Japan Branch Office Incorporation

Branch Office Registration, Incorporation, Formation. Setting up a branch office of a foreign company in Japan. Opening up a legal entity and business presence in Japan.

Foreign companies willing to engage in commercial business operations in Japan have the option of establishing a “branch office” or a local “subsidiary company” in the form of KK Co. or GK Co.(LLC) as the legal entity in Japan.

The simplest model for a foreign company to establish a legal entity for commercial business operations in Japan is to set up a branch office. The branch office can start business operations as soon as registration with the local authority is completed and all necessary mandatory post-registration notifications to relevant local authorities are completed.

A branch office of a foreign company handles commercial transactions in Japan as per the parent company's decision/instruction and is usually not expected to make independent decisions.

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A branch office does not have its own independent local legal corporate status. Instead, it is deemed within the parent company's corporate status outside Japan. At the time of registration of a branch in Japan, there is no requirement to establish statutory officers/management bodies such as directors and auditors.

A branch office only needs an “A Representative in Japan." The branch office can register a maximum of 2 (two) “Representatives in Japan,” but 1 (one) must be a “Resident of Japan.”

In general, therefore, the branch office's foreign parent company is ultimately responsible for all debts and credits generated by the activities of its Japan branch office.

Branch Office Incorporation Service in Japan

Branch Office: The simplest model for a foreign company to establish a legal entity for commercial business operations in Japan is to set up a branch office. There are no essential differences between the branch office and domestic corporations regarding the range of business activities allowed. Taxed on branch office income only, the rate is the same as that of a local company. For registration, there is no requirement to establish a statutory officers/management body; it only needs a local physical address (not a PO Box) and a Representative in Japan (must be a “Resident of Japan”). In general, the transfer of operational funds between the branch and its head office can be made without restrictions and is not subject to withholding tax. A branch office can register a maximum of 2 (two) “Representatives in Japan,” but 1 (one) must be a “Resident of Japan” and a director/member of the parent company with their overseas resident address.  

Company Bank account: Once registered in Japan, a branch office can open a company bank account(s), lease real estate in its own name, and carry out commercial activities as per corporate objectives derived from the parent company.

Business activities: In terms of the range of business activities allowed, there are no fundamental differences between a branch office and a domestic corporation.

Tax compliance: A branch office in Japan is obliged to submit a corporate tax return to the local tax authority within two months from the date of its closing of the fiscal year. The branch office's fiscal year is registered in Japan as per the parent company's fiscal year in the home country. The tax applies to the net income generated in the Japan branch office as per local regulations, and the rates used are the same as those of a domestic company.

Branch closing and upgrading to a subsidiary company: The closing procedures must be completed when upgrading a branch office to a subsidiary company. Because a branch office cannot be directly reorganized into a joint-stock corporation (Kabushiki-Kaisha {KK}) or a Limited Liability Company (Godo-Kaisha {GK}, LLC), the branch office closure procedures and the subsidiary company establishment procedures must be carried out simultaneously. However, in such instances, the branch office's assets may be passed on to the subsidiary through investment in kind.

Option regarding the formation of a legal business entity in Japan for ongoing commercial activities:  The choice is either to establish a “Branch Office” or a local “Subsidiary Co. (Kabushiki-Kaisha or Godo-Kaisha)."

For any of the said formats, the minimum requirement is a “local physical address” in Japan (not PO Box address) and a local “Resident of 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).

[However, for Kabushiki-Kaisha or Godo-Kaisha, a “Resident of Japan,” is not mandatory.]

The branch office allows a maximum of 2(two) “Representatives in Japan” to be registered. A local “Resident of Japan” is mandatory. A shareholder /director /managerial staff from the head office can also be registered as a “Representative in Japan” with the said person's overseas residential address.

Time-frame for registration: For the procedure, please refer to the registration flowchart of the Branch Office. Upon applying to Legal Affairs Bureau for registration, it takes about 2(two) weeks to obtain the registration certificate.

Japan Branch Office verses Subsidiary Company- Comparison At a Glance

Note: The exception is allowed that NO "Resident of Japan" is a mandatory requirement for registration of a "subsidiary company" since the change of regulation effective March 2015.

Japanese govt. has allowed foreign companies to register a local subsidiary company(Kabushiki-Kaisha [KK] or Godo-Kaisha [GK]) in Japan without a “Resident of Japan."

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