Side-Business While Employed: What's Allowed

Side business while employed in Japan is allowed only when three separate gates all clear: your employer's contract clause, your visa activity scope, and your tax filing duty.¹²³ Miss any one of them and the other two do not protect you.

Confirm current details with official sources

Procedures, fees, and requirements can change. Confirm current details at the Ministry of Health, Labour and Welfare, the Immigration Services Agency, and the National Tax Agency sites. This article is general information, not legal, tax, or immigration advice; for your specific case, consult a licensed bengoshi or shakai hoken roumushi for contract interpretation, an immigration lawyer or gyoseishoshi for status-of-residence permission, or a zeirishi for side-income filing.

Overview

This article is for salaried employees who hold a full-time job and consider paid side work, from a second part-time shift to freelance client work to a small self-run business.¹⁴ It uses 副業 (fukugyō, "side business") for side work alongside main employment and 兼業 (kengyō, "concurrent employment") for holding two employments at once.¹

The three gates apply in a fixed order. Your employment contract and filed work rules decide whether you may start at all.¹⁵ Your status of residence decides whether you need immigration permission on top of that.² Tax law then decides what you must file and pay, including residence tax on the full total even when income tax needs no return.³

Statutes on tax and immigration apply uniformly nationwide. Employer handling varies company by company, residence-tax collection handling varies in practice by municipality, and visa handling varies by status of residence.¹²³

The policy shift: from ban to permission by default

Japanese employers historically discouraged or contractually prohibited side work. The government's work-style reform execution plan of 2017-03-28 set the opposite direction, asking the Ministry of Health, Labour and Welfare to build conditions where companies and workers can engage in side work with assurance.¹

The Ministry published its 副業・兼業の促進に関するガイドライン (fukugyō kengyō sokushin gaidorain, "guidelines for promoting side work") in January 2018, revised it in September 2020 to clarify rules, and revised it again in July 2022 to support career formation through occupational choice.¹ In January 2018 it also deleted the model work-rules item that told workers not to work for another company without permission, and added a new side-work provision. That provision was revised again with the September 2020 guideline revision, now carried as Chapter 14, Article 68 of the model text.¹⁵

The hub page also lists a pamphlet (revised 2025-03-31), employer and worker leaflets, a Q and A (revised 2022-07-13), working-time aggregation materials, a simplified management model, and reference notification and agreement forms.¹

Ask for the current work-rules text first

Many workplaces still operate under pre-2018 rulebooks even though the model text changed. Request the filed work-rules side-work article in writing and compare its date against the 2018 change.¹⁵

What the guideline is and is not

The guideline explains points to note under current laws and ordinances. It is administrative guidance, not a statute that grants a standalone right to hold side work.¹

It therefore does not override your individual contract, your workplace's filed work rules, confidentiality and competition duties, or immigration and tax statutes.¹²³ A prohibition or permission clause in your own paperwork still binds as a contract matter even though national policy now favors permission.¹

Your employment contract comes first

No general statute entitles an employee to hold a side job. Control sits in your individual contract and in filed work rules, which workplaces with 10 or more workers must draw up and file under Labor Standards Act Article 89.¹⁵

Practitioner sources describe a split market: many older contracts carry a permission-required or prohibited clause, while many newer foreign-multinational contracts allow side work with notification. Figures on the split are inconsistently reported, so treat this as a market pattern to verify at your own company, not as a measured share.¹

The following flowchart shows the contract check in order.

Prohibited, permission-required, and notification-only clauses

Most clauses fall into three patterns: prohibited without exception, allowed with prior permission, or allowed with prior or prompt notification.¹ Under a permission pattern, file the employer's designated side-work form before you start. The Ministry publishes reference notification and agreement forms that employers may adapt.¹

Under a notification pattern, report the content and hours of the side work and update the notice when the work changes.¹ Refusal or revocation grounds usually invoke a competing business, confidentiality leakage, impaired attendance or performance, overtime-cap overflow, or reputational harm. Exact grounds depend on your employer's own rules.¹

Keep the permission result in writing before you earn anything

Verbal approval is hard to prove in a later dispute. Keep the stamped permission or the accepted notification copy with its date.¹

What to check in work rules and side documents

Check the 就業規則 (shūgyō kisoku, "work rules") side-work article, the 労働条件通知書 (rōdō jōken tsūchisho, "labor-conditions notice") where limits are restated, and any separate confidentiality, non-compete, and invention-assignment undertakings.¹⁵ File the 届出 (todokede, "notification filing") through the channel your rules name, not by informal chat.¹

A side business for a direct competitor, use of employer trade secrets or customer lists, or solicitation of your employer's clients can breach surviving duties even where side work in general is permitted.¹ Invention and IP assignment terms can also capture side-work output where the contract or work rules so provide, so review them before you use employer equipment or working time for the side business.¹

This article does not re-derive how to read each clause line by line. That ground is covered by the general contract-reading guide for employees evaluating an offer before signing.

The visa layer: work outside your status needs permission

A foreign resident on an activity-defined status who will operate an income-accompanied business or receive remuneration outside the permitted activity scope must obtain 資格外活動許可 (shikakugai katsudō kyoka, "permission to engage in activity other than that permitted") under Immigration Control and Refugee Recognition Act Article 19(2).²

File when you intend to start the out-of-scope paid activity, at the regional immigration bureau with jurisdiction over your residence (as of 2026-09; confirm current procedures with the Immigration Services Agency).² The applicant, a legal representative, an approved application agent, or a notified bengoshi or gyoseishoshi may file.² No fee is charged for this permission.² The standard processing period is 2 weeks to 2 months (as of 2026-09).²

The Immigration Services Agency grants the permission only where all seven general-principle requirements hold.

Requirement	Detail
Non-hindrance	Side activity does not hinder performance of the current status activity2
Current activity performed	Applicant is actually performing the current status activity2
Eligible activity class	Side activity falls under a Table 1 or Table 2 status activity, excluding Specified Skilled Worker and Technical Intern Training2
Lawful and non-entertainment	Side activity is not illegal and not defined adult-entertainment business activity2
No detention process	No detention order or hearing notice outstanding2
Conduct	Good conduct2
Employer consent	Where residence is contract-based, the contracting organization consents2

The table above states the full requirement set as published. Confirm current handling with the Immigration Services Agency before you apply, since individual screening turns on your facts.²

Out-of-scope paid work without permission risks your residence

Working outside your status without the required permission is an immigration violation, not an employment paperwork issue. Confirm your activity scope with an immigration lawyer or gyoseishoshi before your first paid day.²

Who needs permission and who does not

Holders of activity-defined Table 1 work statuses need this permission for paid work outside their defined scope.² Holders of status-based residence, including permanent resident, spouse of Japanese national, spouse of permanent resident, and long-term resident, have no activity restriction of this kind and do not need this permission for side work as such.²

Students, dependents, and designated-activities holders remain subject to their own permission conditions. This article does not cover their hour caps or comprehensive-permission patterns.²

Readers who have not yet mapped their own status to its permitted activity should first confirm that mapping through the work-visa eligibility guide for their category.

The tax layer: the 200K JPY filing line and beyond

Most single-salary earners complete income tax through 年末調整 (nenmatsu chōsei, "year-end adjustment") with no filing needed.³ The exceptions below are the only path that pulls a side worker into filing. National Tax Agency pages cited here are stated under current laws and ordinances (as of 2025-04-01; confirm current figures with the National Tax Agency).³⁴

Income tax: the 20万円 rule for single-salary earners

A person receiving salary from one payer, all subject to withholding, must file a 確定申告 (kakutei shinkoku, "final tax return") where the total of non-salary and non-retirement income amounts exceeds 200,000 JPY, excluding filers whose filing would produce a refund (as of 2025-04-01).³ Salary income and retirement income themselves are excluded from that 200,000 JPY count; only other income categories count toward it (as of 2025-04-01).³

A person receiving salary from two or more payers, all subject to withholding, must file where year-end-unadjusted salary plus the same non-salary and non-retirement total exceeds 200,000 JPY, subject to the stated deduction-balance exception (as of 2025-04-01).³ A separate annual-revenue trigger at salary over 20,000,000 JPY also forces a return, but it rarely decides side-work cases (as of 2025-04-01).³

Side earnings commonly fall into 雑所得 (zasshotoku, "miscellaneous income"), including personal online-marketplace sales, skill-based services such as babysitting or tutoring, crypto-asset disposals, minpaku hosting, and NFT mint-and-transfer gains.⁴ Sales of used household goods for personal use are non-taxable and need no filing on that portion.⁴

Filing trigger	Threshold	As of	Notes
Single-payer salary, other income total	Over 200,000 JPY	2025-04-013	Salary and retirement income excluded from count
Multi-payer salary, unadjusted salary plus other income	Over 200,000 JPY combined	2025-04-013	Subject to deduction-balance exception
Annual salary revenue	Over 20,000,000 JPY	2025-04-013	Rarely the deciding trigger for side work

The table states the full threshold set as published. Confirm current figures with the National Tax Agency before you decide whether to file, since the page is dated to current laws and ordinances.³

The 200K JPY count uses income, not revenue

The threshold counts income amounts after allowable deductions, not gross receipts. Keep expense records from day one so the total is correct.³⁴

Residence tax, withholding, and bookkeeping notes

Residence tax is assessed on total income including side income. A side worker therefore owes residence tax on the side portion even in years where income-tax filing is not required, and a municipal report may still be needed for that portion.³

A second salary payer generally withholds income tax at its own payment. Client payments for freelance side work may carry 源泉徴収 (gensen chōshū, "withholding at source"). Record each slip for the year-end total.³⁴

Once side work becomes continuous self-employment rather than occasional income, bookkeeping shape matters. 青色申告 (aoiro shinkoku, "blue-form return") and 白色申告 (shiroiro shinkoku, "white-form return") differ in record-keeping and deduction handling, so review that choice before the side business grows.³

The disclosure risk: how your employer can find out

Salaried residence tax is normally collected by 特別徴収 (tokubetsu chōshū, "special collection") through the main employer. The payroll office receives a notice showing the assessed amount derived from total income, so a side-income uplift can surface at HR as an unexpectedly high amount.³

Workers commonly request 普通徴収 (futsū chōshū, "ordinary collection") for the side-income portion at filing to keep it off the employer's slip. Whether the municipality honors that request in a given year is administrative practice and is not guaranteed.³

No filing or collection choice removes the underlying duty to report and pay tax on the side income itself.³

Do not hide side work by skipping filing

Skipping a required return or municipal report trades an employment awkwardness for a tax delinquency. Resolve the employer permission first, then file correctly.³

Steps before you start

Follow this order and keep paper at each step. First, read the contract and filed work rules for the side-work article and any permission or notification form.¹⁵ Second, obtain employer permission or file notification and keep the written result.¹

Third, where your status is activity-defined, obtain Immigration Services Agency permission before starting paid out-of-scope work.² Fourth, set up income tracking and keep every withholding slip from day one.³⁴ Fifth, at year end apply the 200,000 JPY filing test and file or municipally report as required (as of 2025-04-01).³

Where any gate is unclear, such as an ambiguous clause, an unclear activity scope, or an unclear income classification, pause and consult the matching professional before starting.¹²³

Good to know

A permission-clause denial is an employment risk, not a tax defense

Starting side work after a denial, or without a required permission filing, risks discipline up to dismissal as a contract and work-rules matter.¹⁵ Tax compliance does not cure the employment breach. Keep the denial and your next steps in writing and seek professional review before you act.¹

Side income under 200K JPY can still need a residence-tax filing

The 200,000 JPY line excuses the income-tax final return in the stated single-salary cases (as of 2025-04-01).³ It does not excuse residence tax on the same income. Residence tax is assessed on total income, so the side portion remains taxable and may need a municipal report.³

Ordinary collection for side income is a request, not a guarantee

File early enough to make the ordinary-collection request for the side portion, and confirm with the municipality whether it was honored.³ Do not assume the employer's slip will stay flat. Payroll offices notice uplifts because the notice derives from total income.³

Weekend work for a competitor can breach confidentiality even when side work is allowed

A general permission to hold side work does not authorize use of trade secrets, customer data, or solicitation of the employer's clients.¹ Weekend work for a competitor concentrates all three risks at once. Separate the information environments completely and get a specific review where overlap is possible.¹

Hours from two employers add up under the Labor Standards Act

Working time is aggregated across the main and side employers for cap management.¹⁶ The Ministry hub lists dedicated aggregation explanatory materials and a simplified management model for dual-employment hour tracking.¹ Dual-job hours share one statutory ceiling even though each employer pays separately. Check total weekly hours before you commit to a second shift.¹⁶

See also

• Registering as a Sole Proprietor (Kojin Jigyounushi)
• Invoicing and the Qualified Invoice (Inbosu) System
• Health Insurance and Pension for Freelancers
• Notifying Immigration of the Employer Change
• The Residence-Tax Year-Two Surprise
• The 3-Month-Unemployment Renewal Risk

References

Footnotes

1. Ministry of Health, Labour and Welfare. 副業・兼業 hub page. https://www.mhlw.go.jp/stf/seisakunitsuite/bunya/0000192188.html ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶ ↩⁷ ↩⁸ ↩⁹ ↩¹⁰ ↩¹¹ ↩¹² ↩¹³ ↩¹⁴ ↩¹⁵ ↩¹⁶ ↩¹⁷ ↩¹⁸ ↩¹⁹ ↩²⁰ ↩²¹ ↩²² ↩²³ ↩²⁴ ↩²⁵ ↩²⁶ ↩²⁷ ↩²⁸ ↩²⁹ ↩³⁰ ↩³¹ ↩³² ↩³³ ↩³⁴

2. Immigration Services Agency. 資格外活動許可申請. https://www.moj.go.jp/isa/applications/procedures/16-8.html ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶ ↩⁷ ↩⁸ ↩⁹ ↩¹⁰ ↩¹¹ ↩¹² ↩¹³ ↩¹⁴ ↩¹⁵ ↩¹⁶ ↩¹⁷ ↩¹⁸ ↩¹⁹ ↩²⁰ ↩²¹ ↩²² ↩²³

3. National Tax Agency. No.1900 給与所得者で確定申告が必要な人 (as of 2025-04-01). https://www.nta.go.jp/taxes/shiraberu/taxanswer/shotoku/1900.htm ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶ ↩⁷ ↩⁸ ↩⁹ ↩¹⁰ ↩¹¹ ↩¹² ↩¹³ ↩¹⁴ ↩¹⁵ ↩¹⁶ ↩¹⁷ ↩¹⁸ ↩¹⁹ ↩²⁰ ↩²¹ ↩²² ↩²³ ↩²⁴ ↩²⁵ ↩²⁶ ↩²⁷ ↩²⁸ ↩²⁹

4. National Tax Agency. No.1906 給与所得者がネットオークション等により副収入を得た場合 (as of 2025-04-01). https://www.nta.go.jp/taxes/shiraberu/taxanswer/shotoku/1906.htm ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶ ↩⁷

5. Ministry of Health, Labour and Welfare. モデル就業規則について hub page. https://www.mhlw.go.jp/stf/seisakunitsuite/bunya/koyou_roudou/roudoukijun/zigyonushi/model/index.html ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶ ↩⁷

6. Japanese Law Translation, Ministry of Justice. Labor Standards Act, Act No. 49 of 1947. https://www.japaneselawtranslation.go.jp/en/laws/view/3567/en ↩ ↩²