Our main incorporation related services include:
- Comprehensive advice regarding Japan business entity selection including tax considerations in Japan and in the client’s home jurisdiction.
- Once a decision has been made, Japan Visa can handle all aspects of the Japan business entity establishment.
Overview of Business Entities Available in Japan
The main Japan business entity options used by foreign companies are as follows:
- Japan Representative Office / Liaison Office.
- Japan Branch of a Foreign Company.
Japan Incorporated Entity / Subsidiary.
The two incorporated entity / subsidiary options most commonly utilized by foreign investors are:
- Kabushiki Kaisha (“KK”),
- Godo Kaisha (“GK”).
Japan Visa can assist in establishing all of the above entities.
The following article provides additional information regarding Choosing a Japan Entity: KK, GK, Japan Branch and Representative Office.
In addition to the three options listed above, there may be alternative “non-entity” options available to foreign investors, such as the highly efficient Tokumei Kumiai. The following article provides an Introduction to Japanese Tokumei Kumiai Structures.
Basic Requirements for Establishing a Japan Business Entity
Each available Japan business entity has its own particular method of establishment. Common issues that need consideration include the following:
Shareholder / Head Office
In the case of a KK or a GK, the shareholder can be either an incorporated entity or an individual.
In the case of a Japan branch of a foreign company or a Japan Representative Office / Liaison Office, a foreign company must be identified to act as the Head Office.
Japan Resident Director / Representative
All Japan entities require a Japan resident representative who is a natural person (i.e., not a company) and is resident in Japan (though not necessarily a Japanese citizen).
The technical name given to the Japan resident position varies depending on the entity involved:
- In the case of a Kabushiki Kaisha (“KK”): Representative Director.
- In the case of a Godo Kaisha (“GK”): Executive Manager.
- In the case of a Japan Branch of a Foreign Company: Branch Manager.
- In the case of a Japan Representative Office / Liaison Office: Japan Representative.
The individual undertaking the role of Japan resident representative be subject to adverse individual and corporate tax consequences.
To avoid such disadvantageous consequences, Japan Visa can provide a suitably qualified individual to fill any of the above positions via its Japan Nominee Director Service. This service can be provided for both the short term and long term. For example, a nominee director can be provided until the real candidate obtains an appropriate Japan Visa – usually a Japan Investor Visa / Investor Manager Visa) or on a long term basis.
All Japan entities require a registered address in Japan. The three issues that need to be considered with respect to an address in Japan are:
A Japan business entity requires a legal registered address. Care should be taken when choosing this address since an address change can be both costly (several thousand USD) and time consuming.
Address to receive mail, phone calls, etc.
Either a functioning business office or virtual office an be used. The virtual office must be able to provide phone answering, mail collection, etc.
Where visas for foreign employees are needed, a functioning business office will generally be required. Virtual offices are usually not acceptable but a serviced office may be a workable option.
We are able to advise clients with respect to Japan Office Solutions that will meet the above requirements in a cost effective manner.
Paid in Capital
Paid in capital is mainly relevant to the establishment of Kabushiki Kaisha (“KK”) and Godo Kaisha (“GK”). It represents the amount of cash the owners contribute to a company in exchange for shares in the company.
Paid in capital is important for three main reasons:
Tax based on share capital
One component of calculating a Japan entity’s tax liability is the amount of paid in capital. In the case of a Japan branch it is the paid in capital of the Head Office.
The amount of paid in capital is part of the public record. Customers may be reluctant to do business with a Japan entity that is perceived to have low paid in capital. In addition, low paid in capital may cause difficulties when entering into an office lease.
Where the Japan entity will sponsor Japan work visas, paid in capital must be sufficiently high to demonstrate that the Japan operation is a serious and viable business.
Regardless of the type of entity selected, Japan Visa can fully assist clients in understanding the issues and implementing an appropriate solution.