Basic Knowledge About Furusato Nozei (Hometown Tax Donation Program)

Conditions for Foreigners to Participate in Furusato Nozei

Two Types of Deduction Procedures for Furusato Nozei

How Foreigners Can Make a Furusato Nozei Donation

Important Points Foreigners Should Know When Donating Through Furusato Nozei

Summary

Furusato Nozei (Hometown Tax) is a system that allows you to make donations to local municipalities you wish to support.
By participating in Furusato Nozei, you can not only receive deductions on your resident tax and refunds on your income tax, but also receive local specialties as gifts from the municipalities you donate to.
Did you know that this attractive system is also available to foreigners who are not Japanese nationals?
This article provides a detailed explanation of how Furusato Nozei works and how foreigners can utilize it.

Basic Knowledge about Furusato Nozei

If you are a foreigner considering utilizing this system, this information will be very useful for you.

How the Furusato Nozei System Works

In the Furusato Nozei system, you make donations to the municipalities of your choice within a certain maximum deduction limit, which varies depending on your annual income and family structure.
For example, for a household with an annual income of 5 million yen, a spouse (without a spousal deduction), and children, the estimated deduction limit is about 39,000 yen.
By donating up to this limit, not only can you receive the chosen return gifts, but you can also get refunds on your resident tax and income tax, minus a personal contribution of 2,000 yen.

Benefits of Participating in Furusato Nozei

By participating in Furusato Nozei, you can enjoy the following benefits:

Make donations to municipalities you want to support

In some cases, specify how your donation will be used

Receive local specialties as return gifts

Receive tax refunds or deductions

Requirements for Foreigners to Use Furusato Nozei

Despite the name including “tax,” Furusato Nozei is actually about making donations to municipalities, and there are no special qualifications or conditions required for participation.
Therefore, nationality does not matter—foreigners can also participate in Furusato Nozei.

Foreigners Who Pay Income Tax and Resident Tax Can Use Furusato Nozei

Furusato Nozei is intended for those who pay income and resident taxes in Japan.
If you do not have a tax obligation for either, you are not eligible to benefit from the system—even if you are Japanese.
Additionally, there is a maximum deduction limit based on your income and family situation, so depending on these factors, you might not fully benefit from the system.
For example, for a single person with an annual income of 2 million yen, the estimated deduction limit is about 15,300 yen; for a person with a dependent spouse, the limit is about 6,900 yen.
If your deduction limit is too low, the selection of return gifts will be limited, or you may incur additional personal expenses.

Two Methods for Tax Deductions with Furusato Nozei

If you decide to participate in Furusato Nozei, you should choose your deduction method beforehand.
You can claim your deductions either through the “One-Stop Special System” or through filing a tax return.

The One-Stop Special System for Salaried Workers Who Do Not File Tax Returns
If you opt for the One-Stop Special System, you do not need to file a tax return yourself; your resident tax will automatically be adjusted in the following fiscal year.
After applying for Furusato Nozei, you need to submit a One-Stop Special Application Form to the municipality to complete the procedure.
This option is best suited for salaried workers who otherwise do not file tax returns.
However, if you choose the One-Stop Special System, you must limit your donations to five municipalities or fewer per year.

Filing a Tax Return If the One-Stop Special System Cannot Be Used

If you donate to more than five municipalities or are self-employed and need to file a tax return for other reasons, you cannot use the One-Stop Special System.
Instead, you will need to declare your donations in your tax return the following year to receive your income tax refund and resident tax deductions.
In principle, whether you use the One-Stop Special System or file a tax return, there is no difference in the amount of tax deduction you receive.

How Foreigners Can Use Furusato Nozei

The procedures for foreigners to use Furusato Nozei are the same as for Japanese citizens.
Here is a detailed guide:

1. Choose the Municipality You Want to Donate to

First, select the municipality to which you want to donate.
You can choose a place that has special meaning for you or one offering attractive return gifts.
While there are many Furusato Nozei websites available, if you find reading Japanese difficult, we recommend using multilingual sites like “Furusato Japan.”

2. Apply for the Donation

Follow the instructions on the Furusato Nozei site, fill in the necessary information, and apply to donate to your chosen municipality.
Many sites will ask you to choose between the One-Stop Special System and filing a tax return at the time of application.

3. Receive the Return Gifts You Selected

Next, you will receive the return gifts you selected.
The delivery timing may vary depending on the municipality and the gift.

4. Receive and Keep the Donation Certificate

You will receive a donation receipt (certificate) from the municipality you donated to.
Depending on the municipality, this may be sent together with the return gift or separately. Please check in advance.
If you selected the One-Stop Special System, you will also receive the One-Stop Special Application Form along with the certificate.
If you plan to file a tax return, make sure to keep the donation certificate safely until the filing period.

5. Complete the Tax Deduction Procedure

If you opted for the One-Stop Special System, send the completed application form along with documents verifying your My Number and identity to the municipality by January 10 of the year following your donation.
If you plan to file a tax return, attach your donation certificate to your tax return documents.

6. Receive Your Tax Deductions

If you used the One-Stop Special System, your resident tax will be reduced in the following fiscal year.
If you filed a tax return, you will receive an income tax refund and a resident tax deduction in the following fiscal year.

Important Points Foreigners Should Know Before Using Furusato Nozei
When foreigners participate in Furusato Nozei, they should keep the following in mind:

Be Careful About Handling Middle Names

One common issue is that many Furusato Nozei websites do not support middle name entry.
However, when filing a tax return, you must use your full legal name as written on your residence card or passport.

If you have a middle name, consult your local tax office in advance to confirm the correct procedure.

Additional Documents Required for Tax Deductions

The donation certificate alone is not enough to complete your tax deduction process.
You will also need the following documents:

For Tax Return Filers:

Completed tax return forms

Withholding slip (gensenchoshuhyo)

Donation certificate

Copy of both sides of your My Number Card
(If you do not have a My Number Card, other identification documents are required.)

For One-Stop Special System Users:

Donation certificate

Copy of both sides of your My Number Card
(If you do not have a My Number Card, other identification documents are required.)

If you do not have a My Number Card or a My Number Notification Card, you will need alternative documents, such as a copy of your residence certificate showing your My Number, or a copy of official documents

Conclusion

Furusato Nozei is a system that can be used regardless of nationality.
By participating in Furusato Nozei, you can donate to the municipalities you want to support, receive selected return gifts, and obtain deductions or refunds on your resident and income taxes.
By understanding the important points to be careful about, you can make the most of this system and review your own tax strategies!