®

 
 
 
 
 
 
 
 

Japan Branch & Company Registration - Setting up a legal-entity & business presence in Japan

 

How a foreign company or entrepreneur sets up business presence in terms of formation of a legal entity depends upon the nature and magnitude of the business, proposed business operation, as well as legal, tax and other considerations. Many options exist, ranging from a Branch office or a local Japanese subsidiary company such as Kabushiki-Kaisha (K.K. Co.), Godo-Kaisha (G.K. Co.) and there are several local types of company formations available. There is also a Japanese version of a limited liability partnership (LLP), is not a corporation, but a partnership format.

 

A foreign company or an entrepreneur can set up a business presence (legal-entity) in Japan in one of following four(4) options:

 However to engage in commercial business activities in Japan the option is either to establish a “branch office” or a “local subsidiary company” as a legal entity.

 

Representative Office

Representative office is generally established for carrying out market research & liaison activities on behalf of head office. It does not allow to conduct commercial business activities in Japan and therefore no registration is required at the legal affairs bureau nor be subjected to corporate tax under Japanese tax laws, except banking, security or similar businesses.

 

Branch Office

The simplest mode for a foreign company to establish a legal entity for commercial business operations in Japan is to set up a branch office. In terms of the range of business activities allowed, there are no basic differences between branch office and domestic corporations. Taxed on branch office income only and the rate is same as local co. For registration there is no requirement to establish statutory officers / management body, it only needs a local physical address (not a PO Box) & a Representative in Japan (must be a “Resident in Japan”). In general, transfer of operational funds between the branch and its head office can be made without restrictions, and is not subject to withholding tax. Branch can register max. 2 (two) “Representative in Japan” but one must be a “Resident in Japan” & a director / member of parent co. with his / her personal overseas resident address.

 

Subsidiary Company

A foreign company willing to establish a subsidiary company may choose from the followings:

There are also formats such as unlimited partnerships (Gomei-Kaisha) and limited partnerships (Goshi-Kaisha) under the Companies Act, but they are rarely chosen in practice because equity participants burden unlimited rather than limited liability.

 

A subsidiary is a separate legal entity from the foreign parent company, therefore foreign company will bear the liability of an equity participant stipulated by law for all debts and credits generated by the activities of the subsidiary co. Minimum requirement for establishing a subsidiary co in Japan is to have a local physical address (not a PO Box) & a local “Resident in Japan”. [Please see the “Note(a)” below re a local “Resident in Japan”.]

 

Please see “Note” below re exception allowed for “subsidiary co.” since the change of regulation effective Mar'15.

 

Limited Liability Partnership (LLP)

This format is also allows to do business by using a Yugen Sekinin Jigyo Kumiai. It is considered as Japanese version of a limited liability partnership (LLP), it is not a corporation, but a partnership formed only by the equity participants, who have limited liability. Taxes are levied on profits allocated to equity participants but no tax on LLP. The format is normally used for carrying out a time bound project. One partner must be a local “Resident in Japan”.

 

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

The option is either to establish a “Branch Office” or a local “Subsidiary Co.(Kabushiki-Kaisha or Godo-Kaisha)”.

 

Note(a) re 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 as per immigration law.

 

Note: re exception allowed for “subsidiary co.” since the change of regulation effective Mar'15.

 

Japanese govt. has allowed foreign co. to register a local subsidiary co. in Japan without a local “Resident in Japan”. [In case of G.K. Co. the overseas investor must be a corporation]

But in both cases it would require a temporarily a local Resident in Japan” for the purpose of completing the procedure of paid-up capital for K.K. Co. & equity for G.K. Co.

In case of a K.K. Co. a “local resident shareholder” & in case of a G.K. Co. a “local resident member (equity holder)”.

Please click here for a Brief Summary re Establishing a Business Entity in Japan.

For further information please contact us by mail.

 

 

 

 

Consulting & Administrative Services
"One-Stop Solution"
[Market-entry support, Company Registration, Immigration, Accounting, Tax etc.]
"Since 1993"

AddThis Social Bookmark Button

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Copyright, All Rights Reserved by Sarkar Office Japan KK

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!