Attention All Brides-to-Be: What Happens to Wedding Costs When Consumption Tax Increases to 10%?

2019.01.28 published

Tax Increase in October 2019! What Will Happen to Wedding Costs?

On December 15, 2018, Prime Minister Abe announced at a temporary cabinet meeting that "as scheduled, the consumption tax will be raised from 8% to 10% starting October 1, 2019."

It has been about five years since the consumption tax was raised from 5% to 8% in April 2014, marking the first increase in 17 years.

Five years ago, many people were not at an age to make such big purchases and may have thought, "Oh well," but this time, there are likely many concerns regarding the tax increase.

Of course, purchases of homes and cars are significant, but the immediate concern is the cost of weddings!

If you plan to hold your wedding after October 2019, what will happen to the consumption tax?

Contracts Before the Tax Hike, Ceremony After. What About Payments?

If you enter into a contract with a venue after October 1, 2019, the 10% consumption tax will apply.

The issue arises when you contract before September 2019 and hold the wedding after October.

Generally, the tax rate applies when you receive goods in exchange for payment or when the service has been completed.

In other words, if you buy items or receive services after October next year, the tax will be 10%. Even if you applied before September, if you take delivery of goods or receive services in October, the tax will be 10% by principle.

However, there are some exceptions under 【transitional measures】.

One of those exceptions is weddings!

Will the Consumption Tax Stay at 8%? What Are the Transitional Measures?

Transitional measures are rules that allow some costs to be settled at 8% during a tax increase.

This applies to wedding receptions, real estate purchases, orthodontic treatment, and more.

According to the transitional measures, even if your wedding is after October 1, 2019, if you contract by 【March】, the consumption tax will remain at 8%.

However, there are some conditions.

Additional Costs After April 1, 2019, Will Be 10%!

The 8% consumption tax will only apply to costs agreed upon by [contracts signed by March 31, 2019].

In other words, any items contracted after April 1 will incur the increased 10% tax.

Therefore, those planning a wedding after October 2019 should be careful if they signed the contract by March.

Any changes or additions made after April 2019 will be subject to the 10% consumption tax!

For Example...

Let's say you have a contract by the end of March 2019 with the following contents:

☑ Number of guests: 60

☑ Meal course: 15,000 yen

☑ Basic dress plan: 200,000 yen

However, as the wedding preparations progress, circumstances change, and you ultimately settle on the following plan:

☑ Number of guests: 80 (20 more)

☑ Meal course: 20,000 yen (5,000 yen more)

☑ Upgraded dress plan: 400,000 yen (200,000 yen more)

In this case, the additional costs added after April (noted in parentheses) will be taxed at 10%!

It's typical for wedding estimates to increase with every meeting.

As preparations progress, people solidify their desires, dress choices, and ideal images, making increases unavoidable.

However, with this tax increase, the more your estimates rise, the higher the consumption tax will be, so caution is needed.

So, What Should You Do?

What couples can do is finalize some contract details and apply by April 1, 2019.

☑ Survey guests to avoid major changes in numbers.

☑ Do not contract for the minimum plan for meals and drinks.

☑ Check the price of the dress you want beforehand and choose a plan.

Particularly regarding meals, attire, and floral arrangements, most people upgrade later. Instead of receiving estimates for the minimum plan, you can ask for "the most popular plan at this venue (the highest plan)" from the beginning to minimize additional costs.

However, Don't Rush!

Still, it's tough to contract by the end of March for a wedding in October 2019 just because of the tax increase.

In such situations, there’s no need to hurriedly rush into last-minute contracts.

Historically, post-tax increases have often led to [discounts].

It makes sense; if demand is preempted before the tax increase, sales afterward might fall flat.

To avoid this, industries, including real estate and automobiles, have frequently offered discounts after tax increases.

Therefore, even if you contract post-10% tax increase, there's no guarantee that prices will definitely be higher.

Consulting Your Venue's Planner is Key!

This article introduced the tax increase scheduled for October 2019 and the corresponding changes in consumption tax for wedding receptions.

While the rules published by the National Tax Agency's Consumption Tax Office are as described here, it's wise to consult with your venue's planner about specific contracts and the timing of cost settlements.

The average cost of weddings is said to range from 3.5 million to 5 million yen.

The 2% increase in tax amounts to about 70,000 to 100,000 yen. Though it may seem like a small impact compared to the overall cost, it is still a significant amount.

To avoid regretting any decisions later, it’s important to think carefully about your wedding plans now.

@nagisa_marry