Cross-border contracting: permanent establishment, withholding, foreign salary, invoices, and currency conversion

A foreign company with no physical address in Japan that hires local freelance contractors does not, in the view of chat participants, create a "permanent establishment" or tax obligations in Japan, as long as it does not sell goods or services directly in Japan — an unconfirmed opinion; legal advice is recommended. No withholding needs to be done at all if a contractor is not located in Japan (a foreign freelancer abroad); invoices for foreign contractors are recommended to show 0% tax on each line item. Salary from a foreign company not registered in Japan (meaning there is no 源泉徴収票 certificate) is declared as "miscellaneous income" (雑所得), not as 給与 — confirmed through a consultation with an auditor in the chat, though no unambiguous official clarification was found; in the old e-Tax interface it was possible to skip the questionnaire and go straight to the right form, which is not always obvious in the new interface. For invoices to foreign counterparties, there is no strict template, but there is a set of content requirements needed for tax deductions; Misoca is a free service (up to 10 invoices a month) for generating invoices to the Japanese standard, while invoices generated by Wise do not meet Japanese standards for internal accounting purposes. Finally, on currency accounting: the conversion rate used is the TTM (Telegraphic Transfer Middle Rate) of any major Japanese bank on the date funds are received — the Bank of Japan does not publish official rates, unlike Russia's central bank. Sources for historical rates include Mizuho and MUFG/Murc (called the "gold standard" in the chat, with a CSV export), plus an independent aggregator with 2 years of MUFG/Mizuho data via a JSON API. For transactions through services like Wise, some blogs recommend using the TTS rate — it is higher and can produce a more favorable or consistent currency-gain picture, though it also raises the company's reported turnover. Whatever method is used must stay consistent all year. There was a dispute in the chat about the "moving average" method (移動平均法) for foreign currency balances: one participant argued it is not legally mandatory for currency, unlike its mandatory use for cryptocurrency — consistency of method is what matters. Payments through intermediaries (SWIFT, conversion) typically lose about 0.4-1% of the amount to fees and exchange spread. Initial revenue is booked at the invoice amount (usually in USD), and any difference between the invoice amount and the yen actually received is recorded as an expense.