Consumption Tax Refund
2026Startup Consumption Tax Refund Guide
A guide for newly established companies to reclaim consumption tax incurred in the early stages of their business journey. Covers the election form, 2-year lock-in, accountant fees, and an interactive refund calculator.
What is the Taxable Operator Election Form?
Newly established kabushiki kaisha (KK) and godo kaisha (GK) are generally classified as exempt businesses (免税事業者), meaning they are exempt from filing and paying consumption tax.
The advantage of exempt status is that you don't need to remit consumption tax on sales. However, you also cannot reclaim the consumption tax you paid on purchases — known as the input tax credit (仕入税額控除).
This is where the election form comes in. By filing it, even an exempt business can voluntarily become a taxable operator (課税事業者) and claim input tax credits. When input tax exceeds output tax, the difference is refunded by the tax authority.
As a Taxable Operator
✓ Claim input tax credits
✓ Receive refund if input > output
✓ Especially good with large capital spending
✓ Can issue qualified invoices
Important Caveats
✗ Locked in 2 years (3 if ≥¥1M asset purchased)
✗ Must file & pay on sales
✗ Accounting costs increase
✗ Wages have no consumption tax — no refund
Should You File? — Decision Guide
Should You File? Flowchart
Question 1 of 4
Is your capital below ¥10M, not registered for invoice, and without a base period (new company, Year 1-2)?
Refund & Cost Estimator
Quick Refund Estimator
Equipment, renovation, software, etc. (incl. 10% tax)
Taxable sales this year (enter 0 if none)
Monthly add +¥6,000 · Year-end +¥50,000 = ¥122,000/yr
Recommended
The refund exceeds additional accounting costs. Filing is recommended.
* Estimates are for reference only. Consult a tax accountant, especially regarding Year 2 obligations. Refunds are not available under the Simplified Taxation System.
Companies That Benefit Most
Newly established companies with these types of expenses are strong candidates for a refund.
- 💻
Computer & Equipment Purchases
Business PCs ¥198,000 each (¥18,000 tax) × multiple units
- 🏗️
Office Renovation
Office renovation ¥2,200,000 (¥200,000 tax)
- 📦
Inventory / Raw Materials
Inventory ¥5,500,000 (¥500,000 tax), revenue ¥0
- ☁️
Software & SaaS Licenses
Annual licenses ¥1,100,000 (¥100,000 tax)
- 🚗
Vehicles / Heavy Equipment
Company vehicle ¥3,300,000 (¥300,000 tax)
- 🌏
Sales Abroad (Exports — Zero-Rated)
Exports are zero-rated (0% output tax), so all domestic input tax on purchases is refundable — regardless of export revenue level
The following costs carry no consumption tax and cannot be included in input tax credits: director/employee wages & bonuses, social/labor insurance premiums, land purchases & rent, insurance premiums, residential rent. If most of your spending is on labor, the refund opportunity is limited.
Filing Process — Step by Step
- 1
Obtain the Election Form
Download the 消費税課税事業者選択届出書 from the NTA website, or pick it up at your local tax office. You can also file electronically via e-Tax.
- 2
Complete the Form
Enter your company name, registered address, corporate number, fiscal year dates, and submission date. In the 'taxable period' field, enter the fiscal year from which the election is to take effect.
- 3
Submit to the Tax Office
Submit to your local tax office in person, by mail, or via e-Tax. New companies must file by the last day of their first fiscal year. Existing exempt businesses must file by the last day of the current fiscal year.
- 4
Calculate at Fiscal Year-End
Once your first taxable fiscal year ends, calculate output tax (on sales) and input tax (on purchases/expenses). If input tax exceeds output tax, you file a refund return.
- 5
File the Consumption Tax Return
File the consumption tax return within 2 months of fiscal year-end. For refund returns, the refund is typically deposited into your designated bank account within a few weeks.
Important: The 2-Year Lock-In Rule
Once you file the election, you cannot revert to exempt status for at least 2 full fiscal years. Even if sales surge in Year 2, you remain obligated to file and pay consumption tax. Make sure to model Year 2 projections carefully before deciding.
Use the calculator above to model the 2-year combined impact.
To revert to exempt status after the 2-year period, file the 消費税課税事業者選択不適用届出書 (Withdrawal Notification) at your local tax office. This must be submitted after the lock-in period ends, before the start of the next fiscal year.
Watch Out: Assets ≥ ¥1M Trigger a 3-Year Lock-In
If you acquire a qualifying fixed asset (machinery, vehicle, building, software, etc.) with a single-transaction pre-tax value of ¥1 million or more while under the voluntary election, the lock-in extends to a minimum of 3 full fiscal years — not just 2.[16]
Qualifying Fixed Assets
- •Machinery & equipment
- •Vehicles & transport
- •Tools, fixtures & fittings (inc. PCs)
- •Buildings & fixtures
- •Intangible assets (software etc.)
- ✕Land excluded (no consumption tax)
High-Value Assets (≥ ¥10M excl. tax)
Purchasing a single asset worth ¥10 million or more (pre-tax) triggers a mandatory 3-year standard taxation period from the following fiscal year — regardless of whether the voluntary election was filed.
Example: If you purchase a single business PC for ¥1.5M (pre-tax) in Year 1, the 2-year lock becomes a 3-year lock. You cannot revert to exempt status until Year 4, and must file consumption tax returns every year. We strongly recommend discussing equipment purchase plans with your accountant before deciding.
Expected Increase in Accountant & Accounting Costs
Becoming a taxable operator adds consumption tax filing work, which increases monthly accountant fees and year-end filing costs. The table below shows typical ranges (varies by company size, transaction volume, and accounting firm).
| Cost Item | Low | Typical | High |
|---|---|---|---|
| Monthly bookkeeping increase(/month) | ¥3,000 | ¥5,000–8,000 | ¥10,000+ |
| Consumption tax return additional fee(/year) | ¥30,000 | ¥50,000–70,000 | ¥100,000+ |
| Accounting software consumption tax tier(/month) | – | ¥0–5,000 | ¥5,000–15,000 |
| Total Annual Estimate | ¥66,000 | ¥110,000–150,000 | ¥220,000+ |
Break-Even Threshold
Low Cost
¥726,000
in costs to break even
Typical
¥1,342,000
in costs to break even
High Cost
¥2,420,000
in costs to break even
If your tax-included costs in the early stages of your business exceed these thresholds, the refund outweighs the additional accounting fees.
Invoice Registration vs Election Form — Which Route?
Both routes make you a taxable operator (課税事業者), but they differ in purpose, lock-in, and side effects.[13]
| Comparison | Election Form | Invoice Registration |
|---|---|---|
| Main purpose | Receive a consumption tax refund | Issue qualified invoices to B2B clients |
| Becomes taxable operator | ✓ Yes | ✓ Yes |
| Can claim a refund | ✓ Yes (under General Taxation) | ✓ Yes (under General Taxation) |
| Can issue qualified invoices | ✕ No — invoice registration also needed | ✓ Yes |
| Lock-in / Exit restriction | Min. 2 years (3 if ≥¥1M asset) | No 2-year rule, but taxable status continues for a period after cancellation |
| 20% Special Rule (2割特例) | ✕ Not eligible | ✓ Eligible (until Sep 2026) |
| After Sep 2029 | Still available | The transitional rule allowing invoice-only taxable status may change — consult your accountant |
Use Election Form Only
- ✓ Primarily B2C business (individual consumers)
- ✓ Clients don't need qualified invoices
- ✓ Large equipment purchases, refund is the only goal
Use Invoice Registration Instead
- ✓ Need to invoice other businesses or freelancers
- ✓ Want to use the 20% special rule (until Sep 2026)
- ✓ One registration covers both taxable status and invoice issuance
No Refund Under the Simplified Taxation System
In most cases, newly established companies are on General Taxation (原則課税) by default. You only end up on Simplified Taxation if you (or your accountant) specifically filed the 消費税簡易課税制度選択届出書 with the tax office. If you don't recall submitting that form, you're on General Taxation and can proceed with a refund filing.
Under Simplified Taxation, input tax is calculated using deemed purchase ratios (40–90% by industry type) — actual expenses do not determine the calculation, so refunds never arise regardless of how large your costs are. To receive a refund, you must use General Taxation (原則課税).[5]
If you are already under Simplified Taxation, you must file a 消費税簡易課税制度選択不適用届出書 to switch to General Taxation. The same 'effective from next fiscal year' rule applies to this change.
How to Exit Taxable Status — Withdrawal Form
After the 2-year lock-in ends, you can revert to exempt status by filing the 消費税課税事業者選択不適用届出書 (Withdrawal Notification).[6]
When?
After 2-year period ends, by the last day of the current fiscal year
Where?
Local Tax Office (in person, mail, or e-Tax)
Effect?
Reverts to exempt from the start of the next fiscal year
FAQ
References
- [1]消費税法第9条（小規模事業者の納税義務の免除）— e-Gov
- [2]国税庁 タックスアンサー No.6531 課税事業者選択届出書— NTA
- [3]国税庁 タックスアンサー No.6503 基準期間がない法人の納税義務— NTA
- [4]国税庁 消費税課税事業者選択届出書（様式）— NTA
- [5]国税庁 タックスアンサー No.6505 簡易課税制度— NTA
- [6]国税庁 消費税課税事業者選択不適用届出書— NTA
- [7]国税庁 タックスアンサー No.6611 消費税の還付— NTA
- [8]国税庁 タックスアンサー No.6501 納税義務の免除— NTA
- [9]国税庁 e-Tax（国税電子申告・納税システム）— NTA
- [10]消費税法（全文）— e-Gov
- [11]国税庁 タックスアンサー No.6451 仕入税額控除の対象となるもの— NTA
- [12]freee 消費税の還付とは？仕組みや申告方法をわかりやすく解説— freee
- [13]国税庁 適格請求書等保存方式（インボイス制度）— NTA
- [14]国税庁 タックスアンサー No.6629 消費税の各種届出書— NTA
- [15]小谷野税理士法人 起業1年目で消費税の還付は受けられる？— Koyano CPA
- [16]小谷野税理士法人 消費税の原則課税が3年間強制される場合（調整対象固定資産）— Koyano CPA
- [17]マネーフォワード 消費税還付の仕組みと条件— MoneyForward