You have decided to set up a subsidiary in Japan. The next question is what to do, and by when. Japanese procedures fall into three areas: legal (incorporation and registration), tax (notifications to the tax authorities) and HR (social and labour insurance). Each has its own offices and deadlines.
Decisions you make before incorporation, such as share capital and fiscal year-end, also shape your tax position and paperwork later. Some early mistakes cannot be fixed afterwards.
This article does not go into the details of each rule. Instead, it gives HQ finance teams and Japan representatives a timeline of what to do, and when.
01The big picture
Here is the overall timeline. Incorporation alone usually takes about two to three months, so plan backwards from the date you want to start business.
| When | Main tasks | Who usually helps |
|---|---|---|
| Before incorporation | Decide on entity type, share capital, fiscal year-end, directors and registered office. Check the visa status of any manager who will be based in Japan | Certified public tax accountant, judicial scrivener, administrative scrivener |
| Incorporation (about 2–3 months) | Prepare the articles and parent company documents, pay in capital, register the company | Judicial scrivener |
| Right after incorporation (up to 2 months) | Open a bank account, file foreign exchange reports, file tax notifications | Certified public tax accountant |
| When you hire your first employee | Enrol in social and labour insurance, sign employment contracts | Certified social insurance and labour consultant |
| Monthly, through the first year-end | Bookkeeping and HQ reporting; corporate tax returns (due within two months after the fiscal year-end) | Certified public tax accountant |
Official sources
02Decisions to make before incorporation
Before preparing for registration, HQ should decide the following. Each of these is costly and time-consuming to change later.
| Decision | Options | What it affects |
|---|---|---|
| Entity type | KK (kabushiki kaisha), GK (godo kaisha) or branch Most foreign companies choose a KK | Liability, set-up costs and tax filings |
| Share capital | Many companies start with JPY 1 million (unless a manager needs a Business Manager visa) | With share capital of JPY 10 million or more, the company pays Japanese consumption tax from its first year. Also affects registration costs and visa requirements for managers Note: even with capital under JPY 10 million, the company may pay tax from its first year, depending on the size of its parent group (see section 4) |
| Fiscal year-end | Same as the parent or not Most choose the same year-end as the parent | Whether Japanese tax filing falls in the same period as the group year-end close |
| Directors and representative | Resident in Japan or overseas | Documents required (such as signature certificates) and opening a bank account |
| Registered office | Leased office, serviced office, etc. | Registration, bank account opening and visa screening |
| Manager based in Japan | Assigned from HQ or hired locally | The status of residence (visa) required, such as Business Manager |
The main requirements are: capital of JPY 30 million or more; at least one full-time employee (such as a Japanese national or permanent resident); Japanese language ability of either the applicant or that employee; at least three years of management experience or a relevant degree; and a business plan reviewed by a qualified professional (an SME management consultant, certified public accountant or certified public tax accountant).
These affect your capital and hiring plans, so check with an administrative scrivener before incorporation. If you assign a manager from HQ, a different status of residence may be available.
Official sources
03Legal: incorporation and foreign exchange filings
Company registration is usually handled by a judicial scrivener. For subsidiaries of foreign companies, the documents from the parent company often take the longest.
| To do | What it involves | When |
|---|---|---|
| Articles of incorporation | For a KK, have the articles notarised by a Japanese notary and declare the beneficial owner | Before incorporation |
| Parent company documents | Certificate of registration, affidavit, signature certificates, etc., notarised in the parent’s home country | Before incorporation (often the longest step) |
| Paying in capital | Pay into the account of a promoter or director. If all of them live overseas, a third party can receive the funds under a power of attorney | After notarisation |
| Registration | Apply to the Legal Affairs Bureau. The application date becomes the date of incorporation | After paying in capital |
| Corporate bank account | Apply after registration. Bank screening can take some time | After registration |
| Foreign Exchange Act filings | Setting up a company as a foreign investor is “inward direct investment”. Depending on the business, prior notification is required; otherwise, a post-investment report is generally filed through the Bank of Japan | Prior notification: before incorporation / Report: within 45 days |
Official sources
- Ministry of Finance: Foreign Direct Investment Regime – Overview
- Bank of Japan: Reports and notifications under the Foreign Exchange Act (Japanese)
04Tax: notifications right after incorporation
Once the company is registered, notifications to the tax office and local governments begin. Some deadlines are short, so have them ready when registration is completed.
| Filing | Where | Deadline |
|---|---|---|
| Notification of incorporation | Tax office | Within 2 months of incorporation |
| Local tax notification of incorporation | Prefecture and municipality (Tokyo Metropolitan Tax Office for the 23 wards) | Tokyo: within 15 days (varies by local government) |
| Application for blue-form tax returns | Tax office | By the day before the earlier of: 3 months after incorporation, or the end of the first fiscal year |
| Notification of opening a salary payment office | Tax office | Within 1 month of opening (required even if only directors are paid) |
| Application for semi-annual payment of withholding tax | Tax office | Optional (if fewer than 10 people receive salaries) |
| Consumption tax notifications and invoice registration | Tax office | Depends on your situation (see below) |
Three more things to check
Japanese consumption tax: A new company is generally exempt for its first two fiscal years, but a company with share capital of JPY 10 million or more pays tax from its first year. In addition, even with share capital under JPY 10 million (for example, JPY 1 million), a company may pay tax from its first year, depending on the size of its parent group (a “specified newly established corporation”). This applies where a parent or other group company holding more than 50% has either (1) taxable sales in Japan of more than JPY 500 million, or (2) total revenues, including revenues outside Japan, of more than JPY 5 billion (test (2) applies to tax periods beginning on or after 1 October 2024). Even a parent with no sales in Japan often meets test (2), so check before your first sale.
Directors’ pay: In Japan, directors’ pay is generally deductible only if the same amount is paid every month, and changes are normally allowed only within three months of the start of the fiscal year. Decide the amount before the first payment.
Payments to the parent: Royalties, interest and similar payments to the parent may be subject to Japanese withholding tax. To apply a reduced tax treaty rate, a treaty relief form must be filed by the day before payment.
For more on each filing, see our page Accounting & Tax for New Japanese Subsidiaries.
Official sources
- National Tax Agency: Guidelines for Notification of Corporation Establishment, etc.
- National Tax Agency: Consumption tax for newly established businesses (Japanese)
05HR: social insurance, labour insurance and employment rules
Social insurance applies even before you hire staff. A company must enrol in social insurance (health insurance and Employees’ Pension Insurance) even if the only person it pays is the representative director.
| To do | Where | Deadline |
|---|---|---|
| Health insurance and pension enrolment for the company, plus enrolment of each insured person | Pension office | Within 5 days of becoming covered |
| Labour insurance: establishment notification and premium declaration | Labour Standards Inspection Office | Within 10 days of hiring (notification) / within 50 days (declaration) |
| Employment insurance: office notification and employee enrolment | Hello Work (public employment office) | Within 10 days of setting up the office (notification) / by the 10th of the month after hiring (enrolment) |
| Written terms of employment (employment contract or notice of working conditions) | — | At hiring, in writing |
| Work rules and overtime agreement (Article 36 agreement) | Labour Standards Inspection Office | Work rules: once you regularly employ 10 or more / Agreement: before any overtime |
| Social security for assignees from HQ | Pension office, etc. | On arrival (see below) |
Assignees: If employees are sent from a country that has a social security agreement with Japan and the assignment is expected to last no more than five years, they can be exempt from the Japanese pension system and certain other schemes by submitting a certificate of coverage from their home country. The details vary by agreement, so check before the assignment starts.
Official sources
- Japan Pension Service: Enrollment in Employees’ Pension Insurance and Employees’ Health Insurance
- Ministry of Health, Labour and Welfare: Introduction to procedures for enrolling in Labour Insurance (PDF)
- Japan Pension Service: When You are Working in Japan (social security agreements)
06Summary: plan the timeline with your advisers
When you set up a Japanese subsidiary, legal, tax and HR procedures run in parallel, and each is handled by a different professional. The best way to avoid delays and gaps is to put the whole schedule on one page before incorporation and agree who does what, and when.
After incorporation, monthly bookkeeping and HQ reporting continue, and tax returns must be filed and the tax paid within two months after each fiscal year-end.
We support Japanese subsidiaries of foreign companies with tax and accounting, in English by email and chat. For registration and social insurance, we work with our partner judicial scriveners and certified social insurance and labour consultants and coordinate with them in Japanese on your behalf. We are happy to help before incorporation, too.
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Contact usDisclaimer and enquiries
This article provides general information based on the laws, regulations and circulars, and materials published by the National Tax Agency, in effect at the time of publication. It is not tax judgement or advice on any individual case. The actual treatment depends on the facts and the timing.
Laws and regulations may change. Before making any decision, please check the latest information and consult a certified public tax accountant or other professional adviser. Miyaji Kai Tax Office accepts no liability for any loss arising from decisions or actions taken on the basis of this article.
We do not respond individually to questions or enquiries about the content of this article. If you would like advice on your own situation, please contact us to request a formal engagement.
