Investing in Japan
How to Set Up Business in Japan Initial Cost Estimation: Model Case
Basic Premises of Model Case [Pertinent information]
- 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 complete incorporation procedures to set up joint-stock company or branch office, and then moves into a permanent office (rented).
- The foreign national (managing director) lives in an extended-stay apartment or hotel, then moves to permanent housing in a residential area after completing incorporation procedures.
- The company engages licensed professionals with publicly administered qualifications for a kind of procedures.
Initial Costs in Tokyo
For the establishment of a Japanese corporation or a branch, the costs are generally as follows. See below for details.
Subsidiary company:
About US$ 137,000～US$ 146,000
Note: Click on the links to be taken to the pertinent page.
| Details |
Subsidiary Company (Kabushiki Kaisha) |
Branch | Criteria/Remarks |
|---|---|---|---|
| Costs to register company | 2,230 | 890 | Registration and license tax, stamp tax for article of incorporation, obtaining official copy etc. |
| Paid-in capital | 44,560 | N/A |
Although establishment with capital of 1 yen is possible under the Companies Act of Japan, you need to invest 5 million yen or more if you are in receipt of an "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.”) |
| Name seals for company and personal use | 270 | 270 | 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. |
| Company registration and notifications (through proxy) | 2,230 | 1,780 | Includes fees to prepare affidavit(s). |
| Notification of stock acquisition to the Bank of Japan (through proxy) | 270 | N/A | |
| Tax and social insurance notices (through proxy) | 1,780 | 1,780 | |
| Subtotal | 51,340 | 4,720 |
| Details |
Subsidiary Company (Kabushiki Kaisha) |
Branch | Criteria/Remarks |
|---|---|---|---|
| Temporary visitor visa (short-term stay visa) | 0 |
Not required for citizens of countries with which Japan has visa exemption agreements; View list of 68 countries (as of July 2017) on Ministry of Foreign Affairs website.
|
|
| Certificate of eligibility through proxy (work or long-term stay visa) | 1,780 | Commission to professional (proxy) varies depending on type of visa. | |
| Subtotal | 1,780 | ||
| Details |
Subsidiary Company (Kabushiki Kaisha) |
Branch | Criteria/Remarks |
|---|---|---|---|
| Rent (3 months) for temporary office (includes security deposit) | 0~8,910 |
Assuming use of the temporary office until an official location is found, for a period of up to three months. Rental fees and required deposits vary among the private companies and public organizations that offer such facilities. JETRO IBSCs provide free temporary office space (for up to 50 business days). |
|
| Monthly rent (do not include maintenance fee) | 2,540 | Based on rates for a 50 sq.m office in one of Tokyo's five major districts (Source: "MIKI OFFICE REPORT 2017 June," Miki Shoji). Security deposit is equivalent to ten months' rent. | |
| Security deposit (approximately 10 months of rent) | 25,400 | ||
| Real estate brokerage fee (equivalent to one month's rent) | 2,540 | ||
| Basic office furnishings (desks, chairs, etc.) | 1,160 | New items bought at major office equipment stores. (*) | |
| Basic office equipment (computers, printers, phones, etc.) | 2,940 | New items bought at major electronics retail stores. (*) | |
| Communication costs (basic monthly fee for internet and telephone, internet initial cost) | 210 | Same provider for fixed telephone, cell phone and Internet service. Subscription fee for fixed telephone is not included. | |
| Fire and accident insurance (one-year policy) | 220 | Covers costs for damage to building/office equipment due to fire, lighting/flood and theft. | |
| Subtotal | 35,010~43,920 | ||
(*) Cost-savings is possible through leasing equipment or buying items second hand. Rental serviced offices are generally furnished with desks, chairs and equipment such as telephones.
| Details |
Subsidiary Company (Kabushiki Kaisha) |
Branch | Criteria/Remarks |
|---|---|---|---|
| Fee paid to recruiting agency for hiring a manager | 31,190 | Equivalent to 35% of expected first year salary (JPY 10 million) | |
| Subtotal | 31,190 | ||
| Details |
Subsidiary Company (Kabushiki Kaisha) |
Branch | Criteria/Remarks | |
|---|---|---|---|---|
| Rent (3 months) for temporary housing (in extended-stay apartment) | 4,040 | Assuming residence in temporary housing until a permanent location is found, for a period of up to three months. 20 to 30 sq.m | ||
| Monthly rent (includes maintenance fee) | 2,420 | Based on average rent for 60 to 70 sq.m apartment in Tokyo's Minato district. | ||
| Deposit two month's rent, key money two month's rent. | 9,680 | There has been an increasing trend towards properties that reduce the deposit and key money amounts or do not require them at all. | ||
| Real estate brokerage fee (equivalent to one month's rent) | 2,420 | |||
| Subtotal | 18,560 | |||
Initial costs in areas beside Tokyo
1. Comparison of initial start-up costs for subsidiary in major business areas
(128KB)
* For more information on the business environments of Japan's regions.
*This model case is meant to be only a "guide". The actual costs of setting up a business in Japan vary from company to company (and depend on current economic and business conditions).
2. Reasonable business costs of Japan compared to major cities of the world
(1) Office rent for major cities in Japan is cheaper than that of Hong Kong and London
Office rent comparison in major world cities and Japan (Average annual cost per square foot)
Unit: US$
Note 1: The district for each major world city is as follows. New Delhi (Connaught Place-CDB), Shanghai (Pudong), Tokyo (Marunouchi/Otemachi), New York (Midtown Manhattan), London (Wes End), Beijing (CBD), Hong Kong (Central)
Note 2: The cost of cities in Japan besides Tokyo is calculated by JETRO from the average rent of each business district (May 2017)
Source: “Global Prime Office Rents, March 2017”, CBRE, “Office Report, June 2017,” Miki Shoji
(2) Personnel expenses in Yokohama and Osaka are cheaper than that of New York and Singapore
Comparison of manager wages by city in non-manufacturing industries (monthly)
Unit: US$
Source: Comparative Survey of Investment-Related Costs, JETRO (As of June 28)
(3) Housing rent in Tokyo and Nagoya is cheaper than that of Beijing and Paris
| Rank | City | Rent |
|---|---|---|
| 1 | Hong Kong | 51.2 |
| 2 | Geneva | 39.5 |
| 3 | Yokohama | 38.9 |
| 4 | Osaka | 31.1~38.8 |
| 5 | Singapore | 32.7~37.1 |
| 6 | Beijing | 35.7 |
| 7 | London | 34.1 |
| 8 | Paris | 25.3~30.5 |
| 9 | Tokyo | 26.0~28.6 |
| 10 | Seoul | 23.0~27.4 |
| 11 | Nagoya | 19.9 |
| 12 | Shanghai | 19.0 |
| 13 | New Delhi | 9.9 |
(4) Living cost in Tokyo and Osaka is cheaper than that of Hong Kong and Singapore
| Rank | City | Index |
|---|---|---|
| 1 | Singapore | 120 |
| 2 | Hong Kong | 114 |
| 3 | Zurich | 113 |
| 4 | Tokyo | 110 |
| 5 | Osaka | 109 |
| 6 | Seoul | 108 |
| 7 | Geneva | 107 |
| 7 | Paris | 107 |
| 9 | New York | 100 |
| 9 | Copenhagen | 100 |
(As of July 2017)
