Real Estate, Incorporation, Visas, Succession - Shiho-Shoshi Law Office in Kobe, Japan

Kobe Legal Partners

Foreign Company’s Expansion to Japan

Foreign companies considering expanding to Japan and engaging in business on an ongoing basis must establish a Japanese branch office or set up and register a Japanese corporate entity. In addition, executives and employees seconded to Japan by a foreign company must first obtain an appropriate status of residence for the category of work he or she will engage in.

Kobe Legal Partners Shiho-shoshi Law Office, with its experienced English-speaking staff, provides one-stop support and services for everything from incorporation and registration to obtaining statuses of residence.

Corporate Entity Forms for Overseas Expansion

Foreign companies contemplating the establishment of a base in Japan may choose from among the following corporate entity forms, taking into consideration the nature of the business activities as well as tax and accounting matters.

Representative Offices Branch Offices (Foreign company’s business office) Japanese Corporations
 Stock company Limited liability company
Business Activity  X
Capital n/a* n/a Required (no fixed minimum amount)
Registration n/a
Representative n/a Branch representative required Required (corporate entities not eligible) Required (corporate entities are eligible)
Representative’s Authority n/a All activities related to business in Japan All activities related to company business
Scope of Corporate Taxes n/a Domestic sourced income Worldwide income
Accounting Process n/a Need to consolidate with income of foreign company Accounting process for Japanese corporate entity only
Overseas Remittance Taxation n/a No taxation on overseas remittances made after collection of corporate taxes Withholding taxes assessed on dividends, interest, and royalty
Legal Liability Foreign corporation Foreign corporation Japanese corporate entity

*”n/a” means not applicable.

Establishing a Representative Office

A representative office is not permitted to engage in revenue generating business activities on an ongoing basis. However, a representative office may generally engage in the following activities:

  • Information collection
  • Market research
  • Advertising and publicity
  • Purchasing products

To engage in revenue generating business activities, it is necessary to establish a Japanese branch office or set up and register a Japanese corporate entity.  Since representative offices are not considered a separate legal entity, it is not possible to open a bank account or enter into a contract (or lease) in the name of the representative office.

The procedures required for setting up a representative office are:

1.  Opening an office
2.  Acquiring the appropriate status of residence and entering Japan
3.  Registration is not required.

Setting up a Branch Office

For a foreign company to establish a business office and continuously engage in business in Japan, it must designate and register its representative in Japan. Please note that the “foreign companies” referred to in this section are legal entities or organizations established under the laws of a foreign country. This includes not only entities with the juridical personality, but also entities such as partnerships, which do not have the juridical personality in the home country, are subject to register. A final requirement is that the designated representative must be a resident of Japan with  an address in Japan. In general, a representative of a branch office should be in Japan for 6 months each year. There is no nationality requirement for the representative.

Since a registered branch is not considered a legal entity, all its credits and debts are attributed to the foreign company who has ultimate responsibility for them. However, a branch office can open a bank account and lease property in the name of the branch.

The procedures required for setting up a Japanese branch of a foreign company are:

1. Advance preparation

(1) Provide us with a certificate from a public authority, such as the registration of a company in a foreign country, and documents evidencing the details of the company, such as articles of incorporation

(2) Draft of an affidavit prepared by our office based on the information provided in item (1) above, and confirmation of same our office

(3) Approval of the affidavit by a notary public or governmental official with a similar function

2. Registration application of the branch office submitted to Japan’s Legal Affairs Bureau (approximately one week to finalize)

3. Post-registration procedures

(1) Notification to the tax and social security insurance offices

(2) Report of inward direct investment to the Bank of Japan*

(3) Obtain a status of residence and enter Japan
Depending on the nature of the foreign company’s business, it may be necessary to make the report to the Bank of Japan prior to submitting the registration application.

Setting up a Corporation

To set up a Japanese subsidiary of a foreign company, the procedures and processes specified in the Japan’s Companies Act must be followed as it is basically considered to be the establishment of a domestic company. A company is formed by registration of incorporation.

Procedures for Setting up a Japanese Subsidiary (stock company)

1. Advance preparation

(1) Decision to the details of incorporation, such as a corporate resolution (or copy thereof)

(2) Determination of whether a prior notification is required under the Foreign Exchange and Foreign Trade Act

2. Procedures for registration of incorporation

(1) Draft articles of incorporation, certification by a notary public

(2) Payment of capital

(3) Application for registration of incorporation (approximately 1 week to complete)

3. Post-registration procedures

(1) Notification to the tax and social security insurance offices

(2) Report of inward direct investment to the Bank of Japan

(3) Obtain a status or residence and enter Japan

(4) Applications for approvals and authorizations, if required

Kobe Legal Partner’s Support and Services

Kobe Legal Partners Shiho-shoshi Law Office routinely provides the following support and services to foreign companies who wish to expand into Japan.

  • Registration application for incorporation and branch set up
  • Preparation of documentation necessary for registration applications
  • Preparation of affidavit
  • Applications for status of residence
  • Applications for approvals and authorizations
  • Translation of documents
  • Coordination with an English-speaking tax accountant
  • Introduction to an English-speaking real estate agent to assist with office and employees’ residential needs

Kobe Legal Partners’ Uniqueness

Setting up a business in Japan normally requires the services of a shiho-shoshi lawyer for the procedures up through and including the company's registration and also the services of a gyosei-shoshi lawyer for obtaining business licenses, visas, and other post-incorporation matters. Since the shiho-shoshi lawyers and gyosei-shoshi lawyers generally maintain separate offices, setting up a company usually requires the services of two offices and the fees of two offices.

Kobe Legal Partners is unique in offering a one-stop support approach by combining the services of a gyosei-shoshi with the services of a shiho-shoshi in one office. This eliminates the risk of overlapping costs and  gives you the freedom to grow your business instead of focusing on the headaches of business registrations and visas

Why not expand to the Kobe area?

Since Kobe first opened its port to the world in 1868, it has developed as an international port city. Its foreigner-friendly environment is reflected in the more than 40,000 foreign residents from more than 120 countries.

Impressed by this environment and the good business rapport between the foreign business community and the local businesses and government, many foreign and foreign-affiliated companies were drawn to Kobe and have located their headquarters in Kobe. Such well-known corporate giants as P&G, Nestle, Eli Lilly, Airbus Helicopters call Kobe home.

Kobe City’s recent efforts to promote the “Kobe Medical Industry Development Project” have resulted in an influx and concentration of medical and pharmaceutical-related companies in the Kobe area, both foreign and domestic. With the presence of RIKEN, the Advanced Institute for Computational Science, and Kobe University, Kobe is becoming known for cutting-edge technology.

However, the scope of domestic and foreign businesses in Kobe area run the gamut from high-tech to manufacturing, from agricultural to chemical.
A final reason that makes Kobe attractive to foreign company is the variety of incentives and subsidies available through local and prefectural governments. We would be happy to help you explore these options.

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