Setting up KK（Japan subsidiary）→Fee for incorporation

★Table of contents

１．Company structure when a foreign company starts a business in Japan.
２．Subsidiary vs. Branch Office: Differences in Establishing Representative Offices.
３．Reasons, situations, and stages for establishing a Japanese subsidiary.
４．The difference between a KK and a GK.
５．Reasons why a KK is recommended.
６．Cases where a GK is more advantageous and why.
７．Procedures for establishing a KK with 100% foreign ownership.

８．Frequently Asked Questions (FAQ)
Ｑ１　Which company structure do you recommend, a KK or a GK?
Ｑ２　What documents are required when a foreign parent company becomes a shareholder?
Ｑ３　We don't have sufficient time to obtain the necessary documents for our parent company to become a shareholder in a foreign country. Is there a simpler way to do this?
Ｑ４　How is the capital contributed?
Ｑ５　Are there any requirements for an address that can be used as the registered address of the head office?
Ｑ６　Is it okay to use a virtual office as the company's main office?
Ｑ７　Can a director of the parent company (residing overseas) also become a director of the Japanese subsidiary?
Ｑ８　Please explain the process and timeframe for establishing a corporation.
Ｑ９　Please explain the steps involved in opening a corporate bank account.
Ｑ10　Can you handle all the tax, accounting, payroll, and social insurance matters for the subsidiary after its establishment?
Ｑ11　Is it possible to communicate with the CFO or controllers at the foreign headquarters in English?

１．Company structure when a foreign company starts a business in Japan.

When a foreign corporation begins doing business in Japan, it must consider whether to establish a subsidiary, a branch office, or a representative office. With the exception of highly regulated sectors such as banking and insurance, the appropriate corporate form depends on the nature of the business operations. Generally, however, establishing a subsidiary under Japanese corporate law is recommended, as it allows for the separation of liability from the parent company in the home country.

The chart on the page titled "Which is your appropriate vehicle? - Setting up a presence in Japan" offers just one example to help you decide on the right option—please give it a try.

２．Subsidiary vs. Branch Office: Differences in Establishing Representative Offices

There are advantages and disadvantages to operating in Japan as either a "subsidiary" or a "branch" of a foreign corporation.
Determining which option is more appropriate depends on the specific nature of the company's business. We have compiled a comparison of the two; let us examine their respective pros and cons.
※ Here are the differences between a subsidiary, a branch office, and a representative office.

３．Reasons, situations, and stages for establishing a Japanese subsidiary

What is the reason behind your company (a foreign corporation) wishing to establish a subsidiary in Japan? Is it because you decided to take direct control of sales activities that had previously been handled by local agents and felt the time was right for this transition? Or is it because, after conducting a feasibility study through a representative office to assess business potential, you concluded that operations were viable and began considering incorporation? Alternatively, is there another reason?

We will assist you in establishing a subsidiary by first discussing your reasons for needing a Japanese subsidiary and your future business plans, and then working with you to determine the most appropriate business structure (a representative office, a branch, or a subsidiary).

At that time, upon request, we can also propose a structure designed to optimise your global tax burden, taking into account the relationship between the tax systems of your home country and Japan.

４．The difference between a KK and a GK.

We have compiled a comparison on this page of our website. If the parent company is not a U.S. corporation, we generally recommend establishing a *Kabushiki Kaisha* (Japanese joint-stock company).

５．Reasons why a KK is recommended

From the perspective of Japanese stakeholders—such as business partners, financial institutions, and job seekers—a *Kabushiki Kaisha* (joint-stock company) is viewed as more trustworthy due to its clearly defined operational standards.
Conversely, the very features that characterize a *Godo Kaisha* (limited liability company)—such as flexibility in profit distribution (unlike a *Kabushiki Kaisha*, where profits must be allocated based on capital contribution ratios, a *Godo Kaisha* can determine distribution freely via its articles of incorporation, regardless of investment share), the absence of a requirement for an annual general meeting of shareholders, and the lack of fixed terms for officers—appear to be the reasons why a *Kabushiki Kaisha* enjoys greater external credibility.

６．Cases where a GK is more advantageous and why.

In the case of a Japanese subsidiary of a U.S. entity (such as an LLC), the *Godo Kaisha* (GK) structure is often preferred if the U.S. parent company wishes to utilise U.S. tax law provisions to benefit from pass-through taxation in the United States.

1) If pass-through taxation is achieved by making the appropriate election on IRS Form 8832, losses incurred by the Japanese subsidiary can be treated as losses of the U.S. parent company for tax purposes.

2) Effectively, the scenario described in (1) yields the same result as incorporating a Japanese branch in terms of loss absorption. The difference in tax treatment compared to a branch is that there is no requirement to attach the U.S. parent company's financial statements to the tax return (whereas, in the case of a branch, the financial information of the overseas head office must be attached to the tax return).

3) Japanese taxes paid by the *Godo Kaisha* can be claimed as a foreign tax credit in the United States (subject to the parent company's tax position in the U.S.).

※Please verify with the U.S. parent company whether pass-through status is applicable in the United States. (Our firm does not provide services regarding U.S. tax law; however, we can introduce you to a Japanese U.S. Certified Public Accountant with whom we partner.)

7. Procedures for establishing a wholly owned subsidiary of a foreign corporation.

This outlines the procedure for establishing a wholly owned subsidiary of a foreign corporation.

8. Frequently Asked Questions (FAQ)

Q１　Which company structure do you recommend, a KK or a GK?
A１　一Generally, for US corporations, a limited liability company (Godo Kaisha) is more advantageous from a U.S. tax perspective. This is because if you elect pass-through taxation on IRS Form 8832, the Japanese subsidiary's losses can be treated as the US parent company's losses for tax purposes. If it is not advantageous under US tax law, we recommend a KK because joint-stock companies are considered more trustworthy from a third-party perspective in Japan. Please refer to this page for more information.

Q２　What documents are required when a foreign parent company becomes a shareholder?
A２　In your home country, you will need to prepare an Affidavit (sworn statement) in the presence of a Public Notary, certifying the existence of the company and its officers in accordance with the national company law. The method of obtaining this varies from country to country. Our team's juridical scrivener handling the procedure will contact the relevant person in your home country directly to gather the necessary documents.

Q３　We don't have sufficient time to obtain the necessary documents for our parent company to become a shareholder in a foreign country. Is there a simpler way to do this?
A３　Another method involves establishing a company with a Japanese resident as the founder and initial 100% shareholder, and then immediately transferring 100% of the shares to the foreign parent company on the same day as the company's establishment, making the foreign parent company the 100% owner. In this case, the capital is borrowed from the foreign parent company during the establishment process, and the loan is offset against the shares upon immediate transfer on the establishment date, thus making the new shareholder. Using this method eliminates the need for the "documents required when a foreign parent company is the owner," which must be obtained in the home country, thus shortening the establishment process by the number of days required to obtain those documents.
However, in the shareholder history of the Japanese subsidiary, the first 100% shareholder will be a resident of Japan, and the second shareholder will be the parent company in its home country. If there are no issues with this history, it may be acceptable to start with a Japanese resident as the 100% shareholder. If you are unwilling to have this history recorded, we will have you obtain the "Documents Required for Foreign Parent Company Investment" in your home country.
Furthermore, if you wish to appoint a foreign resident, such as an officer of the parent company, as an officer of a Japanese subsidiary, you will need their personal identification, and there is no easy way to do so.

Q４　How is the capital contributed?

A４　The capital will be transferred to the personal bank account of the representative or employee who resides in Japan.

Please note that when establishing a Japanese subsidiary of a foreign corporation, the directors may not have a bank account in Japan. In such cases, our firm has a proven track record of participating in the establishment process as a custodian of the capital.

(According to Ministry of Justice Civil and Commercial Affairs Notice No. 41, dated March 17, 2017, "If it is clear that all of the founders and initial directors do not have an address in Japan, the account holder of the bank account may be someone other than the founders and initial directors.").

Q５　Are there any requirements for an address that can be used as the registered address of the head office?
A５　Any location is fine as long as you can register your company with the Legal Affairs Bureau through your lease agreement. If your parent company in your home country wants to rent an office in a glamorous location to promote itself, then you would choose a tenant in a major commercial building. Even a virtual office can be used as the head office address if registration is possible. Where you choose to set up your head office depends on your parent company's business policy in your home country, and the options will vary depending on the actual operations required after the business starts. It all comes down to the nature of your business and your business plan.

Q６　Is it okay to use a virtual office as the company's main office?

A６　The address you choose will depend on how you plan to open a bank account. If you have a legitimate business and can effectively demonstrate its existence, a virtual office is acceptable. However, if establishing a legitimate business takes time and you need a certain amount of physical space to start your business, renting an apartment, such as a SOHO (small office/home office) space, is another option.

Q７　Can a director of the parent company (residing overseas) also become a director of the Japanese subsidiary?

A７　日Even if you don't reside in Japan, you can become an officer of a Japanese subsidiary. However, if it's better from a business perspective to have a representative residing in Japan, that should be done.
In that case, there will be restrictions on the payment of incentive bonuses, which are a typical benefit of foreign-owned companies, so this point must also be considered when making a decision.
For more information on "Incentive bonuses for executives of Japanese subsidiaries," please refer to this page on our website.

Q８　Please explain the process and timeframe for establishing a corporation.

A８　The time required will vary depending on who the initial shareholders are (i.e., whether or not you need to obtain the necessary documents from the foreign parent company). Once all the necessary documents are gathered, our team's judicial scrivener will prepare the registration documents in about two weeks and submit them to the Legal Affairs Bureau.
Generally, it takes about 2-3 weeks from the time you answer the questionnaire until all the necessary documents are gathered. The company establishment date is the date the documents are submitted to the Legal Affairs Bureau, but the establishment is complete only when the Legal Affairs Bureau has finished its checks and issued the certified copy of the registration. Depending on how busy the Legal Affairs Bureau is, this can take about 1-4 weeks. Once the company establishment process begins, the judicial scrivener in charge will be asked to find out the current level of busyness at the Legal Affairs Bureau.
Please wait approximately 4 to 8 weeks for the company to be established.

Q９　Please explain the steps involved in opening a corporate bank account.
A９　Opening a corporate bank account has become increasingly stringent due to anti-money laundering regulations aimed at preventing money laundering and other crimes. The process varies depending on the extent of business activity (e.g., the actual office location, whether the business has started, the number of employees, etc.). We provide advice on opening a bank account after the company has been established and assist with the application process at various banks. For more details, please refer to this page on our website. As of April 2026, it takes approximately two weeks to one month to open a bank account.

Q10　Can you handle all the tax, accounting, payroll, and social insurance matters for the subsidiary after its establishment?

A10　Our firm handles tax accounting and payroll calculations. Social insurance and labour insurance are handled by our partner social insurance and labour consultant. We also have partnered judicial scriveners for registration matters, administrative scriveners for visa applications, and lawyers for legal consultations who can communicate in English, so you can consult with us through our office as your point of contact.

Q11　Is it possible to communicate with the CFO or controllers at the foreign headquarters in English?

A11　All of our staff, including our partner experts, are fluent in English (including web conferencing).

Before deciding to establish a Japan subsidiary

You seem to be considering a subsidiary structure as your Japanese business base. Why a subsidiary rather than a branch office? Is your tax planning in your home country sufficient? Are you truly sure this is the right approach?

*If you still have concerns, please consult us.

For US parent companies, please also refer to this (Joint Stock Company vs. Limited Liability Company).