ChatGPT Plus (about 3,000 yen per month), Claude Pro ($20 per month), GitHub Copilot ($10 per month).... As more people use AI tools for work, we're also hearing this question more often: "Can I write off these subscription fees as a business expense?"
The short answer is: yes, if you use them for business, you can deduct them. That said, there are a few details worth knowing so you don't lose money: which expense category to use, how to prorate the cost if you also use the tool personally, and how Japan's invoice-system rules changed significantly in 2026.
In this article, we'll explain how sole proprietors, freelancers, and side-hustle workers can deduct AI subscription fees, using the latest information available as of March 2026.
What Expense Category Should You Use for AI Subscriptions?
When you deduct monthly fees for ChatGPT or Claude, the first question is usually: "Which accounting category should this go under?"
There actually isn't one officially correct account title for AI subscription fees. These are the three most common options.
Three Common Expense Categories
| Expense category | Best for | Why it works |
|---|---|---|
| Communication expenses | People who want to group them with internet and cloud services | Because these are services used over the internet, you can classify them with internet fees, server fees, and similar costs |
| Fees and commissions | People using AI as a productivity tool or substitute for outsourcing | Because it feels similar to "asking" AI to perform tasks, it can be treated as a type of service fee or commission |
| Miscellaneous expenses (or software usage fees) | People who don't feel the other categories quite fit | A catch-all option when nothing else applies. Just be careful: if miscellaneous expenses get too large, the tax office may take a closer look |
The most important rule: once you choose a category, don't keep changing it. As explained in Money Forward Cloud's guide, the principle of consistency applies to accounting categories. If you change categories every year without a valid reason, it could raise questions during a tax audit.
In plain English, the simplest approach is to group ChatGPT, Claude, Copilot, and similar tools under "communication expenses". They fit naturally alongside internet service, domain fees, and other online business costs, which also makes your books easier to read.
How to Prorate the Cost If You Use AI for Both Work and Personal Tasks
Plenty of people use ChatGPT for work, but also ask it for recipes, casual questions, or everyday help. In that case, you should deduct only the business-use portion through household/business proration.
How to Choose a Proration Percentage
There isn't a fixed legal percentage you have to use, but the percentage should be reasonable and explainable. These are two common methods.
- Prorate by usage frequency: Review one month's chat history and count business uses versus personal uses. For example, if 70 out of 100 chats were for business, your business-use percentage would be 70%
- Prorate by time: If you only use the tool during work hours, calculate it based on business usage time divided by total usage time
For example, if ChatGPT Plus costs 3,000 yen per month and your business-use percentage is 70%, you can deduct 2,100 yen per month.
Sample Journal Entry
For ChatGPT Plus (3,000 yen per month, 70% business use):
| Debit | Amount | Credit | Amount | Description |
|---|---|---|---|---|
| Communication expenses | 2,100 yen | Owner contribution | 3,000 yen | ChatGPT Plus for March (70% business use) |
| Owner draw | 900 yen | (30% personal use) |
If you pay by credit card, you may also use "accounts payable" instead. Accounting software like Money Forward or freee can automatically create the monthly entries once you set up the proration rule.
Invoice-System Rules in 2026: ChatGPT and Claude Are Different
For taxable businesses that file consumption tax returns in Japan, whether you have a qualified invoice directly affects whether you can claim an input tax credit. As of March 2026, here's where the major AI services stand.
Invoice-System Support for Major AI Services (as of March 2026)
| Service | Approx. monthly cost including tax | Invoice-system status | Registration number |
|---|---|---|---|
| ChatGPT Plus | About 3,300 yen | Supported since January 2025 | T4700150127989 |
| Claude Pro | About 3,400 yen (including tax from April) | Supported from April 1, 2026 | T7700150134388 |
| Google Gemini Advanced | 2,900 yen | Supported | (Through Google Japan) |
| GitHub Copilot Individual | About 1,500 yen | Supported | (Through GitHub Japan) |
Claude Pro is the one to watch. According to ITmedia AI's March 16, 2026 report, Anthropic will begin charging Japanese users an additional 10% consumption tax on April 1, 2026, and has completed registration as a qualified invoice issuer.
That means Claude Pro fees through March 2026 won't come with qualified invoices, so taxable businesses can't claim an input tax credit for those charges. From April onward, the credit becomes available.
Meanwhile, ChatGPT Plus has supported qualified invoices since January 2025. You can download qualified invoices from the official OpenAI Help Center.
Tax-Exempt Businesses and Employee Side Hustlers Don't Need to Worry
If you're a tax-exempt business for consumption tax purposes, such as a sole proprietor with annual sales of 10 million yen or less, or an employee reporting side income as miscellaneous income, you don't file consumption tax returns in the first place. That means whether you have a qualified invoice doesn't matter. You can simply record the tax-included amount as an expense.
How to Handle Dollar Payments, Exchange Rates, and Receipt Storage
ChatGPT and Claude were originally billed in U.S. dollars. Since January 2026, ChatGPT has been gradually moving new users in Japan to yen-denominated display. If you're still paying in dollars, you'll need to deal with exchange-rate conversion.
Two Ways to Handle Exchange Rates
- Simplified method (recommended): Use the yen amount shown on your credit card statement. In practice, this is usually fine
- Standard method: Convert using the TTM middle rate on the payment date. This can create foreign exchange gains or losses, but for subscriptions of only a few thousand yen a month, the difference is usually tiny
Saving Receipts and Invoices Under Japan's Electronic Books Preservation Act
Since January 2024, electronic transaction data must be stored as electronic data. Printing it out and keeping only the paper copy is no longer enough.
- ChatGPT: Download the PDF invoice from OpenAI's billing settings and save it so you can search by date and amount
- Claude: Get invoices from Anthropic's account settings. From April onward, invoices are expected to include the qualified invoice number
- GitHub Copilot: Download invoices from GitHub's Billing & plans page
Google Drive, Dropbox, or a local folder on your computer are all fine storage locations, but you need to keep the files in a state where you can search by transaction date, vendor, and amount. A filename like "2026-03_ChatGPT-Plus_3300yen.pdf" can make this much easier.
How to Handle Annual Payments, Plus Side-Hustle Notes
How to Treat Annual Payments
Some services, including Claude Pro, offer a discount if you pay annually. Claude Pro, for example, is $200 per year, or roughly $17 per month. If you pay annually, here are the main options.
- When the short-term prepaid expense rule applies: If it's a continuous service contract and you use the same accounting treatment the following year, you can deduct the full amount in the year you paid it (Income Tax Basic Circular 37-30-2). In other words, if you pay annually for Claude Pro in December, you can generally record the full payment as an expense for that year
- Standard treatment: Record it as a prepaid expense asset, then transfer 1/12 of it to expenses each month. This is more precise, but for subscriptions that cost only a few thousand yen a month, deducting it all at once under the special rule is usually more practical
Notes for Side Hustles Reported as Miscellaneous Income
Even if you report side-hustle income as miscellaneous income, AI subscription fees can still be deducted. Just keep these two points in mind.
- Keep support for your proration percentage: Miscellaneous income can sometimes get closer scrutiny than business income. Keep a short note explaining what you use the tool for
- You can't offset losses against other income: Miscellaneous income can't be netted against other income. If your expenses exceed your side-hustle revenue, you can't deduct that loss from your salary or other income
FAQ
If I only use the free version of ChatGPT, is there any expense to deduct?
No. Since the free version doesn't cost anything, there's no subscription fee to deduct. However, your internet service and computer costs may be partially deductible based on business use.
I subscribe to both ChatGPT Plus and Claude Pro. Can I deduct both?
Yes, if you use both for business, both can be deducted. It's easier to manage them if you use the same category for both, such as "communication expenses." As long as you have a reasonable business reason for using multiple AI tools, such as different use cases, that's generally fine.
Can I deduct API usage fees, too?
Yes. Usage-based charges for the OpenAI API or Anthropic API can also be deducted to the extent they're used for business. You can use the same category as your subscriptions, such as "communication expenses" or "fees and commissions." Since the billed amount changes each month, don't forget to save your invoices.
Can employees deduct AI tool costs for a side hustle through year-end tax adjustment?
No. Japan's year-end adjustment process doesn't let you report side-hustle expenses, so you'll need to report them yourself on a tax return. Even if your side income is 200,000 yen or less, you may still need to file a resident tax return, and that's where you can include the expense.
When does consumption tax start applying to Claude?
According to Anthropic's announcement, a 10% consumption tax will be added for users in Japan starting April 1, 2026. Qualified invoices will also begin at the same time, so taxable businesses can claim input tax credits for Claude fees from April onward.
References
- Japanese consumption tax on OpenAI invoices — OpenAI Help Center
- Notice regarding consumption tax (JCT) for Japanese customers — Claude Help Center, March 2026
- Claude effectively gets more expensive in Japan as 10% consumption tax starts April 1 — ITmedia AI+, March 16, 2026
- Can ChatGPT be deducted as a business expense? Expense categories and key accounting notes — Money Forward Cloud
- Are ChatGPT usage fees deductible? Consumption tax and accounting points from 2025 onward — Kawabata Tax Accountant Office
- Can ChatGPT and Google Gemini fees qualify for input tax credits? — Sera Tax Accountant Office
