Japan Branch Office registration

 Foreign companies willing to engage in commercial business activities in Japan must establish a branch office or a local subsidiary company as a legal entity in Japan.

 The simplest mode for a foreign company to establish a legal entity for business operations in Japan is to set up a branch office. Branch office can start business operations as soon as registration is completed with the local authority and all necessary post-registration mandatory reporting are completed.

 A branch office of a foreign company carries commercial transactions in Japan as per the decision / instruction of the parent company, and usually is not expected to independent decision making.

 A branch office does not have its own independent local legal corporate status, but instead is deemed to be within the umbrella of corporate status of the parent company outside of Japan. At the time of registration of a branch in Japan thus there is no requirement to establish statutory officers / management body such as directors, auditors, a branch needs a representative only (a resident of Japan).

 In general, therefore, the foreign parent company is ultimately responsible for all debts and credits generated by the activities of its Japan branch office.

 A branch office, however, can open company bank accounts and lease real estate in its own name, carry commercial activities as per corporate objectives derived from parent co, once its registered in Japan.

 In terms of the range of business activities allowed, there are no basic differences between branch offices and domestic corporations.

 A branch office in Japan is obliged to submit corporate tax return to local authority within two months from the date of closing of fiscal year and fiscal year is registered in Japan as per the parent company's fiscal year established in home country. Tax applies on the net income generated in Japan as per local regulation and rates applied are same as domestic company.

 The procedures for closing a branch office must also be completed when upgrading a branch office to a subsidiary company. Because a branch office cannot be directly reorganized into a joint-stock corporation (Kabushiki-Kaisha {K.K.}) or a limited liability company (Godo-Kaisha {LLC}), the branch office closure procedures and the subsidiary company establishment procedures must be carried out simultaneously. In such instances, however, the branch office's assets may be passed on to the subsidiary through investment in kind.

 Option re formation of a legal entity in Japan for ongoing commercial activities:

 The option is either to establish a Branch Office or a Local Subsidiary Co (either a Joint-stock corporation (Kabushiki-Kaisha) [K.K.] or Limited Liability Company (LLC) (Godo-Kaisha) [G.K.]). For any of the said formats the minimum requirement is a local physical address in Japan (not PO Box address) and a local resident in Japan (either a Japanese or a foreign national but in case of a foreign national the person must have an appropriate status of residence or may require change of status of residence).

 [Note: effective Mar’15 Japanese government has allowed foreign company to register a Japanese KK co with directors residing abroad and the mandatory requirement of at least one local Resident Director has been relaxed / abolished!]

 Branch office allows a maximum of 2(two) Representative in Japan to be registered and a shareholder / director / managerial staff from head office can be registered as a Representative in Japan with overseas address in addition to the Japan local resident.

Local Subsidiary Co allows registering directors with overseas address in addition to the local resident director.

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Disclaimer: This information is for illustration purpose, no warranty is given that it is free from error or omission, and Sarkar Office® cannot be held liable for any decision made based on this information only!