Representative Office

Setting Up a Representative Office in Japan

Steve Crane chats with Yoko Majima, a certified Japanese gyosei shoshi lawyer who specialises in market entry for international companies, to learn about the various options for setting up a business in Japan. View our podcast here and read the overview below:

Representative Office

A Representative Office is a simple fact of having a physical office space located somewhere in Japan, and there isn’t any required procedures to register it officially. It is not supposed to engage in commercial activities or generate profits locally. The activities of a representative office are limited to the following fields :

  • Providing information to parent company in overseas,
  • Advertising and publicity,
  • Market research,
  • Basic research and studies,
  • Purchase and storage of assets for parent company.

Since a Representative Office doesn’t have any commercial activities, a Representative Office doesn’t have capital, and therefore it is not subject to paying corporate tax in Japan.

When a non-Japanese staff member is sent to work in Japan, it is necessary to obtain a visa / status of residence for that staff member (see the page on visa and immigration procedures). It is also possible to employ local staff.

It is not possible to open a bank account under the name of the parent company. Only a personal account under the name of the representative can be opened, but the account holder’s name can be followed by the company’s name.

The representative office is the easiest way of establishing an office in Japan and is typically used when a foreign company wants to conduct market research in Japan before committing to a branch or subsidiary. Under Japanese law, a representative office can only engage in the limited business activities of purchasing and storing assets, and auxiliary services such as advertising, information gathering and market research.

A representative office cannot participate in sales activities but can supply information to distributors, communicate prices and terms of sale and identify sales opportunities. There is no legal restriction on the number of employees a representative office can have and as it is considered an extension of the parent company there are no shareholding requirements or restrictions.

There are no legal registration requirements for a representative office and there is no requirement to report the direct inward investment to the Ministry of Finance via the Bank of Japan. This is currently required under the Foreign Exchange Law for branch entities.

A  foreign corporation – one with its headquarters in a country other than  Japan – must appoint a representative director who is resident in  Japan. On March 15th  2015, however, the  law  regarding  domestic  Japanese  corporations  – those headquartered  in  Japan  – was revised, removing the requirement for a representative director resident in Japan. In simple terms, if you are setting up a Japan-based subsidiary of a pre-existing foreign corporation, you need a resident director. If you are establishing a new company with your head office in Japan, you don’t need a director who is resident in Japan.

Note that where there are employees receiving remuneration into a Japanese bank account, there are payroll and social insurance registration requirements.

A representative office needs to be able to show the following in order to prove existence:

  • A lease for office space in its own name – the lease for a representative office’s space may be signed between the head office in the home country and the Japanese building owner. In many cases, however, the owner will require that the representative office have a guarantor resident in Japan
  • A utility bill in the name of the representative office
  • A copy of the contract between the representative and the foreign company

A representative office can hold a bank account in Japan but is not required to retain books and records in Japan unless the representative office claims input tax credits. There is no statutory audit requirement and representative offices are not subject to taxation in Japan.

Last updated January 2024: Steve Crane OBE


Questions about setting up a company in Japan?