What is needed to start a business in Japan? We’ve asked an immigration lawyer (1)
If a non-Japanese person wants to start a business in Japan, what do they need to know first? Yasuo Tachikawa, an immigration lawyer familiar with visa applications, responded to our questions.
Mr. Tachikawa has plenty of experience working for Vietnamese, Burmese, and other Asian visa applicants. Sometimes he is asked for help beyond his profession, an indication that he is trusted by the immigrant community in Japan. “Many Japanese people stereotype or unconsciously distinguish between non-Japanese and themselves. “It’s something we as Japanese people need to be aware of,” he says.
*Mr. Tachikawa is a certified 行政書士 (gyosei shoshi), a legal specialist who deals not only with immigration matters but also a wide range of official documents. Given his professional experience in immigration applications, we refer to him here as an 'immigration lawyer'.
––– When foreigners do business in Japan, what type of visa do they usually apply for?
Yasuo Tachikawa: Many foreign business owners are Permanent Residents or Spouse visa holders. Except for those cases, you will be required to obtain a Startup visa or a Business Manager visa, which might be challenging as it requires ¥5,000,000 as an initial investment (including capital).
––– Please tell us about the Business Manager and Startup visas.
YT: A Business Manager visa has two capacities. One is Executive Level and the other is what we usually call “Manager.” Given the nature of this interview, which is to learn about “how to do business in Japan,” I’ll talk about the Executive Level capacity of a Business Manager visa.
When starting a business, visa applicants need to meet the following conditions:
- Have an office located in Japan with a lease contract
- Employ more than two staff members. Employees must be Japanese nationals, permanent residents, or spouses of Japanese nationals.
- Secure an initial investment, including the capital, that exceeds ¥5,000,000.
- Prepare a proper business plan deemed appropriate and sustainable and reported to the tax authorities.
Two types of Startup Visa: One year under “Designated Activities” or a half-year as a “Business Manager”
YT: Regarding Startup visas, there are two options. One is issued for one year by the Ministry of Economy, Trade and Industry (METI) for specific “Designated Activities.” The other is a six-month Business Management visa in National Strategic Special Zones, such as Tokyo and Fukuoka. This visa is granted after the business plan is confirmed by prefectural authorities.
In both cases, applicants request local government approval by submitting a business plan. Startup visas allow you to spend one year (a half year in the case of National Strategic Special Zones) as a startup period for establishing your company through activities such as arranging money matters, hiring employees, etc. Then, after this period, you can apply for a Business Manager visa with concrete evidence as a former Startup visa holder. So, we could say that acquiring a Startup visa is relatively more feasible than a Business Manager visa. Tokyo also admits international students for the Startup visa application.
If you intend to start your business in Tokyo, your business plan will be assessed by the Tokyo Metropolitan Government. Tokyo is rather enthusiastic about assisting non-Japanese entrepreneurs and provides a helpful advisory system. Furthermore, Tokyo does not limit the type of business, while other areas restrict startups to the IT or medical industries.
––– How about those who want to start small businesses?
YT: Even small amounts of recurring income are regarded as “remuneration” (報酬, hoshu) and require a Business Manager or other type of visa. To explain the difference between “remuneration” and “reward” (謝金, shakin) in the Japanese context, here is an example. When you are asked to make a speech at a university and receive money for it, this is considered a “reward” if it is just one occasion. However, money for any further work would be considered remuneration and require an appropriate visa.
––– If you are a Japanese citizen and start a business as a freelancer, you can only begin your operations after filing an application as a “sole proprietor” (個人事業主, kojin jigyo-nushi) with the local tax office. Do foreigners need a Business Management visa even for freelancing?
YT: Yes, you’ll need to obtain a Business Management visa by submitting a well-prepared plan to prove the stability and sustainability of your business. The important point is not just obtaining the visa itself, but also ensuring that your business develops steadily. Failure of the business will make the visa assessment process more difficult, so preparing a very good business plan is key.
In addition, if the size of your business is rather small, you may be eligible for what is known as “permission to engage in an activity other than that permitted by the status of residence previously granted” (資格外活動, shikaku-gai katsudo). This is granted by the Immigration Services Agency of Japan.
For this type of permission, there is a general qualification for international students or family members of working visa holders that allows them to work up to 28 hours a week. There is also an “individual” qualification that considers each person’s situation and the details of their application; however, there are many hurdles, and in reality, it is rather difficult to obtain.
Start by considering what you can do with your particular type of visa
––– So, is there any way to start a small business such as online retailing?
YT: If you hold an Engineer/Specialist in Humanities/International Services visa, first try developing your business plan based on what it allows. This approach is far more likely to succeed than applying for the shikaku-gai katsudo status mentioned above.
Even if you can obtain approval for the shikaku-gai katsudo, there is another hurdle: Suppose you earn a decent amount of money within the 28 working hours a week permitted under shikaku-gai katsudo – It may happen if the business goes well. However, then you’ll be advised to switch to a Business Manager visa by the immigration office. Why? When renewing your qualification, you might be required to submit your tax payment certificate, and if your income is very high, you will be regarded as working in excess of what is allowed.
(Edited by Jennifer Pastore)
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Photo caption: (From left to right) Sato Itoko, an immigration lawyer at Tachikawa's office, Yasuo Tachikawa, Yumiko Horie (Posse Nippon)
Author’s note: Posse Nippon interviewed Mr. Tachikawa, who has extensive experience in immigration law, about the procedures immigrants in Japan need to follow when starting their own businesses. This article is not an advertorial, as Mr. Tachikawa generously agreed to speak with us on a voluntary basis. His office is available to answer questions in English.
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*The information on this page is correct as of 3 September 2022.