a site like [this](https://www.5kuho.com/keisan/).
Anything extra like sweet ketchup notes on your omelette or Polaroids adds up super fast!