The Japan Investor Visa

Step 1

Confirm that the Applicant satisfies the preliminary requirements for obtaining a Japan Investor Visa.

There are several initial points to confirm prior to applying for an Investor Visa. Note that the exact requirements will depend upon circumstances of the position the Applicant will undertake.

If the Applicant will start a new business in Japan, she will need to fulfill the following:

1. There must be an office located in Japan, and
2. The business must have the capacity to employ at least two full-time employees in Japan. Note that this means his means two employees in addition to those who are managing / operating the business. The employees need to be either Japanese nationals or foreigners who hold Japanese Permanent resident, are the spouse or child of Japanese national / permanent resident, or are long term residents.

If the Applicant will manage an existing business in Japan she will need to fulfill the following:

1. She must have at least three years’ experience in business operations or management. The three years can include time spent studying business operation or management at postgraduate level, and
2. She must receive no less remuneration than would a Japanese national for comparable work.

Step 2

Assemble the documents required to support an Investor Visa application.

Once the preliminary items in Step 1 have been confirmed, the actual activities the Applicant will undertake in Japan need to be considered.

Three sets of activities are permitted for the holder of an Investor Visa as follows:

1. Activities to commence the operation of a business in Japan,
2. Activities related to investment in and subsequent management and operation of a business in Japan,
3. The operation or management of a business established by foreigners in Japan.

Step 3

Assemble the specific documentation required to support a Japan Investor Visa application.

Once an Applicant has confirmed that her proposed activities in Japan are consistent with those outlined above in Step 2, supporting documentation needs to be prepared.

In the case of an Investor Visa, the authorities require the following:

1. Basic Documents

   1. A Business Plan

      The document does not need to be overly long or complex but it should cover the usual bases. This includes a business description, marketing strategy, competitive analysis, design and development plan, operations and management, and financials. Note that a Japanese translation (or at least a Japanese summary) should be provided.

   2. Copies of the company registration (tokibo tohon)

      Once a Japanese company has been officially incorporated, a certificate of registered matters (tokibo tohon) becomes available from the Japanese Legal Affairs Bureau (“houmukyoku”). This sets out the most important legal matters associated with the company including paid in capital, directors, registered address, etc.

   3. Statement of profit and loss

      This needs to be in Japanese and should be produced with the assistance of a Japanese accounting professional (either a zeirishi or a konin kaikeishi.) A new company may not have significant financial activity but basic financial statements can still be prepared.

   4. Material showing the number of the full-time employees other than the Applicant

      This is a key part of the application. Ideally the business will have at least two full-time employees. If this requirement is not met, it may be possible to demonstrate a capacity to employ at least two full-time employees. This would typically be done by demonstrating paid in capital of at least JPY5 million.

      Payroll information: This would include information about basic salary, withholding tax, and deductions for social insurance and labor insurance. Note that you will certainly need the assistance of a Japanese professional to run a Japan payroll and assemble this data.

   5. A diagram (and possibly a photo) of the business office

      This is another key aspect of an Investor Visa application. The object is to communicate a strong image of the operation. A virtual office will not be acceptable. However, a serviced office is generally fine and is often a good solution.

2. In addition, depending up the situation, the authorities may require:
   1. Material certifying the amount invested by the Applicant.
   2. Documents certifying role the Applicant will be undertaking including duration and information about remuneration.
   3. Documents certifying the Applicants career.
   4. A graduation certificate showing a major in management or administration.

Although not technically required, our experience is that providing Japanese translations enhances the quality of an application. This may minimize delays in obtaining final approval.

Japan Visa’s certified immigration specialists are able to assist in the preparation and translation of all documentation required for an Investor Visa.

Note Regarding Japan Tax Planning Opportunities for Investor / Manager Visa Applicants.

Typically, there are very significant Japan tax planning opportunities for the holder of an Investor Visa. Items such as employer provided housing, commuting allowance, and employer funded home leave can result in significant individual tax savings. In some circumstances, off-shore payment of compensation can result in tax savings if the holder of the Investor Visa will spend time outside Japan on business.

In addition, if the Applicant will become the director of a Japanese company both individual and corporate tax planning needs to be undertaken prior to the Applicant taking up her role. In addition, if the Applicant will become the director of a Japanese company both individual and corporate tax planning needs to be undertaken prior to the Applicant taking up her role. If proper planning is not undertaken, there is a high risk of disadvantageous tax treatment for both the company and the individual. This article discusses some specific Issues in Structuring Compensation for Directors of Japanese Companies.

All these matters should be negotiated prior to finalizing the documentation needed for the Investor Visa COE application (see Step 4 below). The following article provides more information about this important issue Japan Taxes: Tax Planning for Foreigners Working in Japan.

Step 4

Submit an application for a Japan Investor Visa Certificate of Eligibility (“COE”).

Once the Applicant’s activities have been confirmed and the appropriate documents assembled per steps 2 and 3 above, the next step in most cases will be to apply for a Certificate of Eligibility (abbreviated as “COE”).

A COE is a document issued by the Japanese immigration authorities. It certifies an Applicant’s eligibility to undertake specific employment in Japan – in this case, the job associated with the Investor Visa application.

An application for an Investor Visa COE must be submitted in person at a regional immigration office in Japan. The COE application cannot be submitted by mail or at a Japanese embassy outside Japan.

Where the Applicant is not personally available (for example because she is not in Japan or due to a busy schedule) Japanese law allows a certified immigration specialist to submit an Investor Visa COE application on behalf of the Applicant.

Japan Visa’s certified immigration specialists are able to handle all the procedures associated with preparing and submitting an application for an Investor Visa COE.

Step 5

Await Approval of the Investor Visa COE.

The processing time for an Investor Visa COE is generally four to six weeks.

Once approved, a notice is sent to an address in Japan advising that the COE is ready for collection at the regional immigration office where the COE application was originally submitted.

Where Japan Visa’s certified immigration specialists are handling the Investor Visa application, the notification from the immigration authorities is sent to our office. Japan Visa then collects the COE from the regional immigration office and either forwards it to the Applicant or prepares a change of status application (see Step 6 below).

Step 6

Obtain Investor Status of Residence (SOR).

Once an Applicant has the Investor Visa COE in hand, the next step is for her to exchange the COE for Investor “Status of Residence” (usually abbreviated as “SOR”).

Technically speaking, it is the Investor SOR that will form the basis of the Applicant actually living and working in Japan.

There are two methods for converting the COE to Investor SOR:

1. Exchange the Investor COE at a Japanese embassy or Consul outside Japan.

This is the traditional route for obtaining Investor SOR.

The Applicant first exchanges the Investor Visa COE for an Investor Visa at a Japanese embassy or consul outside Japan. The process generally takes two to three business days.

The Applicant then travels to Japan and is granted Investor SOR at the port of entry.

2. Undertake a Change of Status to Investor SOR in Japan.

In some cases, an alternative may be for the holder of an Investor COE to enter Japan under the Japan Visa Waiver Program or some other form of short-term entry. The Applicant then applies for Investor SOR via a change of status at a regional immigration office in Japan.

A change of status takes approximately two weeks. During that time, it is not possible for the Applicant to travel outside Japan.

Where the change of status route is utilized, Japan Visa’s certified immigration specialists can undertake the necessary procedures at the regional immigration office in Japan.

Japan Residence Card

Whether you receive your Japan Investor SOR at the airport upon entering Japan or via a change of status application filed at a regional immigration office in Japan (see Step 6 above), you will receive a Japan Residence Card.

This is an official identification card that includes an IC chip. The Residence Card contains personal information such as your name, address, birth date, residence status (in this case, Investor SOR), period of stay, etc.

You are required to carry your Residence Card at all times.

Step 7

Consider applying for a Japan Re-Entry Permit.

Up until July 2012, if you held Investor SOR and wished to temporarily leave Japan (e.g., for vacation, business, etc.) it was necessary to obtain a Re-entry Permit for Japan in advance of travelling.

However, it is now possible to leave Japan for up to 12 months without a Re-Entry Permit.

If there is any possibility that a trip outside Japan will last for more than 12 months, an individual holding Investor SOR should ensure that they have a Re-entry Permit. This can be obtained at regional immigration office in Japan.

1. Japanese Tax for holders of Investor SOR

People living in Japan under Investor SOR will typically be working for an institution that handles at least part of their Japan tax matters on their behalf. This is done by way of withholding tax deducted each month and a year-end adjustment as part of the December payroll.

However, if some income is being paid outside Japan, you may need to submit a Japanese individual tax return by 15 March each year. It is very important that you understand your Japan tax obligations since no extensions are available.

Complying with your Japanese tax obligations is essential in order to renew your visa.

2. US Tax for holders of Investor SOR

If the holder of Investor SOR is a US citizen or green card holder, they will continue to have US tax obligations even while living in Japan.

The US rules applicable to Americans living overseas are complex and constantly changing. In order to avoid possible penalties, anyone with a US tax filing obligation should seek specialist advice to ensure that they fulfill their US tax obligations.

3. Taxes when the holder of Investor SOR leaves Japan

Before leaving Japan, the holder of Investor SOR is required to fully settle her taxes or appoint a tax agent.

It should also be noted that Japanese local tax is assessed based on where you live on 1 January each year. As a result, departing Japan prior to 1 January can result in significant tax savings.