Representative Office in Japan

Japan Representative Office. Registration, Incorporation, Formation. Setting-up and Opening a legal entity and business presence in Japan.

A representative office is generally established to carry out preparatory and supporting tasks to enable foreign companies to engage in full-scale commercial business operations in Japan in the future.

A representative office is generally established for carrying out market research and liaison activities on behalf of the head office. It does not allow to conduct of commercial business activities in Japan. Therefore no registration is required at the legal affairs bureau nor be subjected to corporate tax under Japanese tax laws. However, representative offices established by foreign banks, insurance companies, securities companies, or other financial institutions are exceptions; prior notification must be provided to the Financial Services Agency for such representative offices (as stipulated in the Banking Law, Securities Exchange Law, and other laws).

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In principle, a representative office is not a company, which is registered as a corporation. The office format may be used by foreign corporations, which do not conduct commercial business in Japan but expect to carry out the activities such as:

• Advertising and promotional activities, providing information, carrying out market research, conducting primary research, and other activities to support the foreign corporation's undertakings.
• Purchasing and storing of goods on behalf of the head office (parent company in overseas).

Japan Representative Office Main Features

No registration is required under the “Commercial Code” in principle. (The establishment of representative office “does not require registration” with Legal Affairs Bureau.)

• No report of direct inward investment to the Ministry of Finance via the Bank of Japan is required under the Foreign Exchange Law.
• Since representative offices do not conduct business in Japan, they are not regarded as a permanent establishment and are therefore not subject to corporate taxes.
• However, the advantage of no required reporting does not apply in financial institutions such as foreign banks, insurance companies, or securities companies. Under the laws concerning banking, foreign insurance operations, and foreign securities brokers, such institutions must submit a report in advance to the Ministry of Finance to establish a representative office.
• The lease for a representative office’s office space may be signed between the head office in the home country and the Japanese building owner. In many cases, however, the owner may require that the representative office have a guarantor who is a resident in Japan.
• A representative office can open ordinary savings account at a Japanese bank using an account name such as “Tom Smith, XXX Inc. Representative Office in Japan,” a hybrid of individual and corporate status.
• A representative office is not allowed to do business in Japan, whether it expects a profit or not.

However, foreign corporations intending to do commercial business activities in Japan may not use the representative office format. Their choices are establishing either a "Branch Office" or forming a local "Subsidiary Company" (Kabushiki-Kaisha or Godo-Kaisha).

Japan Types of Companies(legal-entity) - Comparison At a Glance

For reference generally, the following documents are required to open a bank account:

• Passport of representative
• Resident card of the representative
• Parent Company’s brochure
• Office Leasing agreement in Japan
• Personal seal (stamp) of the representative in Japan (depending upon the bank signature of the representative may be allowed)

For further information, please contact us by mail.