I report it as miscellaneous income rather than business income. So, since I started papa-katsu (compensated dating in Japan), my various taxes have gone up quite a bit. But my papa (a male supporter) told me, “You’ll never pay more in taxes than you receive,” and that made sense to me.
There’s one point I forgot to mention.
You really need to ask a professional about taxes.
By “professional,” I mean a tax accountant or a certified public accountant. (CPAs can become tax accountants without taking the exam, so this means a CPA who is also registered as a tax accountant.) I believe they offer free consultations around tax-return season, so it might be worth asking there.
As a second option, although they aren’t professionals, blue-return filing associations seem to have a reasonable level of expertise. (That said, asking a tax accountant is still best.)
Please keep in mind that opinions from anyone other than a professional—including mine—could be incorrect.
Now, regarding this particular case:
> I believe papa-katsu allowances are what’s generally considered a “gift,” rather than business income.
If we’re talking specifically about papa-katsu allowances, then yes, they would be gifts.
But what if the questioner is running a dating business as an individual—meeting and going on dates with various papas (male supporters)?
You might say, “But if she’s going to hotels, doesn’t that make it adult entertainment?” However, cabaret clubs, for example, aren’t considered adult entertainment establishments, even though some hostesses may engage in pillow business (i.e., go to a hotel) to keep customers coming back. The hotel visits themselves are presumably treated as consensual romantic relationships between individuals.
With that in mind, the business might be classified as a dating service or perhaps a counseling service.
Since she meets men and listens to them while having meals, you could call it counseling. If “dating” is easier to understand, that might work too.
As for whether any licenses or notifications are required, an administrative procedures specialist who handles these matters should be able to tell you whether there are any filings you should make.
Miscellaneous income is more readily accepted, but business income has more advantages, so I think it would be better to structure things so they qualify as business income.
I searched online and found that, to classify papa-katsu as business income, you apparently need to:
- Submit a business-opening notification to the tax office
- Earn a consistent income from papa-katsu every month, with little month-to-month variation
- Do it on both weekdays and weekends
- Earn more from it than from your main job (salary income); it’s even better if papa-katsu is your only work
- Keep books and retain supporting documents such as receipts
Apparently, it has to reach roughly this level before it can be considered business income, and even then, it may still be classified as miscellaneous income.
Also, to prevent your side job from being discovered through your resident tax:
When filing your tax return, mark “Pay by myself” under “Matters concerning resident tax” on the second page of the tax return form. This means you will pay the resident tax on this income yourself, so your employer won’t find out about the side job.
That’s what I found written online.
As long as you pay your taxes properly, you’re fine.
For the girls I give large amounts of money to, I explain everything from “What is a My Number?” onward, and I make sure they file and pay their taxes without skimming off even a single yen.
Even if you’re paying taxes, giving large sums to relatives can be difficult, but when they’re complete strangers, giving around ¥1 million a month to one person is totally doable.
I currently have two regulars who are sole proprietors. A third one may be joining soon (the next ace).
P.S. Giving someone a large amount of money comes with a great deal of responsibility. It can seriously mess with your head, and you could end up ruining a woman’s life. That’s why I only give large sums to girls who have dreams and are trying to become independent.
I teach them business—thoroughly. I also have them work. And in the end, they graduate from me.
