Company housing ranges from the dormitories and company-owned apartment blocks of large manufacturers to flats the employer leases on the open market and sublets to staff, known as kariage shataku. It grew up with lifetime employment and frequent transfers: an employer that sends people anywhere in the country provides somewhere to live when they get there.
The value lies in the tax treatment. For an ordinary employee, the National Tax Agency calculates a monthly assessed rent as 0.2% of the building's fixed asset tax value, plus 12 yen per 3.3 square metres of floor area, plus 0.22% of the land's value. If the employee pays at least half of that amount, the rest of the subsidy is not treated as salary; if they pay less, the whole difference between what they pay and the assessed rent is taxed. The assessed rent is usually far below market rent, especially in central Tokyo, so a company that leases a flat and charges the employee a modest rent can deliver much more after tax than the same money paid as a housing allowance. The company must obtain the property's tax valuation from the landlord to do the calculation.
The rules are tighter for directors, and there is no 50% safe harbour: any shortfall against the assessed rent is taxed as salary. Small housing, meaning up to 132 square metres (99 square metres for buildings with a statutory useful life over 30 years), uses the same formula as for employees. For larger housing the assessed rent is 12% of the building's fixed asset tax value (10% for buildings with a useful life over 30 years) plus 6% of the land value, divided by 12; if the company leases the flat, the assessed rent is the higher of that figure and half the rent the company pays. Luxury housing, generally over 240 square metres or smaller with features such as a pool, is valued at market rent.
Social insurance has its own method. The benefit is valued using a monthly amount per prefecture set by the Minister of Health, Labour and Welfare, less any rent the employee pays, and added to pay when setting the standard monthly remuneration. Until 30 September 2026 the value was per tatami mat of living space (2,830 yen in Tokyo); from 1 October 2026 it is per square metre of total floor area, including kitchen, bathroom and hallways (1,330 yen in Tokyo).
What it means for a foreign employer
- It is the standard way to house senior hires and assignees. Leasing the flat in the company's name and charging the employee a rent above the 50% threshold is common and legitimate.
- Get the numbers right. The tax benefit depends on correct calculation and on the employee paying the rent. A flat paid in full by the company with no rent charged creates a taxable benefit.
- Treat directors separately. If the country head is a director of the subsidiary, the director rules apply and the benefit is smaller.
- Expect candidates to ask about it. Employees of large Japanese companies may currently live in heavily subsidised company housing. Losing it on a move can be a significant cost; ask, and price it in.
Sources
- National Tax Agency, Tax Answer No. 2597 (company housing for employees) and No. 2600 (company housing for directors).
- Income Tax Act, Article 36 (income in kind).
- Ministry of Health, Labour and Welfare notice on the value of remuneration in kind, and Japan Pension Service, table of in-kind values by prefecture and Q&A on the October 2026 change to housing values.