Opting for a Japanese branch can be a strategic move for some, allowing foreign companies to engage in commercial activities—a possibility not offered by a simpler-to-establish representative office.
While a branch office has the advantage of being able to engage in commercial activities, unlike a representative office, if your goal goes beyond using it solely as an expense hub without generating any profit and involves considering accounting complexities that require synchronization with the head office’s accounts, opting for a subsidiary (Godo Kaisha or Kabushiki Kaisha) might be a better option.
*The information provided in this article is a general guide and not tailored to individual circumstances. For personalized advice and assistance with your specific business set-up process/visa application, it is recommended to consult a specialist.
A Japanese branch office operates as a business hub providing services in Japan as directed by the foreign company.
A Japanese branch office operates as a business hub providing services in Japan as directed by the foreign company.
It doesn’t make independent decisions and doesn’t have its own legal status, falling under the foreign head office.
Although the branch office can open bank accounts and lease property, the head office is ultimately responsible for all financial commitments arising from the branch office’s activities.
The branch acts as an extension of the head office, carrying out commercial activities funded by the head office’s capital. The head office covers expenses, and profits made by the branch are collected but merged into the head office’s yearly accounts.
Setting up a branch in Japan is simpler and more cost-effective, but it has some limitations compared to having a subsidiary.
The difference between these options is that for the branch office, accountability and debts will be attributed to the parent company while it is separated in the case of a subsidiary company.
A subsidiary is an independent company under Japanese law, owned by a foreign parent company. and are typically established as either a Kabushiki Kaisha (KK), a joint stock firm, or a Godo Kaisha (GK), a limited liability company.
A representative office, not requiring registration and lacking legal entity status, means you won’t be able to use its name for a corporate bank account or sign an office lease contract. This type of office also can’t engage in sales activities. Conversely, a branch office allows you to engage in sales activities and provides you with a legal status.
📚 Quick Read📚
Setting up a Representative Office | Overview
Your company must appoint a Japanese national or a foreigner residing in Japan with a valid long-term visa as the representative of its Japanese branch office.
Some foreigner friendly agency for rental offices:
The affidavit needs to be drafted based on the Registry Certificate and Articles of Incorporation of the head office and the seal certificate of the representative in Japan. It must then be notarized by a notary public or the Embassy/Consulate in Japan.
An affidavit for registering a branch office contains details such as the name and address of the head office, the company’s activities, amount of capital, etc.
Authentication typically involves the representative of the head office visiting a notary center in their country. However, in cases where the embassy or consulate in Japan recognizes and allows these procedures to take place in Japan, the branch office representative in Japan can use the Japanese embassy or consulate for the notarization process.
In this process, the person executing the affidavit records facts, signs it after swearing to its truthfulness, and confirms the identity of the person authorized to administer the oath (verified through their passport). Once it’s confirmed, an authenticated document with seals is issued.
The representative of the branch office should affix their registered personal seal to the application for the registration of the representative seal. In the event that the representative manager is not Japanese and lacks a registered personal seal, they must sign the application and provide notarized evidence of their signature.
With all the information and required documents collected, the branch office will need to be officially registered as a legal entity in Japan
Upon completion of registration, you can obtain a registry certificate and the branch office’s seal certificate. These documents are essential for opening a bank account and proceeding with tax and social security-related procedures.
The standard list of documents that you will need:
When considering business expansion into the Japanese market, many individuals often view Representative Office or branch office as convenient options.
However, it’s essential to carefully examine the accounting and administrative implications associated with managing a Japanese branch office. The reality of administering a branch office is more complex than perceived. For example, the accounting needs to be integrated into the head office, and there’s a requirement to update registration within 60 days if crucial information about the head office changes.
Moreover, a branch office in Japan is not an independent legal entity separate from its foreign head office. Consequently, the liabilities of a Japanese branch office—whether debts, employee-related issues, or product/service liabilities—are ultimately the responsibilities of its foreign head office.
A branch-office in Japan must file annual financial statements and tax-returns. It will be crucial to hire a tax accountant to handle this for your business.
An Interfree Visa is for expatriates temporarily assigned from the head office, branch office, or any affiliated office outside Japan to the corresponding office within the country.
A Business Manager Visa is a work visa designed for foreigners intending to either establish a business in Japan or oversee the management and operation of an existing business.
Small Seasons & Co. is a bilingual legal office in Tokyo led by a Gyoseishoshi Lawyer. Whether you’re establishing your business or navigating visa applications, we’re delighted to be your guide through the process. Let’s ensure your venture in Japan is both smooth and successful.
