Aoi Shinkoku (Blue Return)
青色申告 (Aoiro Shinkoku)
Aoiro Shinkoku is Japan's reward system for freelancers and sole proprietors who keep proper accounting records. In exchange for maintaining double-entry bookkeeping, the government grants you up to a ¥650,000 deduction on your taxable income — one of the most powerful tax breaks available.
"Think of it as a VIP discount at a restaurant. The restaurant (government) gives regular diners (people who file white returns) the standard menu. But if you bring your own detailed order book and prove you've been tracking every meal you've ever ordered (double-entry bookkeeping), you get a 20% discount on your entire bill — plus a secret menu of extra perks."
The 'order book' is your accounting records. The government trusts well-documented businesses more, so it rewards them with lower taxes. The more detailed your records, the bigger the discount.
Blue Return is available to anyone earning business income (事業所得), real estate income (不動産所得), or forestry income (山林所得). This primarily means:
• Freelancers and independent contractors
• Sole proprietors (個人事業主)
• Landlords renting out property
• Side-hustle earners if their side income qualifies as a business (typically requiring regularity and profit motive)
Salaried employees cannot use Blue Return for their primary employment income — but if they have a qualifying side business, they can apply Blue Return to that portion.
| Tier | Deduction | Requirements | Filing Method |
|---|---|---|---|
| Full (最高) | ¥650,000 | Double-entry bookkeeping (複式簿記) + file via e-Tax electronically | e-Tax online only |
| Mid | ¥550,000 | Double-entry bookkeeping + file on paper | Paper filing |
| Simplified (簡易簿記) | ¥100,000 | Single-entry bookkeeping (simple cashbook) | Either |
| White Return (白色) | ¥0 | No accounting requirement — but also no special deduction | Either |
If your business makes a loss in a year, you can carry that loss forward for up to 3 years to offset future profits. Under White Return, losses cannot be carried forward at all.
You can pay your spouse or family members a wage and deduct it as a business expense — as long as they genuinely work in your business and the wage is reasonable. Under White Return, family wages have a very limited fixed deduction.
Blue Return filers can immediately expense equipment purchases up to ¥300,000 each (up to ¥2.88M total per year), instead of depreciating over years. This means a new laptop, camera, or desk can be fully deducted this year.
Blue Return allows you to pre-deduct a bad debt allowance — setting aside 5.5% of accounts receivable as a tax-deductible reserve, even before customers fail to pay.
Under Blue Return, you can deduct any expense that is ordinary, necessary, and business-related:
• Home office portion of rent and utilities (按分 — prorate by m² or hours used)
• Internet and mobile phone bills (business portion)
• Equipment: laptop, camera, microphone, desk, chair
• Software subscriptions (Adobe, accounting tools)
• Business travel (train, bus, taxi — keep receipts)
• Client entertainment (meals with clients — 50% in some cases)
• Books, courses, and professional development
• Business insurance premiums
• Accounting and tax advisor fees
• Your own iDeCo contributions (fully deductible)
| Software | Blue Return Support | Price / Year | English UI |
|---|---|---|---|
| freee (フリー) | Full + e-Tax integration | ~¥26,400 | Partial |
| マネーフォワード クラウド | Full + e-Tax integration | ~¥35,760 | No |
| やよいの青色申告 | Full (desktop app) | ~¥10,800 (basic) | No |
| Tax Return Japan (third-party) | Varies | Varies | Yes (CPA service) |