In order to carry out business in Japan, it is necessary to create a comprehensive business base in form of a branch-office or Japanese subsidiary.
When establishing a Japanese branch-office, registration as a “foreign company” is mandatory. However, when conducting market research or similar activities in Japan, all you need is a “representative office”. A “foreign company” registration is therefore not needed.
Creating a Japanese branch-office is more convenient and cost effective than establishing an official Japanese subsidiary. However, Japanese municipal tax depends on the capital stock of the company’s head quarters which in turn means that larger companies will have to inevitably pay higher municipal tax rates. In such cases, it is often said that creating a small-scale Japanese subsidiary is the more reasonable solution.
Credits or debts generated by a branch-office are directly linked to, and payable by the company’s headquarters. Therefore, if you wish to limit the risks surrounding your business in Japan, it is most probably advisable to create a Japanese subsidiary. By doing so, the parent company is able to watch and control the capital invested.
There are various ways to go about creating a Japanese subsidiary, all of which are designed to meet different demands. Deciding on the right method to establish your Japanese subsidiary therefore depends on the nature of your business. However, unlimited investor liability is usually not considered the norm.
Traditionally the most usual form of company is that of Kabushiki-gaisha / K.K. (株式会社, corporation). Recently however, the LLC system, introduced from abroad and most likely familiar to people coming from the United States has become increasingly known.
Nonetheless, under current business laws and regulations, the corporation tends to be the company form of choice, since it allows for the greatest flexibility in designing institutions and organization, therefore meeting the needs of your business in the most effective way.
Making the right choice on what form your company should take is of elevated importance, which is why it is recommended that you consult with a Japanese judicial scrivener or tax counselor before making your next step.
Visas and Status of Residence Required for a Foreign National
In order to start a business in Japan as a non-Japanese, you will need to have an “investor/manager” visa. Other possible visas include “permanent resident”, or “spouse of a permanent resident”. For more information on visas, visa regulations and qualifications, please refer to the websites of JETRO and the Ministry of Foreign Affairs .
