Invoice system (インボイス制度) for foreign freelancers in Japan

The freelance invoice system in Japan (インボイス制度, qualified invoice system) is optional to join, but it comes with a catch: registering ends your consumption tax exemption. As of October 2026, a sole proprietor who was exempt and registers can pay only 20% of sales tax under the 2割特例 for the 2026 return, then 30% under the 3割特例 for the 2027 and 2028 returns. Clients who buy from unregistered sellers can still deduct 70% of the tax, falling to 50% from October 2028.

What is the invoice system?

The system started on 1 October 2023. An invoice (適格請求書) can be any document with the required items; the document’s name does not matter. It must show the issuer’s name and registration number, the date, what was sold, the total and consumption tax per tax rate (10% and 8%), and the buyer’s name.

To issue one, you must register as a qualified invoice issuer (適格請求書発行事業者) with the tax office. Registered businesses must file consumption tax returns as taxable businesses. In principle, a buyer can claim the input tax credit (仕入税額控除) only if it keeps an invoice from the seller.

That is why clients ask freelancers for a registration number.

Who pays consumption tax, and who is exempt?

If your taxable sales in the base period are ¥10,000,000 or less, you are in principle exempt from consumption tax (免税事業者). For an individual, the base period is the year two years earlier. (National Tax Agency, as of October 2026.)

You are not exempt if, among other things:

• you are registered as a qualified invoice issuer
• your sales in the specific period, 1 January to 30 June of the previous year, were over ¥10,000,000 (you may use salary payments instead)
• you filed to choose taxable status

So the choice is yours only when you are under the threshold. Registering makes you a taxable business whatever your sales.

What does the 2割特例 do?

It is a transitional relief for people who were tax-exempt and became taxable because they registered. Instead of working out actual purchase tax, you treat 80% of your sales tax as purchase tax, so you pay 20% of the sales tax. You don’t need to calculate actual purchase tax or keep invoices for your consumption tax return.

Key points:

• You apply on the return, by noting it on the return (申告書に付記). No prior notification and no obligation to keep using it.
• Sole proprietors can use it up to the 2026 return (令和8年分), according to the National Tax Agency’s September 2026 leaflet.
• A business that was already taxable can generally use it in later periods if its base-period sales are ¥10 million or less (Q&A 問114).
• It is not available if you don’t fit the rules, such as not being a registered issuer or having over ¥10 million base-period sales.

What changes for 2027 and 2028?

The 2026 tax reform added a 3割特例 (30% special rule) for sole proprietors who became taxable by registering. It applies to the 2027 and 2028 returns. You then pay 30% of sales tax.

If you want to switch to simplified taxation (簡易課税) afterwards, the National Tax Agency says: if you applied the 2割 or 3割特例 in a tax period, you can file the simplified taxation election (簡易課税制度選択届出書) by the return deadline of the next period to use it from that period. Example: if you used the 2割特例 on the 2026 return, file by the 2027 return deadline, 31 March 2028.

Corporations and non-calendar-year filers have different timelines. Check the agency’s site or ask a tax accountant.

What changes for your clients?

If you stay unregistered, clients who are taxable can still claim part of the tax on your invoices without an invoice. The deductible share steps down:

So a client’s cost of using an unregistered freelancer rises over time. Clients may ask you to register. That is a business decision, not a legal duty. The agency’s pages don’t say who should register, and the right choice depends on who your clients are.

How do I register, as a foreigner?

You send an Application for Registration as a Qualified Invoice Issuer to the District Director of your tax office. The National Tax Agency publishes English instructions and forms for domestic and foreign business enterprises. Submit the form marked “For Submission” and follow the English instructions to fill it in.

After examination the tax office notifies your registration number. For a sole proprietor, the name, registration number and registration date are published in principle on the agency’s announcement site. Think about this before registering if you work under a name you don’t want public.

Once registered, you must issue a qualified invoice when a taxable client asks, and keep a copy.

Foreigner checklist

• Your visa comes first. The invoice system is a tax matter; it does not permit you to freelance. See freelancing and side jobs on a work visa.
• Know your tax residency and how you file: tax returns for foreigners and resident tax.
• Keep business money separate. See business bank accounts for foreigners.
• Health insurance and pension costs for the self-employed are separate from consumption tax: national health insurance and pensions for foreigners.
• Ask a 税理士 who works in English if you are unsure.