If you are a foreign enterprise eyeing international business expansion into Japan, representative office might be your cost-effective first step.
Representative office is an office established by a non-domestic company when preparing for overseas expansion into Japan
A representative office is set up by a non-domestic company in preparation for overseas expansion into Japan. It often serves as a stepping stone for foreign companies looking to establish a presence in Japan, facilitating preparatory tasks before diving into full-scale operations; its purpose is to handle non-sales operations, including local market research, information gathering, public relations, and other essential functions in the Japanese market.
It is crucial to note that the activities of a representative office are strictly limited to non-sales tasks.
In contrast to a branch office or subsidiary, representative office doesn’t require registration. However, this exemption comes with implications – opening a bank account or signing a lease agreement in the office’s name is not possible. Instead, these activities must be conducted under the name of a representative in Japan, with all associated liabilities falling under the representative personally. This distinction is vital for foreign companies considering this approach to understand.
It acts as a hub for preparatory operations, engaging in activities such as:
As a representative office, engaging in sales activities such as negotiating orders, invoicing customers, fulfilling orders, or collecting payments is prohibited. To undertake such activities, official registration as a branch office or subsidiary company is required.
As mentioned earlier, using the name of the representative office for transactions like opening a bank account or entering into an office lease is challenging due to its non-legal entity status. Typically, these transactions are conducted in the name of an individual or under the representative’s name.
Representative offices do not require registration unlike branch offices or subsidiary companies, and the set up process looks like this:
Select a representative for the Representative Office and secure an office in Japan.
Small Seasons & Co will communicate with you to review the list of requirements, collect all necessary documents for the visa, and guide you through the process.
Submit required notifications such as Business Establishment Notification to the Labor Standards Inspection Office and Tax Office.
As the representative office is not subject to registration, there is no obligation to file corporate tax-related notifications. Nevertheless, in most cases there are certain documents you will need to submit such as:
In general, because a representative office avoids engaging in sales activities, it is not classified as a permanent establishment (PE), exempting it from corporate taxes. However, situations may arise where the office’s operations extend beyond mere market research, potentially resulting in tax obligations.
For personalized advice, it is recommended to consult with a tax accountant.
For establishing a representative office in Japan, there are a few visa options available.
The Intra-company Transferee Visa is designed for expatriates temporarily assigned from the head office, branch office, or any affiliated office outside Japan to the corresponding office within the country.
The Engineer/Specialist in Humanities/International Services Visa (also known as EHI Visa) is typically obtained through an employment contract with a Japanese company. It caters to foreign professionals with specialized expertise in scientific and humanities-related fields aligned with their bachelor’s degree. However, obtaining this visa while working for a representative office in Japan, which isn’t officially a legal entity, can be challenging.
It is important to note, however, that in Japan, whether you obtain the visa or not depends on the decision of the Immigration Bureau, and there is never a 100% guarantee.
Navigating the intricacies of setting up a representative office in Japan demands expert guidance. At Small Seasons, we specialize in offering comprehensive services for business setup, strategic consultation, and visa assistance. Our team is dedicated to ensuring a smooth and legally sound process for your business expansion.
