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〇 Officer’s remuneration and bonus, its difference in view of taxation in Japan

Here I explain about difference between Officer’s salary ( 役員報酬 = Yakuin Hoshu ) and bonus ( Yakuin Shoyo = 役員賞与 ).
In the case your company pays certain amount of money to its employee or director, the money is called “salary”.
In the case your company pays money to its employee or director, at end of year etc., the money is called “bonus”.

In tax implication, in general, you can not deduct the amount of Director’s salary ( 役員報酬 = Yakuin Hoshu ) and Director’s bonus from Company’s income.
So, When Company A earns 100 yen and pays 100 yen to its director as salary and Director’s bonus, the company still has taxable income ( Kazei shotoku ).

However, as for Director’s salary ( 役員報酬 = Yakuin Hoshu ), if the payment meets following condition, you can deduct the amount of Director’s salary from taxable income of company and reduce amount of corporation tax.

1  Money paid periodically and same amount.
For example, when Company A pays 100 yen to director B at April 1st, the company should pay 100 yen to director B at May 1st.
Assumed that fiscal year end of your company is end of May. Then if new director is appointed on 25th, October, 2017. In this case as far as she receives same amount of salary from November every month, this company can allocate amount of her salary as deductible expense.

2 When company A notifies tax agency in advance (one month prior) and pays as same as notification.

3  profit-related pay

4 Retirement allowance

5 Stock option

6 Salary received as employee ( person who doubles director and employee )

As for specific method to calculate tax amount is as below.
How to calculate the amount of person’s income tax and corporation tax

As for Bonus

In the case of bonus, your company can not allocate it as deductible expense generally.
However, if your company (assumed fiscal year end is end of March and date of general meeting of shareholders is 30th, June) reports amount of bonus by end of July, it can include bonus as deductible expense.

(Then, if your company pays you bonus, it increases amount of social insurance paid by your company and you).

What is “Officer=役員” ?

Even if a person is not registered as “director or auditor”, as far as she engages in management of company or she is major shareholder of the company and she is owner of the company substantially , she is deemed as “officer”.

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