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Director’s salary in Japan and tax

Director’s salary in Japan and tax

In the case you are one of director in Japan and you thought that you could receive certain amount of remuneration.
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In the case of director, the money you can receive is not salary ( Kyuyo ), but remuneration (  Hoshu = 報酬 ).
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Director is not employee, but employer, even if you are not representative director, but director.

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So, stipulation related to minimum wage is not applicable for director.
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And it is possible that you do not receive any remuneration.
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The amount of remuneration should be determined at the time of commencement of each fiscal year.
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The company can not change the amount of remuneration during term of office of director without your permission.
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( It means that at the time of end of your term of office, the company can change it.
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Moreover, it is possible that the company do not appoint you as director ).
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Even if it is determined by general meeting of shareholders and / or board of directors / representative director authorized by articles of incorporation, the company can not change it without your permission.
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There is  a judicial precedent.
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Once the amount of remuneration is determined, it is a part of matters agreed in contract.
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So, the contract bind both company and director (you ).
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So, even if there is resolution at general meeting of shareholders, the company can not reduce the amount of remuneration during term of your office.
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Even if the content of your work has changed, the company can not change the amount of remuneration without your permission.

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According to corporate tax law, company needs to pay same amount of remuneration periodically.

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Assumed that Yamada company ( its fiscal year is from 1st January to 31st December ) determined it pay you ( director ) remuneration of 1 million yen at end of each month.
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In that case Yamada company needs to conduct it and can not change it within the fiscal year.

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If Yamada company has changed the amount of remuneration to 1.5 million yen,  it can not include 0.5 million yen as deductible expense.
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If Yamada company has changed the amount of remuneration from 1 million yen to 0.7  million yen on November, authority consider that from 1st January of the year, the amount of remuneration has been 0.7 million yen.
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However, if there is unavoidable circumstances, Yamada company can reduce the amount of remuneration during fiscal year.

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