What is Furusato Nozei? Complete Guide for Foreigners Working in Japan

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If you’re working for a company in Japan and earning income, you’ve probably heard the term “Furusato Nozei” (ふるさと納税) at least once. This system, created to revitalize local economies across Japan, is an incredibly beneficial program that allows you to donate a portion of your tax payment in advance and receive gift products in return—with zero risk. There’s simply no reason not to take advantage of it.

What is Furusato Nozei?

Furusato Nozei is a system where you donate a portion of your tax payment in advance to local municipalities, and the donation amount (total donation – ¥2,000) is then deducted from your income tax and resident tax.

To attract more donations, local municipalities send gift products to donors worth up to 30% of their donation amount. These gifts range from local specialty foods and beverages to electronics and travel vouchers—virtually any product or service you can imagine.

Through Furusato Nozei, you can donate to any region you wish using your own tax money and choose how your donation will be used. If you want to see what areas these donations support, click here.

How to Use Furusato Nozei

Many people in Japan think Furusato Nozei is too complicated and troublesome, so they give up on using it. According to data from the Ministry of Internal Affairs and Communications, the usage rate of Furusato Nozei in 2024 is only 18.5%.

However, using Furusato Nozei isn’t as complicated or time-consuming as it appears. You simply make your donation just like shopping online, and through a process that takes less than an hour, you can complete the necessary procedures for tax deductions, keeping tens of thousands of yen in your pocket.

1- Calculate Your Donation Limit

While you can make unlimited donations and receive gift products through Furusato Nozei, there is a limit to how much you can deduct from your taxes. This limit varies based on your annual total salary and family structure. To find out your limit, you can use the Rakuten Furusato Nozei simulator.

2- Make Donations to Receive Gift Products Through Furusato Nozei Portal Websites

Select your gift products from Furusato Nozei portal websites that list available items and make your donation. If there’s a specific local government you want to support, you can also choose from their gift products. You can select multiple gift products to reach your donation limit.

Our Recommendation

In terms of “ease of use,” “variety of gifts,” and “online application support,” Rakuten Furusato Nozei is one of the best platforms available.

It’s especially recommended for Rakuten Card holders.

3- Receive Your Gift Products and Donation Receipt

After a certain period following your donation, local governments will send you your gift product and donation receipt.

4- Complete Necessary Procedures to Benefit from Tax Deductions

After completing your donation, you need to take certain steps to benefit from tax deductions. If you don’t complete these procedures, you’ll simply have made a donation and received a gift product—you won’t receive any tax deductions.

There are two methods for receiving tax deductions: Tax Return (Kakuteishinkoku) and One-Stop Special System (Wan sutoppu tokurei seido)

Tax Return (Kakuteishinkoku)

If you have income other than your salary from working at a company in Japan, or if you’re self-employed, you need to file a tax return. Those who file tax returns can benefit from Furusato Nozei tax deductions by reporting their donations during tax filing.

One-Stop Special System (Wan sutoppu tokurei seido)

If you work for a company and won’t be filing a tax return, we recommend using this method. It’s a much more practical approach compared to filing a tax return. Without needing to fill out a tax return form, donation amounts exceeding ¥2,000 are deducted from the following year’s resident tax.

There are two methods for applying through the One-Stop Special System:

【Method 1】Application by Mail

🧾 Application Steps

1. After making your donation, the local government you donated to will send you a document called “寄附金税額控除に係る申告特例申請書” (Tax Deduction Special Application Form) by mail.
2. Fill out this form.
3. Attach photocopies of both sides of your My Number card.
4. Mail the form to the specified address.

Most municipalities send a stamped return envelope, so you simply need to put the documents in and drop them in a mailbox.

【Method 2】Mobile App or Online Application

In recent years, many municipalities have started offering online application options via smartphone or computer. With this method, you don’t need to fill out documents or send mail; you simply scan your My Number card through municipality-designated apps like Furumado (ふるまど) and complete the process in just a few minutes.

Important Points to Keep in Mind

There is a Limit to the Donation Amount You Can Deduct from Your Taxes

While you can make unlimited donations and receive gift products through Furusato Nozei, there is a limit to how much you can deduct from your taxes. This limit varies based on your annual total salary and family structure. To find out your limit, you can use the Rakuten Furusato Nozei simulator.

If you exceed this limit, you’ll simply have made a donation and received gift products—you won’t be able to deduct the portion of your donation that exceeds the limit from your taxes.

If You File a Tax Return After Applying Through the One-Stop Special System, Your Furusato Nozei Tax Deduction Becomes Invalid

If you applied for tax deductions through the One-Stop Special System but then file a tax return for reasons such as mortgage deductions or medical expense deductions, your Furusato Nozei tax deduction becomes invalid.

During your tax return filing, you’ll need to reapply for the tax deduction using the donation receipts sent to you by local governments.

Summary

To summarize what we’ve covered in this article, the Furusato Nozei system allows you to receive gift products by paying a portion of your regular tax payment in advance as donations to local governments—it’s a risk-free system with numerous advantages.

You can start ordering gift products offered by municipalities using Rakuten Furusato Nozei, the most popular portal website for Furusato Nozei.

If you have any questions about “Living in Japan,” including Furusato Nozei, please don’t hesitate to contact us. You can reach us through social media or through the contact form below.

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