Every year from February to March, it is tax season in Japan. We know that most of the animation industry is freelancers, so when it comes to tax season, Japanese animators often ask each other, "Have you done your tax return?" "Although freelancers may sound very handsome, they may actually suffer from a lack of tax knowledge and get paid less. Today, animation industry insider Yasu Daiichi (pseudonym) published the following article on "tax filing in the animation industry", let's take a look at two or three things about tax filing in the Japanese animation industry!

1. What are the positions in the animation industry that are considered freelancers?

First, let's explain what a freelancer is. The so-called freelancer refers to the self-employed, that is, the worker who does not belong to the company and accepts work in his or her personal capacity. In terms of contracts, regular or temporary employees of a company are paid a fixed salary by signing an employment contract, while freelancers are paid a different salary by signing a separate contract for each job.

In the animation industry, the permanent or temporary employees of the animation studio are: various positions in the management level, production staff, production assistants, general staff, accountants, and publicity personnel. On the other hand, scriptwriters, animators, video post-producers, and video special effects producers are freelancers. Photographers, editors, background makers, and 3D animators are considered permanent or temporary employees and freelancers, depending on the animation studio. Most of the animation directors who are the soul of an animation are freelancers, but there are also directors who are employees. For example, when a director sets up an animation studio on his own, or when an animation studio wants to attract outstanding talents.

2. Why do freelancers make up the majority?

At the beginning of the article, we said that the vast majority of people in the animation industry are freelancers, but why is that? Each animation has a so-called production committee that is responsible for planning, publicity, and sales, and the animation studio will only start producing the actual animation after receiving funds from the production committee. If the animation studio's animation production orders can be done smoothly and often, then the staff will naturally not worry about not getting paid, but in fact, many animation studios will encounter a recession, so what should be done at this time with huge personnel expenses? You must know that an animation is made by hundreds of people working together, and you must not underestimate the cost of hiring hundreds of people. Therefore, freelancers are hired only when necessary, and this work system can effectively reduce the cost of animation studios.

On the other hand, animators themselves are happy to work as freelancers. Because the biggest advantage of freelancers is that they can control their workload lightly. On the other hand, no matter how hard the employees of the company are, it is impossible to adjust the workload. If the boss tells you to do it, you have to do it. If you refuse to work, you may lose your wages or lose your job instantly.

Freelancers are able to adjust their workload to suit their situation and refuse requests from their bosses if they feel they are too busy to do so. And wages are positively correlated with the amount of work, the so-called more work and more rewards. For such a mutually favorable reason, the vast majority of today's animation practitioners choose to become a freelancer.

3. Annoying money chores

Of course, there are definitely disadvantages to being a freelancer, and the biggest disadvantage is probably social security. The company will help regular employees pay half of the social health insurance costs and pensions, but self-employed freelancers can only pay the full amount themselves. Not only that, but you must also consider which social insurance is most suitable for you based on your income. These are all problems that cause headaches for many freelancers.

In addition to this, there is a big and troublesome problem that freelancers need to deal with on their own. This is the subject of this article - the declaration of personal income tax. The company's personal income tax is handled by the company, but freelancers have to take time out of their busy schedules to handle such tedious tasks on their own. The real problem is that if the declaration is wrong, it will be miserable to report the tax that should be paid. It's a matter of life and death!

As mentioned above, freelancers enjoy the benefits of being able to control their workload at will, but they also take on a lot of the financial troubles on their own. Therefore, every season, I often hear friends in the industry say, "It's great to set up my own studio, and I don't have to be distracted by chores anymore."

Fourth, the new issue of consumption tax

When it comes to this tax filing problem, it is particularly headache. You see, hasn't Japan raised taxes recently? At the end of last year, there was an executive order issued by the Fair Trade Commission (an administrative department of the Japanese government) that "Toei Animation is required to pay part of the wages of the consumption tax increase". To put it simply, after the consumption tax was raised from 5% to 8%, freelancers were supposed to receive a 3% wage increase, but Toei Animation was criticized by the Fair Trade Commission for refusing to pay the 3% salary according to the regulations.

According to the regulations, self-employed individuals who earn less than 10 million yen per year are exempt from paying consumption tax. Unfortunately, most of our animation practitioners do not have the annual income to pay consumption tax. To put it bluntly, as long as the annual income does not exceed 10 million yen, then the extra 3% of the salary paid by the boss goes into the pocket of the freelancer.

That's why Toei Animation refused to pay the 3% more salary on this ground. From my point of view, it's stupid enough to use such an excuse, and if Toei Animation really thinks about it like this, then I have to say that it has a deep problem in managing as a large-scale animation company. Of course, there are more studios that don't pay this 3% salary, and Toei Animation is just the tip of the iceberg.

For a long time, the consumption tax treatment of animation production sites has been a gray area. Some companies pay freelancers with tax, while others don't. Too often, the company doesn't take the initiative to talk about it explicitly. In the case of tax, it means that the actual salary received and the promised salary will be reduced by 8%. If the company does not state in advance whether the salary includes tax, it is equivalent to "snatching" 8% of the salary from freelancers. In this case, what's wrong with freelancers asking companies to increase their wages by 3%? If the tax is raised to 10% in the future, freelancers in the animation industry who earn less than 10 million yen a year may be exploited by the company for no reason!

Aside from the above Toei Animation example, the entire animation industry has a shallow understanding of the "consumption tax issue for freelancers." Fortunately, with the increase in taxes, more and more animation studios are now making it clear whether their salaries are tax-included when negotiating contracts. In fact, the author has already received several retroactive payments of 3% of my salary.

Write at the end

If you want to become a freelancer and enter the animation industry, you must learn to protect your rights. Carefully understand the composition of your salary and ensure that your income will not be deducted for no reason. In the animation studio, too, we should not bully freelancers for their lack of knowledge and weak stance on paying taxes, but should honestly cooperate with freelancers to promote the good development of the industry.