Rarely, we receive requests from customers saying, “Please mark this product for personal use, not commercial use.”
In Japan, if the items are for personal use, customs duties are applied to only 60% of the item’s value, so we try our best to accommodate these requests.
However, unfortunately, the purpose of use is not decided by our company, but rather by customs during clearance, so things may not always go as you wish.
Therefore, in this article, we would like to provide a clear explanation of the specific boundaries between personal and commercial use.
Understanding these rules can lead to significant tax savings, so please use this as a reference!
Definitions of Personal and Commercial Use
The definition of personal use is purchasing a product for personal enjoyment and use.
The definition of commercial use is purchasing a product for commercial purposes to use or sell for profit.
By the way, whether it is for personal use or commercial use, when you clear it through customs yourself, it is called personal importing!
Based on these definitions, customs determines whether a product is for personal or commercial use based on the following four points.
- Name and Address of the Delivery Destination
Is the shipping destination for the product an individual or a corporation?
- Track Record of the Delivery Address
How frequently have products been sent to the same address in the past?
- Volume of Products Imported
Is the import volume appropriate for personal use?
- Declared Amount and Contents
Are there any unnatural elements in the submitted invoice?
Name and Address of the Delivery Destination
If you specify a company name or address as the delivery destination, it is often judged as commercial use.
This means that even if you receive it at your company because you cannot receive it at home, it may still be judged as commercial use.
Even for sole proprietors, if the shipping address is a business name, the same judgment will be made.
Therefore, when importing for personal use, be sure to use your personal name and personal address as the shipping destination.
By the way, if you are charged commercial taxes even though it is for personal use, you can get a refund by declaring it to customs.
Track Record of the Delivery Address
If you are sending the same product to the same address multiple times, it is often judged as commercial use.
These judgments are made by comparing them with the frequency and quantity established as general standards by customs.
The details vary considerably depending on the product, but it might be a good idea to imagine the amount you would use yourself.
If you were importing products almost every week, it would naturally be judged that the quantity is too large for personal use.
In our experience, when about 5 kg of pancake mix was imported once a week, it was judged as personal use, but when imported twice a week, it was judged as commercial use.
Volume of Products Imported
If the volume of products imported is large, it may seem obvious, but it is often judged as commercial use.
Speaking from our experience, there is no doubt that this point is considered the most important.
For example, as a basic rule in Japan, two months’ worth of pharmaceuticals or cosmetics, two hair growth products, or three pairs of sneakers are considered for personal use, while anything more than that is considered commercial use.
However, the reality is that this judgment is actually often made by customs officials and shipping companies, so the same quantity may be treated as personal use or commercial use depending on the situation at the time.
Declared Amount and Contents
If the invoice amount is over 200,000 yen, or if the quantity or amount is unnatural, it is often judged as commercial use.
Since amounts under 200,000 yen are subject to simplified taxation (which is cheaper than regular customs duties), taxation for personal use is often applied. Conversely, high-priced items exceeding 200,000 yen are more likely to be subject to commercial taxation.
Also, if the actual quantity differs from the invoice quantity, or if undervaluation (declaring a lower value than the actual amount) is suspected, it generally results in commercial taxation.
Customs has a database of general market prices based on a vast amount of past import records, so if you attempt undervaluation, the system will immediately flag it as suspicious and initiate an investigation.
Rarely, some customers stubbornly refuse to send us an invoice. However, based on the above, even if you declare a luxury brand product at 10,000 yen, it will inevitably be rejected by the data, making it pointless.
Failure Cases Where Personal Imports Were Classified as Commercial
As a general view, if you consider the four points above when purchasing products, you will rarely encounter any trouble.
The examples introduced below are cases where actions taken with good intentions led to failure.
Of course, false declarations are bad, but not saying unnecessary things in response to questions from customs is also important for saving on taxes.
Products Purchased Jointly with Friends
This is a case where actions taken to save even a little on shipping costs work against you.
This is a common mistake, but for tax purposes, it means that someone else’s products are mixed in with your own, so it will no longer be recognized as personal use.
It will be judged as if you are selling the products you bought to your friends.
Products Purchased as Gifts for Family or Friends
This is a case where being too honest results in it being judged as commercial use.
Because they are not the importer, anyone other than yourself, even family members, will not be recognized under personal use.
It is not truly for commercial use, but this is a strict aspect of customs.
Products Imported with the Intention of Using Them at the Company
While this partly depends on the judgment of the customs official, it basically becomes a case for commercial use.
Even if you purchase a desk for your own exclusive use at the company, personal use will not be recognized because they cannot determine that no one else will use that desk.
After all, if you use a company as the shipping destination, it will be difficult to prove personal use.
Products Bought in Bulk Because They Are Limited Time Offers or Collected as a Hobby
This is a case where it was judged to exceed the scope of personal use.
Products where you don’t need many identical items, like glasses or watches, or products bought in large quantities because they will be unavailable in the future, are often not recognized as personal use due to quantity limits.
Stocking up on large quantities of non-perishable goods is a very normal thing to do, but this is also a difficult judgment to make.