- April 8, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Considering a Voluntary Move to Tokyo
Hello All, my firm has recently presented me with the opportunity to spend a year in Tokyo on a voluntary basis. The offer entails covering the relocation costs while converting my current salary from Hong Kong Dollars (HKD) to Japanese Yen (JPY), with no additional financial benefits such as accommodation expenses in Tokyo.
## Analyzing Financial Implications and Tax Concerns
Upon further inspection, I have realized that the salary offered in Japan is quite competitive. Despite this, after careful consideration of my investments and financial optimization strategies, I currently experience a tax rate ranging between 5 to 7%.
## Unraveling Tax Questions and Cost of Living Considerations
As I contemplate the potential move to Tokyo, the looming question of federal taxes in Japan, set at 20%, arises. Additionally, I am uncertain if there is a necessity to factor in a municipal tax of 6% on top of the federal taxes. This uncertainty adds to the complexity of determining the full financial impact of the proposed move.
One of the main queries that troubles me is the comparison between the tax burden in Tokyo and the cost of living as opposed to Hong Kong. With a potential increase of 20% in tax obligations in Tokyo, I am left to wonder if the cost of living in the Japanese capital is indeed 20% lower than in Hong Kong. Online sources suggest Tokyo may be more affordable, but the accuracy of such claims remains unclear.
## Navigating Housing Costs in Tokyo
Given that rent comprises a major portion of my expenses currently, I am curious to know if I can secure suitable accommodation for 200,000 yen. This raises concerns regarding the size and location of the prospective rental property, particularly in proximity to transportation hubs served by the red, green, purple, light, and dark blue lines. In Hong Kong, a similar budget might secure me a subdivided 15-square meter space in a central location or a room within a larger shared apartment. Would Tokyo offer comparable options within the same budget?
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Cost of living in Japan is significantly lower than Hong Kong – specifically housing. Food I think is about the same. Transportation might be more expensive; a lot of workers in Japan have transportation covered by the company tho so you may want to check that.
For reference purposes: I’ve lived in Japan and Hong Kong for many years; I know both Tokyo and Hong Kong extremely well.
For Y200,000 a month you would live in a ridiculously nice place and/or right in the middle of the city (which I honestly wouldn’t recommend; it’s not as interesting as going just slightly out of the city center).
I can’t stress enough – housing is considerably cheaper (and generally nicer / safer / cleaner) than Hong Kong – and I say that as someone that really likes Hong Kong.
I think you’ll have a much nicer lifestyle in Japan vs Hong Kong at the same salary converted to JPY, but honestly if it’s just a year – do it for the experience. International experience looks great on any resume. Even if you end up paying a bit more in tax for a year, it’s hardly a significant sum in the grand scheme of things, and the experience will be well worth it.
rent is much cheaper. Transportation is more expensive. Food is similar. 200k can get you a 30-÷ sqm place at a big yamanote station.
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You should use [the income tax calculator](https://japantaxcalculator.com/). If you are highly paid, your total tax rate will be significantly higher than 20%. Japan is a high tax country for high income people, no two ways about it.
The residence tax in Japan is cartoonishly stupid. I mean, if you ever bother to learn how it works, your eyes and ears will bleed as your brain completely fails to understand how a system could be that fucking stupid. It’s just unfathomably, inexplicably stupid.
This means there isn’t a nice clean easy answer to “how much residence tax will I pay.”
Let’s try…
So, “will I owe residence tax” is based on calendar years, with a lag. As soon as you start working in Japan, you start accruing a potential tax obligation. Then, on January 1 of the new year, that potential tax obligation becomes concrete — you can’t leave the country permanently after January 1 without paying off that tax debt. If you’re still working in Japan in June or July (I forget which), they start withholding 1/12th of your residence tax obligation from the previous year from each monthly paycheck for the next 12 months. When you leave Japan, you pay off any remaining residence tax obligation.
But if you leave on/before December 31, the residence tax obligation for that year goes *poof* and you owe nothing.
So, when you leave Japan, if you’ve been here for a long enough time, you will inevitably owe between 5% and 15% of a year’s salary as residence tax when you leave. How much depends on when you leave. There are some deductions to chip away at that, but if you make real big boy money in Japan, the deductions don’t change much.
If you think everything I’ve just typed is insane and you’re torn between jumping off a building and going on a murderous rampage because the insane brokenness of the system shattered your will to live, congratulations, you have correctly understood Japan’s residence tax system.
So when you say you’ll be here for “a year”, whether you will actually pay residence tax and how much you’ll pay depends mightily on what you mean by “a year.” But you’re always much better off if your definition of a year ends in Q4 than in Q1.
A 15-25 sqm apartment literally at Shinjuku station might be like 120,000 yen. Go a few stations over and it’ll be 60,000 yen.
200,000 yen can get you a conveniently located 3-4 bedroom house, or a super centrally located 2 bedroom apartment.
I hear many foreigners find something through UR, as they are relatively friendly to foreigners (I personally use SUUMO which ends up being cheaper, but many/most listings will turn down foreigners unless you have good Japanese skills – and even then it’s hit or miss).
Think about the opportunity to travel around in jp and not coming as a tourist paying for expensive hotel.
What is “red, green, purple, light and dark blue lines”?
Open [suumo.jp](https://suumo.jp), filter a few stations that you will be interested in living at, set minimum area filter and sort by lowest price. You will get an idea. You can live in a nice area with good nightlife and the rent will basically start around 120k for 40sqm apartments in older buildings. The newer the building the more expensive it gets.
Rent is cheaper, food similar, healthcare maybe cheaper in JP.