Engaging a contractor in Japan means engaging a freelancer, usually a sole proprietor, or a company. The Freelance Act, in force since 1 November 2024, asks you to give the scope, the amount and the due date in writing and to pay within 60 days of receiving the work. The legal risk is classification: the Labor Standards Act looks at direction, supervision and pay, not at the contract title. This guide covers the contractor’s side, the contract and the payer’s paperwork. The payment side is on our Japan payouts page. It is general information, not legal advice.
The Freelance Act
The Act defines a freelancer as an individual with no employees, or a one-person company with no directors other than the representative. It applies to any business that entrusts work to one, with no sector limits (Legal 500, checked 2026-10-27).
- Written terms. Immediately after engaging a freelancer for deliverables, state in writing or electronically the scope, the payment amount and the due date.
- Payment. Due within 60 days of receipt; a later date is invalid. For subcontracted work, within 30 days of your own client paying you.
We found no statement on whether the Act reaches a payer with no presence in Japan. Ask counsel; following it is inexpensive either way.
Sole proprietor or company
Freelancer. The contractor notifies the tax office of the business and may apply to file a blue return; that application is generally due by 15 March of the year they want it, or two months after starting if they began after 16 January (NTA, checked 2026-10-27).
Company. A contractor working through a company bills as a corporation and may use its corporate number as the base of its invoice number.
Invoices and consumption tax
A registered issuer prints a T number: T plus 13 digits, or T plus the corporate number (NTA, checked 2026-10-27). Sellers with taxable sales of JPY 10 million or less in the base period, two years back for an individual, are generally exempt from consumption tax (NTA, checked 2026-10-27). A small freelancer may therefore have no T number. A payer abroad claims no Japanese credit on the invoice; a Japanese entity in the chain should ask.
Reclassification risk
Article 9 of the Labor Standards Act defines a worker as someone employed at a business and paid wages (Japanese Law Translation, checked 2026-10-27). The labour ministry applies it through “work under direction and supervision” and pay as a return for that work, with freedom to refuse jobs, direction on method, time and place, a substitute’s role, exclusivity and business-like features of the contractor as further factors (MHLW, checked 2026-10-27). A single client, fixed hours, a monthly fee and your instructions are the facts a claimant would use (contractor misclassification). If the role is a job, hire through an EOR.
What to put in the contract
- A written services agreement with the scope, fee, due date, currency, receiving account and who bears transfer charges.
- An invoice for every payment, with the T number if the contractor has one.
- IP assignment in writing. Japan’s work-for-hire rule for corporate authorship needs the work to be made by someone engaged in the entity’s business and published under its name, with no contrary contract term (Monolith Law, checked 2026-10-27); it is a rule about staff, not contractors. Assign the rights explicitly and ask local counsel about formalities.
- Independence markers: the contractor’s own equipment and schedule, the right to work for others, and a fee tied to deliverables.
Taxes and paperwork
The contractor’s side. Notify the tax office, issue an invoice per payment, file the annual return, and pay a fixed national pension premium if enrolled as a self-employed person: JPY 17,920 a month in fiscal 2026 (Hiroshima City, checked 2026-10-27).
The client’s side. JETRO describes withholding on listed fees to resident individuals as the duty of persons paying in Japan (JETRO, checked 2026-10-27); we found no NTA text applying it to a payer with no Japanese office. US payers collect a W-8BEN and file no 1099: pay for work done outside the US is foreign-source income (irs.gov, checked 2026-10-27), and Japan is on the IRS treaty list (irs.gov, checked 2026-10-27).
How to pay contractors in Japan
Wise sends yen to a Japanese bank account, usually one working day after conversion (wise.com, checked 2026-10-27). A SWIFT wire is the alternative, and some platforms pay yen directly. The Bank of Japan wants a report only above JPY 30 million per payment or receipt (boj.or.jp, checked 2026-10-27). Rails, costs and platforms are compared on our Japan payouts page.
Contractor of Record in Japan
A Contractor of Record is the contracting party for the contractor and reduces reclassification risk; it does not remove it. In Japan the work still has to look independent, and the COR also keeps the contract and invoice consistent across a team. Read the liability clause in the contract rather than the product name. Where the role is a job, with your hours, your tools and core work, hire through an EOR instead. Compare providers in our COR rating.