Femmes Actives Japon

1. Femmes Actives Japon Starting a business in Japan 13 December 2011 Yoko Majima - Legal Advisor, Immigration Lawyer

2. Introduction • Education • One year students exchange program at a high school in Melbourne, Australia • Graduated from Sophia University, majoring in French studies (language, sociology), including one year exchange at Université Aix-Marseille I (Aix-en-Prevence) • Work history • Japanese fashion designer’s office in charge of International Dept. • Japanese importer of French wine and food • Permanent Mission of Japan in Geneva, Switzerland • Mission Economique, l’Ambassade de France au Japon

3. Starting your own business in Japan – how? • Two ways of doing business – as a sole proprietor (kojin jigyo / auto-entrepreneur) or by setting up a company • SOLE PROPRIETOR: • Business entity owned and run by one individual • Possible to use a different commercial name • No legal distinction between the owner and the business • All profits/losses, assets/debts of the business belong to the owner

4. Sole proprietor vs. company • Advantages of sole proprietorship • Easy to start – no registration required • Simple tax procedure • Low cost, no corporate tax • Disadvantages of sole proprietorship • Less credibility • Unlimited liability • No corporate bank account available • Difficult to manage when there are several partners • Higher tax rates when the profit exceeds certain amount

5. Sole proprietor vs. company • What is a company? • A legal entity that can be defined as an “artificial person” registered at the registry office (homukyoku) • Different types of legal entities – Kabushiki Kaisha (KK), Yugen Kaisha (YK), Godo Kaisha (GK), NPO, Association (shadan hojin), Foundation (zaidan hojin), LLP… • Advantages of a company • Credibility • Limited liability • Easier to manage when there are several partners

6. Sole proprietor vs. company • Disadvantages of a company • Registration required for setting up, changes, closing down – more time and costs involved • Complicated tax procedures (need to hire an accountant) • Two levels of taxation – corporate tax and personal tax  However your visa category doesn’t always give you a free choice.

7. Different visa categories

8. Different visa categories • Visas that allow you to become a sole proprietor • Visa status without work restrictions • Freelance under a work visa – need to have stable contracts with Japanese companies (translator, IT engineer…) • Dependent, student, cultural activities visa – within 28 hours/week under a permission from Immigration office (or change to a work visa if working on full-time basis) • Working holiday visa (change to a work visa when the WHV expires) • Investor/Business Manager visa if 5 million yen investment can be proven without a company

9. Different visa categories • Visas that allow you to run a company • Visa status without working restrictions • Investor/Business Manager visa • Other types of work visa if someone else can become the Representative Director • Dependent, student, cultural activities visa – within 28 hours/week under a permission from Immigration office (or change to an “Investor/Business Manager” visa if working on full-time basis) • Working holiday visa (change to an “Investor/Business Manager” visa when the WHV expires)

10. Requirements for an Investor/Business Manager visa • To invest 5 million yen from foreign source (foreign company or individuals) • Investment from the visa holders without work restrictions doesn’t count • Doesn’t need to be your own funds • To have a physical, dedicated place of business (office, shop, etc.) • Virtual office is not accepted. • If working at home, a written consent from the landlord authorizing you to use the residence as an office is required • Could be a place rent out from a friend for free

11. Requirements to renew an Investor/Business Manager visa • Company’s financial stability • Ideally the company needs to generate a profit or have no loss. • It’s still possible to renew the visa even if the company is in loss, as long as the capital hasn’t been exhausted. • Payment of personal income and resident tax • The company needs to pay you a sufficient monthly salary (ideally 200,000 yen/month or above) and withhold the income tax to pay to the tax office on your behalf. • It is necessary to pay the resident tax (jumin-zei) to be able to provide a tax certificate (nozei shomeisho) for the visa renewal.

12. Different types of company

13. Procedures and requirements for setting up a company • Required documents • Inkan shomeisho (seal certificate) issued at the city hall or signature certificate issued by the Embassy or certified by a notary public abroad • Personal bank account in Japan (for deposit of capital) • Necessary to decide: • Office address in Japan • Representative Director who needs to be resident in Japan • Amount of capital (minimum 1 yen / 5 million yen for an Investor visa) • Other detail such as company name, activities…

14. Business requiring licenses • Importing and selling products such as medicines, cosmetics and other products that have contact with skin or could damage the health • Restaurant, café, catering, hotel, spa (sanitary requirements) • Importing and selling alcohol • Sale of used items (including auctions) • Travel agency • Real estate agent • Recruitment, temp agency • Investment brokerage, advisory

15. Taxes and social security • Corporate taxes • Corporate income tax (hojin-zei) • Corporate inhabitant tax (hojin jumin-zei) • Enterprise tax (jigyo-zei) • Effective tax rates from 25% to 40% (on taxable income) • Minimum tax 70,000 yen (even if the company is in loss) • Consumption tax (shohi-zei) 5% : 2 years after making 10MY sales • Personal taxes • Income tax (shotoku-zei), withheld from your salary (5, 10, 20, 23, 33 and 40%) • Inhabitant tax (jumin-zei): 10% • Social insurance • Health insurance • Pension • Limit of “dependent” status: 1.3 million yen income/year • No unemployment insurance availableas a business owner

16. Leaving Japan: what to do with the business started? • Manage from overseas: necessary to hire someone in Japan • Make company dormant • Until you can decide what to do or if you might come back to Japan • Still necessary to file the tax declaration once a year • Sell the business to someone interested • Close down the company (cost around 200,000 yen, 2-3 months procedure)

17. For more information… Yoko Majima– Legal Advisor, Immigration Lawyer www.juridique.jp - info@juridique.jp 2F Minami Azabu Centre, 4-12-25 Minami-Azabu Minato-ku, Tokyo 106-0047

18. Thank you for your attention!