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Setting up business in Japan
Different types of company in Japan
Sole proprietor (kojin jigyo) in Japan
Different types of operation for a foreign company
- Representative office
- Branch office (shiten)
- Subsidiary (company established under the Japanese Law)
Registering a branch office in Japan
Procedures and costs : how to set up a company in Japan ?
Required documents and the details to decide in the Articles of Incorporation
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Setting up business in Japan

Incorporation in Japan

Different types of operation for a foreign company

Foreign companies that wish to operate business in Japan can choose a type of operation among three different options - representative office, branch office or subsidiary.

Representative
Office
Branch Office Subsidiary (KK or GK)
Commercial
activities
NO YES YES
Registration Not required Required Required
Capital None None Minimum 1 yen (5 million yen to satisfy Investor / Business Manager visa requirements)
Setting up costs None Around 260,000 yen Around 400,000 yen (KK) + capital
Representative - Representative in Japan (resident) At least one Representative Director
Accouting - Aggregated to the parent company's accounting (tax declaration required in Japan) Independent from the parent company
Employing staff Possible Possible Possible
Social security Could be mandatory depending on cases Mandatory Mandatory
Obtaining visa Possible Possible Possible
Company name Free to decide Same as the parent company Free to decide
Opening corporate bank account Impossible Possible Possible


Which structure whould be most suitable for your company?

Some indications would be the following:

  • Representative office if you don't know how the business will grow in the Japanese market so simply wish to do a market research so far
  • Representative office if there will be no sales in Japan. You only wish to send an employee to engage in the PR, advertisement or to contact Japanese business partners and do not wish to pay taxes in Japan.
  • Branch office if you need to have an officially registered legal entity in Japan or a Japanese bank account to be able to deal with Japanese clients, but do not wish to have a separate capital in Japan.
  • Subsidiary if you need a Japanese company, or prefer to avoid disclosing the information on the parent company (directors, amount of capital, etc.) or to have a separate accounting from the parent company.
  • Subsidiary if there will be a certain amount of turnover in Japan that would be likely to generate profit locally.


Now let' see the detail of these 3 different operations.

REPRESENTATIVE OFFICE

A representative office is a simple fact of having a physical office space in Japan, and there isn't any required procedures to register it officially.

It is not supposed to engage in commercial activities and to generate profits locally. The activities of a represntative office are limited to the following fields :

  • providing information to parent company in overseas,
  • advertising and publicity,
  • market research,
  • basic research and studies,
  • purchase and storage of assets for parent company.

Since it doesn't have any commercial activity, a representative office doesn't have a capital and therefore is not subject to the corporate tax in Japan.

When a non-Japanese staff is sent to work in Japan, it is necessary to obtain a visa / status of residence (see the page on visa and immigration procedures). It is also possible to employ a local staff.

It is not possible to open a bank account under the name of the parent company. Only a personal account under the name of the representative can be opened, but the account holder's name can be followed by the company's name.

>> Ask for personalized advise

BRANCH OFFICE (SHITEN)

Branch is an extended office of the parent company in Japan and can engage in commercial activities based on the capital of the parent company. The expenses are paid by the parent capmany, but it also collects the profits made by the branch office, which needs to be integrated to the company's annual accounting.

A branch office needs to declare and pay corporate taxes in Japan. The tax amount is based on the profits generated by the branch office in Japan.

Because of the complexity of the accounting aggregation with the head office, the only benefit of registering a branch office is when the Japanese operation will be solely a cost center, without generating any profit in the future, but needs to have an officially registered entity in Japan (to be able to have a bank account in Japan or to be able to provide a certificate of registration issued by the Japanese autnorities for example).

It is recommended to open a Representative Office instead if its fuctions are sufficient, or a subsidiary if the Japanese entity is likely to generate profit in the future.

It is required to register a branch office at the registry office and to be able to do so, it is necessary to have an office address and to nominate a representative who is a resident in Japan (regardless of the nationality).

See also for the required documents and procedures for setting up a branch office (shiten) in Japan.

When a non-Japanese staff is sent to work in Japan, it is necessary to obtain a visa / status of residence (see the page on visa and immigration procedures).

It is necessary to obtain business licenses or permission from Japanese authorities when your activities fall into one ot those that require them.

>> Ask for personalized advise

SUBSIDIARY - company established under the Japanese Law

A subsidiary is an independent company established under the Japanese law, with a foreign company holding its shares. Please see "how to establish a company in Japan ?" for detailed setting up procedures.

A foreign company can be the sole shareholder of its Japanese subsidiary, although it is also possible to have other shareholders whether it is a company or an individual, Japanese or foreign.

It is possible to appoint non-resident directors, as long as there is a Representative Director who is a resident in Japan (regardless of the nationality).

It is also common to appoint two Representative Directors, one resident and another non-resident, often assumed by the president or one of the directors of the parent company.

When a non-Japanese staff is sent to work in Japan, it is necessary to obtain a visa / status of residence (see the page on visa and immigration procedures).

It is necessary to obtain business licenses or permission from Japanese authorities when your activities fall into one ot those that require them.


We support foreign companies wishing to operate business in Japan.


For more information, click here.



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