[freee Practical Memo] 7 Easy-to-Trip-Up Points in Invoice-Era Consumption-Tax Categories (Overseas SaaS, Parallel Imports, Transitional Measure)

freee accounting auto-assigns tax categories to transactions, so daily entry is easy. But there are transactions that make you pause — "which category is this again?" — like overseas cloud services, parallel-import purchases, and purchases from tax-exempt businesses (transitional measure). This article rounds up 7 points where we actually hesitated or tripped up while filing consumption tax.

*This is a practical memo from a non-tax-accountant. Consumption-tax categories change with individual circumstances, so always confirm final decisions with your tax accountant or competent tax office. This article contains affiliate links (Amazon Associates).

First: the transitional measure changed to "7・5・3 tenths deduction"

Purchases from tax-exempt businesses (counterparties not registered for the invoice system) are, in principle, not eligible for the input tax credit. But a transitional measure allows a fixed percentage to be deducted. That percentage was revised in the FY2026 tax reform, and the deadline was extended. Here's the schedule to keep in mind now (2026).

・Through Sep 30, 2026: 80% deduction

・Oct 1, 2026 – Sep 30, 2028: 70% deduction

・Oct 1, 2028 – Sep 30, 2030: 50% deduction

・Oct 1, 2030 – Sep 30, 2031: 30% deduction

・From Oct 1, 2031: no deduction (the measure ends)

Heads up!　For taxable periods beginning on or after Oct 1, 2026, the measure no longer applies to the portion of annual taxable purchases (tax-incl.) from the same tax-exempt business that exceeds ¥100 million (the cap was lowered from ¥1 billion to ¥100 million).

Point 01　For overseas cloud/SaaS (AWS, Adobe, etc.), first look at the "registration number"

Services received over the internet from an overseas provider count as "cross-border digital services (provision of telecommunications-based services)"; if the recipient is in Japan, they're a domestic transaction subject to consumption tax. The entry point for judgment is whether the invoice has a Japanese invoice registration number (13 digits starting with T). Many large providers (like AWS) hold registration numbers as Japanese qualified invoice issuers.

With a registration number: generally can be treated as a normal taxable purchase (10%, qualified) eligible for the input tax credit

Without a registration number: for so-called consumer-facing services, generally no input tax credit; often processed as "out of scope"

Heads up!　Even for the same "overseas service," whether you can deduct changes with the presence of a registration number. Get in the habit of glancing at each invoice PDF for the number.

Point 02　Overseas "ad delivery" is reverse charge — but many companies process it as out of scope

"Business-facing" services received from overseas providers, like Google Ads or social ads, are subject to the "reverse charge" method, where the buyer is originally supposed to file and pay the consumption tax. However, for companies on general taxation with a taxable sales ratio of 95% or more, this transaction is treated as "not having occurred" for the time being, and processed as out of scope (non-taxable).

Taxable sales ratio 95% or more: no reverse-charge filing needed; generally processed as out of scope

Taxable sales ratio under 95%: file under the reverse-charge method, recording it on both the sales and purchase sides

Heads up!　Whether it's "business-facing" is gauged by whether the counterparty indicates it's subject to reverse charge. For ad costs you're unsure about, confirming with a tax accountant is safest.

Point 03　For parallel imports, separate the "payment abroad" from the "import consumption tax"

Buying goods from overseas sites like Coach.com is handled differently from a domestic taxable purchase. The payment for the goods to the overseas site is itself a foreign transaction (out of scope), and consumption tax is charged separately at customs as "import consumption tax." What's eligible for the input tax credit is the import consumption tax paid to customs.

Payment for goods to the overseas site: generally processed as out of scope (foreign transaction)

Import consumption tax paid to customs: eligible for deduction as an import taxable purchase; confirm the amount on the import permit notice, etc.

Heads up!　In freee, the key is to register the payment abroad and the import consumption tax paid at customs as separate transactions. Lumping them together throws off the tax category.

Point 04　Enter purchases from tax-exempt businesses "with the transitional measure"

Even for domestic counterparties, purchases from those not registered for the invoice system (no registration number) are subject to the transitional measure above. In freee, choose the transitional-measure tax category (a category with the deduction percentage) for such transactions. The non-deductible portion of consumption tax is added to the expense or processed as a miscellaneous loss.

With a registration number (qualified): fully deductible as a normal taxable purchase (10% / 8%)

Without a registration number (tax-exempt business, etc.): deduct only the transitional-measure percentage; process the rest as expense or miscellaneous loss

Heads up!　In October 2026 the deduction percentage switches from 80% to 70%. Around the switch date, the category changes based on the transaction date, so take care when entering.

Point 05　Bank transfer fees and payment fees are taxable purchases

Easy to overlook are the various fees. Transfer fees and payment fees paid to domestic financial institutions are, in principle, taxable purchases (10%). Fees from online banks like GMO Aozora Net Bank are treated the same. Even small amounts add up across many transactions, so it's worth setting the tax category correctly.

Domestic transfer / payment fees: generally processed as a 10% taxable purchase

Point 06　Telling apart "tax-exempt (non-taxable)" and "out of scope (non-taxable-event)"

There are types of transactions on which no consumption tax applies. Roughly, social insurance premiums and interest are "tax-exempt," while salaries and tax payments are "out of scope." Rather than leaving it all to freee's defaults, when unsure, checking the NTA's categories is reassuring.

Examples of tax-exempt: social insurance premiums, interest paid, stamps/postage (at purchase), etc.

Examples of out of scope: salaries / officer compensation, taxes (public dues), the principal of remittances abroad, etc.

Point 07　A credit-card statement alone isn't enough

If you pay expenses by card, the card company's statement is not an invoice (qualified invoice). To claim the input tax credit, you need to separately keep the qualified invoices (receipts) received from each store or service. For overseas subscriptions too, download and keep the invoice PDF with the registration number.

Heads up!　There's also a "small-amount special rule" that "taxable purchases under ¥10,000 don't need an invoice," but there are conditions on the eligible businesses and period. Checking once whether your company qualifies is reassuring.

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Three freee settings to reduce guesswork

1　Register the registration number for each counterparty. freee can auto-judge whether they're qualified, cutting category mistakes.

2　Use recurring transactions / auto-registration rules. Fixing the tax category for monthly SaaS and fees saves you from puzzling over it each time.

3　Leave notes on overseas transactions. Noting "out of scope (foreign)" or "import consumption tax" makes the pre-filing review easier.

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Wrap-up

Consumption-tax categories tend to trip people up around overseas services, imports, and the transitional measure. The point is to build the habit of checking three things: (1) does the invoice have a registration number, (2) is it a domestic or foreign transaction, and (3) what's the transitional-measure percentage for that transaction date. Combined with freee's automation, the pre-filing review gets much easier. That said, categories are highly case-specific, so for transactions you're unsure about, consulting your tax accountant early is ultimately the fastest route.

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Books on consumption tax & invoicing (PR)

For those who run accounting in-house — books to grasp consumption-tax, invoice, and freee practice.

Book (PR)　A practical book on invoicing & consumption tax　For confirming categories and input-tax-credit concepts together.

Find on Amazon →

Book (PR)　A guide to using freee accounting　For mastering tax-category settings and automation.

Find on Amazon →

Book (PR)　Accounting & consumption tax for small companies　For sole proprietors and small companies running accounting solo.

Find on Amazon →

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Disclaimer: This article is a practical memo for general information and does not guarantee any particular tax judgment. Confirm individual applicability with your tax accountant or competent tax office. Affiliate: Robin Planning participates in the Amazon Associates Program and may earn referral fees from purchases via links on this site.