Entity Form |
Advantages |
Disadvantages |
Others |
Representative Office |
Not required to be legally registered | No legal entity In general, not subject to Japanese corporate tax. However, there is a risk of corporate tax being imposed in the case of conducting sales activities | A resident representative required |
Branch |
No legal capital requirement (registered as part of the head-office)
Withholding tax not imposed on the transfer of profits to parent company |
Not a separate legal entity from the head-office, hence no separation of legal risk
Head-office is liable for all debts and credits of Japanese branch office |
At least one resident representative required
Change of parent company’s registered information may require Japan branch office registered information to be updated. Required to file a corporate return when it has a Japan source income. Corporate inhabitant tax (including size based business tax) is imposed according to the issued share capital amount of parent company Need to confirm the feasibility of business permissions requiring certain capital amounts |
Company (Subsidiary), KK or GK |
Separate legal entity
Higher credibility Parent company is not liable for all the debts and credits of subsidiary, i.e. limited liability |
Withholding income tax imposed on the payment of dividends and royalties to the parent company (although can be reduced or exempted via tax treaty application if applicable) | Resident representative is required to establish K.K. or G.K. for the purpose of capitalization verification process |
KK vs GK
