---
title: "Director salary and bonus rules: registration, the equal-payment rule, and salary vs dividends"
url: https://memocore.ai/memos/6a5f638063d783ad6870944c
project: "Doing Business in Japan"
tags: "tax-social-insurance, japan-business"
updated_at: "2026-07-23T04:10:22.492Z"
---

# Director salary and bonus rules: registration, the equal-payment rule, and salary vs dividends

A director's salary (役員報酬) must be declared in advance, within 3 months of founding the company or of a board resolution. Based on one participant's experience, this required filing 4 documents: 法人設立届出書, 源泉所得税の納期の特例の承認に関する申請書, 給与支払事務所等の開設・移転・廃止届出書, and the blue-form declaration; separately, the 健康保険・厚生年金保険新規適用届 must be filed with the pension fund. A director's salary cannot be changed arbitrarily mid-year without losing the tax deduction on the changed portion: both raising and lowering it mid-year makes the changed amount non-deductible, under the "equal periodic payment" rule (定期同額給与). The exception is 業績悪化改定事由 (deteriorating business performance), which allows a reduction without penalty. Regular employees face much less risk here — an early payment, for example at the end of December before the holidays, generally causes no problems. Under-withholding tax on a director's salary can be treated as an illegal salary increase and lead to the amount being excluded from deductible expenses in an audit. For new companies, a director's bonus can be set within 4 months of incorporation without prior notice to the tax office; for existing companies, a bonus can only be set before the start of the fiscal year, requiring advance notice to the tax office of the planned bonus for the upcoming fiscal year. A bonus must be fixed in advance and cannot depend after the fact on actual profit, or it risks pushing the company into a shortfall. Bonuses paid to an employee who is simultaneously a co-owner of the company draw increased NTA scrutiny (audit risk) — such profit-splitting arrangements are not recommended. Finally, once a director's monthly salary exceeds roughly 750,000 yen, it can be more tax-efficient to take part of the income as dividends instead of a higher salary, because of how deductions are structured — an opinion from the chat, dependent on individual calculations; a common strategy instead of consistently high salaries is a large one-off dividend payment every few years, for example before a real estate purchase.

Approximate FY2025 social insurance premium rates for Tokyo under Kyokai Kenpo: health insurance runs about 4.955% each for employee and company (roughly 9.91% combined); pension is 9.15% each side (18.3% combined); nursing care insurance, for ages 40-64, adds about 0.9% each side (1.8% combined). As a worked example, a 300,000 yen monthly salary comes out to roughly 84,000 yen per month in combined premiums. Enrollment itself (both the company's new-establishment filing and the individual director's status-acquisition filing) is due within 5 days of starting to pay remuneration, filed with the Japan Pension Service office and requiring an original company registry certificate no older than 90 days; a dependent enrollment notification is also recommended within that window if the director has dependents (covered at no extra premium below about 1.3 million yen of annual dependent income).

There's also a recurring annual compliance cycle worth tracking alongside the equal-payment rule: the Salary Payment Report (to the municipality) and the Statutory Report plus Withholding Tax Certificate (to the tax office and the director) are both due by January 31; the Annual Determination Report (算定基礎届, Santei Kiso Todoke) is due July 1-10, recalculating each director's/employee's Standard Monthly Remuneration from September based on actual April-June salary, filed with the Pension Service; and if using the semi-annual withholding-tax exception (available to employers with fewer than 10 salaried people), payments fall due January 20 (covering July-December) and July 10 (covering January-June) instead of monthly. Resident tax on the director's salary follows its own cycle: the first year has no special (payroll) collection since there's no prior-year data, so the director pays it directly in 4 installments; after the Salary Payment Report is filed by January 31, special collection via payroll withholding starts that June and then runs June-to-May every year after (municipality sends the tax amount notice by late May, company withholds monthly and remits by the 10th of the following month).