I live in a company owned apartment and a certain amount is deducted from my monthly salary as a company owned apartment. How is this company owned apartment fixed? Also, what does it mean that I have to pay income tax depending on the amount of company housing?
Normally, the employer will consider an amount that will not affect your salary income tax and they will base on the following calculation to find out the rent value to determine the rent reimbursement amount. Further, if the amount is very low or free of charge, it will become taxable item of salary income tax.
Calculation of rent value under Japanese tax law
1．(current year taxable amount of fixed asset tax for building) x 0.2%
2．JPY 12 x (Gross floor area of building(㎡)/3.3 ㎡)
3．(current year taxable amount of fixed asset tax for land) x 0.22%
Rent value= (1)+(2)+(3)
Exemption of salary income tax applies to rent subsidy:
If over 50% of the rent value is paid by employee, the salary income tax will NOT apply to the difference between the rent value and the reimbursement.
An employer leases staff accommodation (rent value: JPY 10,000) to an employee.
A) If the employer provides the staff accommodation to the employee for free, JPY 10,000 will be recognized as salary income, and therefore it is taxable.
B) If the employee pays JPY 3,000 back to the employer, the difference JPY 7,000 (JPY 10,000-3,000) will be taxable.
C) If the employee pays JPY 6,000, which is over 50% of rent value (JPY 10,000), the difference JPY 4,000(10,000-6,000) will NOT be taxable.
This is not only limited to staff accommodation owned by the employer, also includes when the rental contract is in the tenant(employer)’s name. The rent value calculation is same as above.
1．If the employee is residing in the staff accommodation provided by employer for free, the value of rent will be treated as taxable salary.
2．In cases the employee affords less than 50% of the rent value, the difference between the rent value and the reimbursement will be treated as taxable salary.
3．Housing allowance is paid by CASH.
4．If the rental contract is in the tenant(employee)’s name and he/she pays the rent, it is not considered staff accommodation according to Japanese tax law.