Total support for
expansion into Japan
It is very important to choose the most suitable structure for your business operation to avoid possible problems. We will help you to decide the structure and will complete all necessary procedures on your behalf.
Three options for foreign company to operate business in Japan.
Representative Office
A representative office is established in Japan as a base for gathering information, conducting market research, advertising, purchasing and storing assets, etc., before a foreign company makes a full-scale entry into Japan. Since legal procedures such as registration are not required to open a representative office, it can be established relatively quickly and cost-effectively.
However, representative offices have various restrictions, among them:
- They cannot engage in trading activity.
- The potential difficulty in opening a bank account or signing an office lease, thereby requiring the opening of accounts and signing leases under the representative’s own name.
Branch Office
A branch office is established for a foreign company to carry out business activities in Japan under the name of its foreign parent company.
- legal procedures such as registration are required to open a branch office.
- A branch office can engage in trade activities.
- A branch office must declare and pay corporate taxes in Japan.
The Companies Act stipulates that when a foreign company conducts business in Japan, it must appoint a representative (regardless of nationality) and the foreign company must be registered.
At least one of the representatives must be a resident in Japan, but he or she need not be an officer or employee of the foreign parent company. You can partner with someone who has the required residency in Japan.
Subsidiary
Unlike a branch office that conducts business activities in Japan under the name of a foreign parent company, a subsidiary is a separate company independent from the parent company. It is the most popular structure to conduct business activities in Japan.
Advantages of subsidiary
- Has higher social credibility than Japanese branches
- Can open a bank account and sign a lease on its own.
- Can more easily obtain permits and visas.
- Has less burdens on tax procedures
Usually either Kabushiki Keisha (Joint Stock Corporation) or Godo Kaisha (Limited Liability Company) is chosen for subsidiary.
Please see Company Incorporation
Comparison of types of operation
| Representative Office | Branch Office | Japanese Corporation | |
|---|---|---|---|
| Registration | None | Yes | Yes |
| Business Operation | Not permitted (except market survey, publicity/advertising, collecting information, purchasing and storing goods, | Permitted | Permitted |
| Article of Incorporation | None (business activities are subject to the article of incorporation of parent company | None (subject to that of parent company) | Yes (subject to that of Japanese Corporation) |
| Capital | No capital | No capital | 1 yen or more |
| Rights and Obligations | If the contract is signed in the name of the representative, it belongs to that individual | Belong to Parent company | Belong to Japanese Corporation |
| Opening a bank account | Not permitted (However, it is possible to open an account in the name of the representative. Some banks allow you to open an account in the name of “business name + representative”) | Permitted | Permitted |
| Profit and Loss Accounting / Loss Carry Forward Deduction | Possible in principle (if a loss occurs, it can be offset against the profit of the home country corporation) | Possible (combined with home country corporation) | Not allowed (Accounting processing is completed in the Japanese corporation. Offsetting with the home country corporation is not possible.) |
| Visa for representative | “Engineer/Specialist in Humanities/International Services” or “Intra-company Transferee” | “Management/Management”, “Engineer/Specialist in Humanities/International Services” or “Intra-company transfer” | Manager’s Visa |
| Liability | In principle, it extends to the representative of the representative office | extend to the corporation in the home country | extend to Japanese corporation |
| Social Security | If you meet the requirements, you can join (however, it is mandatory if you have 5 or more full time employees) | Mandatory | Mandatory |
| Labor insurance | Mandatory | Mandatory (representative not allowed) | Mandatory (representative not allowed) |
