For a freign company, establishing a representative office is the simplest way to have a businesslocation in Japan. The advantages of having a representative office are as follows.
・Official registration of the office is not required by the corporate law.
・The notification of direct inward investment is not required by
The Bank of Japan except for in certain industries.
・Payment of corporate tax is not required because a representative
office is not intended for sales activities and consequently, any
related report for tax purposes is not necessary.
In addition, the following facts may be useful to know, although
they are not necessarily advantages.
・Hiring a local Japanese employee is not required.
・An ordinary saving account is available with a bank under a name
which is not exactly an individual name nor a corporate name (for
example, “XXX Smith, YYY Corporation’s Representative Office in
Japan”).
The disadvantages of a representative office are as follows:
・Sales activities are not allowed in Japan.
・To have a permanent facility is not allowed in Japan.
Taking the above facts into consideration, what kind of foreign
companies will benefit from having a representative office in Japan?
A foreign company tends to decide to have a representative office
in Japan if it needs to have an office in Japan in order not for
sales activities but for the activities such as offering information
to its headquarters in the home country, market research, basic
research, and buying and managing assets for the headquarters.
For a company which intends to conduct marketing research for the
moment to see the Japanese market but start sales activities in
Japan in the future, one option is that such company establishes
a representative office initially and then registers such office
as its Japan branch or Japanese corporation upon commencement of
sales activities.
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