How to Set Up Business in JapanCost Estimation

Basic Premises of Model Case

  • The model case is based on the most common type of new business operation established by foreign firms entering the Japan market with an initial staff of two: one person from the foreign firm (who typically serves as managing director) and a Japanese national (manager-level person).
  • The company makes use of a temporary office to establish a corporation or branch office, and then moves into a permanent office (rented).
  • Japan representative to stay at a hotel or a monthly-contract apartment during the preparation period, then move to a permanent residence upon completion of company registration.
  • Applications and notifications completed by professional service providers.
The following is an example case. You start setting up a company with two - person staff a staff of two people: a foreign national who is a managing director and a Japanese who is a manager recruited through a staff agency. After staying at a temporary office for three months,the company relocates to a permanent office in central Tokyo. Approximate floor space of the office is 50 sq.m. After a temporary stay at an extended-stay apartment for three months,the foreign managing director relocates to permanent housing in central Tokyo. Approximate floor space is 60 - 70 sq.m.

Initial Costs in Tokyo

Subsidiary company: About US$120,000~US$130,000
Branch: About US$77,000~US$87,000

For the establishment of a Japanese corporation or a branch, the costs are generally as follows. See below for details.

1. Company establishment and tax notices

Subsidiary company: About US$9,000 , Branch: About US$ 6,000(unit: $US; 1US$ =JPY114.09)

Details Subsidiary Company
(Kabushiki Kaisha) 		Branch Criteria/Remarks
Costs to register
company 		2,200 900 Registration and license tax, stamp tax for article of incorporation, obtaining official copy etc.
Name seals for
company and personal use 		300 300 Price for standard kit (4 company seals：registered seal, square seal, seal used for bank transactions, a rubber stamp) at major seal chain store in Japan.
Professional fees for company
registration and notifications
(through proxy) 		2,600 2,200 Includes fees to prepare affidavit(s).
Notification to the Bank of
Japan prior to investment
(through proxy) 		900 700 Depends on the type of business and job discription.
Notification of the execution
to the Bank of Japan 		400 N/A
Tax notices (through proxy) 900 900
Social and laber insurance notices
(through proxy) 		1,300 1,300
Subtotal 8,600 6,300

2. Paid-in capital

Subsidiary company: About US$44,000 , Branch: N/A(unit: $US; 1US$ =JPY114.09)

Details Subsidiary Company
(Kabushiki Kaisha) 		Branch Criteria/Remarks
Paid-in capital 43,800 N/A Although establishment with a capital of 1 yen is possible under the Companies Act of Japan, you need to invest 5 million yen or more if you are entitled to a "Business Manager" visa status.
＊The Tokyo Metropolitan Government, Fukuoka City, Niigata City, etc. have started accepting applications for the "Startup Visa Program" (Entrepreneurial Incentives for Foreigners). (For more information, see “How to Set Up Business in Japan:Section 2. Promoting acceptance of foreign entrepreneurs.”)
Subtotal 43,800 N/A

3. Obtaining visas

About US$1,800~US$3,100 , Branch: N/A(unit: $US; 1US$ =JPY114.09)

Details Cost for subsidiary company and branch Criteria/Remarks
Temporary visitor visa (short-term stay visa) 0 Japan has taken measures concerning the Visa Exemption Arrangements with 68 countries and regions (as of November 2021). But currently, in some countries/regions, visa exemption measures have been suspended for the time being, as a border measures against novel coronavirus (COVID-19). Please see theMinistry of Foreign Affairs websiteExternal site: a new window will openfor details.
Certificate of eligibility through proxy (work or long-term stay visa) 1,800~3,100 Commission to professional (proxy) varies depending on type of visa.
Subtotal 1,800~3,100

4. Setting up an office

About US$40,000~US$49,000(unit: $US; 1US$ =JPY114.09)

Details Cost for subsidiary company and branch Criteria/Remarks
Rent (3 months) for temporary office
(includes security deposit) 		0~8,800 Assuming the use of a temporary office until finding an official location, for a period of up to three months.
Rental fees and required deposits vary among private companies and public organizations that offer such facilities. JETRO IBSCs provide free temporary office space (for up to 50 business days).
Monthly rent 3,400 A typical rent for a 50 sq.m office in Tokyo's Minato ward. SeeComparative Survey of Investment-Related Costsexternal linkfor details. Security deposit is equivalent to ten months' rent.
Security deposit (approximately 10 months of rent) 33,610
Real estate brokerage fee (equivalent to one month's rent) 3,400
Subtotal 40,400~49,200
  1. *

    In addition to the above, it costs about 0.5 million yen to purchase office furniture and office automation equipment, communication expenses, etc

5. Hiring local personnel

About US$20,000(unit: $US; 1US$ =JPY114.09)

Details Cost for subsidiary company and branch Criteria/Remarks
Fee paid to recruiting agency for hiring a manager 20,100 Equivalent to 35% of expected first year salary (Manager class in the non-manufacturing sector). SeeComparative Survey of Investment-Related Costsexternal link for details.
Subtotal 20,100

6. Setting up housing (for foreign national)

About US$8,000(unit: $US; 1US$ =JPY114.09)

Details Cost for subsidiary company and branch Criteria/Remarks
Monthly rent (includes maintenance fee) 1,400 Based on average rent for 41.31 sq.m apartment in Tokyo's Bunkyo ward. SeeComparative Survey of Investment-Related Costsexternal link for details.
Deposit two month's rent, key money two month's rent. 5,500 There has been a trend towards reduced or no deposit and key money in recent years.
Real estate brokerage fee (equivalent to one month's rent) 1,400
Subtotal 8,300
  1. *

    See below for commentary page.

Reasonable business costs of Japan compared to major cities of the world

Comparison of business costs in major cities(Tokyo = 100)

Office Rent

Tokyo Osaka Nagoya Yoko
hama 		Kobe Beijing New York Hong Kong London San
Fran
cisco 		Singa
pore 		Paris Seoul
100 74 111 54 34 241 227 164 118 88 110 97 73

Personnel Expenses (Engineer in Manufacturing)

Tokyo Osaka Nagoya Yoko
hama 		Kobe Beijing New York Hong Kong London San
Fran
cisco 		Singa
pore 		Paris Seoul
100 93 90 108 113 33 213 69 152 235 75 179 67
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    You can download investment-related cost data from 111 cities worldwide from JETRO’s Comparative Survey of Investment-Related Costs

(As of November 2021)

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