I recently asked about paying taxes on papa-katsu (compensated dating in Japan). Thank you to Mac, Maezawa, Aya, Makeo, and Kazu for your thoughtful answers.

The tax accountant you consulted doesn’t seem to understand civil law. A gift is legally established when both the giver and the recipient acknowledge that a gift was made. So the moment the woman claims, “It wasn’t a gift,” the possibility of gift tax becomes zero. The tax office can’t determine that a gift was made based solely on the flow of money (unless there’s a gift agreement or other clear evidence of the gift). To make such a determination, they would have to investigate both the giver and the recipient, which is time-consuming for the tax office and something they would generally prefer to avoid. If it wasn’t a gift, then what exactly was the money? That’s where it may fall under income tax—that’s essentially how the tax reasoning works. Conversely, if the man acknowledges that he “gave” the money and the woman acknowledges that she “received” it, they can simply pay gift tax and be done with it. However, when filing a gift tax return, you have to state who gave you how much. So if you were actually going to file, the issue would be how to deal with that part.

If you’re going to present a tax accountant’s opinion, you should get that accountant’s permission and clearly state their name. Otherwise, there’s no way to know whether the information really reflects what that tax accountant said. Unfortunately, once the questioner writes it up, it carries no more authority than their own personal opinion. To be blunt, if merely hearing something from a tax accountant were enough, I’ve spoken with more than 1,000 tax accountants myself. Even so, I still recommend consulting a tax accountant because the accountant who gave that advice bears a certain level of responsibility by virtue of being a licensed professional. I don’t mean liability for damages, but responsibility for expressing an opinion as an expert. That said, I still don’t think other people should take what that tax accountant said and spread it as correct knowledge. When it comes to interpreting the law, it’s quite common for tax accountants and tax offices to have different views. The government has an administrative appeals system, and for national taxes, you can file an appeal with the National Tax Tribunal. Of course, since it is part of the government administration, you can also formally contest the matter in court. There was a famous case, I believe, concerning whether horse-racing betting tickets could be treated as expenses. Regarding taxes on profits from horse racing, the cost of purchasing betting tickets had traditionally not been recognized as an expense. So, if someone bought ¥100 million worth of tickets and the winning tickets paid out ¥100 million, they would have: ¥100 million − ¥100 million = ¥0 Their actual profit would be zero. Yet they were still charged tax on the full ¥100 million. In other words, even though they had no profit and no money left, they could be told to pay ¥40 million in taxes—something they obviously couldn’t afford. Even if they had consulted a tax accountant, they probably would have been told that betting tickets couldn’t be treated as expenses and that they had no choice but to pay the tax. The tax office likely would have said the same thing. The person in that case, although the figures were different, took the matter to court and won. The court ruled that the cost of purchasing the betting tickets could be recognized as an expense. It’s an example of how difficult legal interpretation can be. When interpretations differ, the basic principle is that the courts decide. Also, did you know that even tax accountants may have passed different subject exams? For example, you can qualify without choosing inheritance tax as one of your subjects. However, a tax accountant who didn’t take inheritance tax may not know much about inheritance taxation because they never studied it. There are also people who became tax accountants without taking the examination. They’re often referred to as former tax officials. Those people generally don’t have much knowledge about tax-saving strategies. After all, until they retired from public service, their job was to ensure that as much tax as possible was paid, so they tend to believe that it’s better to pay whatever tax is due. Tax accountants are human too, so their abilities differ from person to person, and their policies and approaches differ as well. If the questioner was satisfied with the advice, then following that tax accountant’s guidance is probably the best course of action. However, it’s a different matter when someone who isn’t a tax accountant posts something they merely heard here as though it were established knowledge. And since the tax accountant didn’t write this themselves, I have to say that other people shouldn’t simply take what was posted this time on trust either. You should consult a professional yourself, and if you’re satisfied with that professional’s advice, follow it for your own situation. Once you start saying, “This is what I was told,” you should recognize that it is, at that point, merely a layperson’s account.

Thank you for the detailed explanation. That said, some tax accountants consider it miscellaneous income rather than gift tax, right? Apparently, the depth of the relationship between the two parties is important for it to qualify as a gift. If you have multiple papas or don’t know the other person’s address, for example, it may not be accepted as a gift. That said, this is only one tax accountant’s opinion. Either way, filing a tax return is necessary.

First of all, that tax accountant said, “I think…,” didn’t they? A tax accountant isn’t the person who determines whether something is legal. So they’re merely expressing their personal opinion. I feel uneasy about calling that “correct knowledge.” At most, I’d call it “the safest-looking approach.” As for the question, “From a man’s perspective, is it unnecessary for a woman to pay taxes?” I don’t think it’s unnecessary. However, for men who are evading taxes or using risky tax-saving schemes, it might be.

There’s a lot you can do within the bounds of the law. Personally, I think having someone act as a company president’s secretary crosses the line, but if you have them do actual, substantive work, that pretty much solves the problem. By the way, our highest-paid female staff member (not a papa-katsu partner) earns around ¥30 million a year. I think she still has room to grow. We’ve incorporated the business. Thank you for sharing that information. You seem like a very thorough person, and I’m impressed. P.S. Tax accountants can roughly be divided into those who lean toward the National Tax Agency and those who lean toward their clients. The former are, so to speak, B-types who lean toward A, and they’re not very accommodating. Client-oriented tax accountants, on the other hand, are straight-up C-types. Whether it’s business income or miscellaneous income, as long as you’ve got a solid story, even if it gets flagged, you can usually settle it with an amended return. That’s what people call bringing a “gift” for them. Tax evasion is a no-go—completely out of the question.

If you’re going to ask an accountant later after getting answers on a Q&A site, wouldn’t it be better to ask the accountant in the first place? The people answering aren’t tax professionals—they’re simply sharing what they think the answer is.