Incorporation

Question:

Will there be any problems if I register my home address as the address for my Japan subsidiary company or branch office?

Answer:

Using one’s home address as the head office address is allowed. However, if engaging in business that requires the application/approval of a “business manager” visa, one cannot use their home address as the head office address.

Explanation:

Regarding Lease Agreements

Generally speaking, a head office is usually an establishment (such as an office or shop) where business occurs; however, there is no explicit requirement that states that the head office establishment should also be the same establishment where business occurs. As such, there is no problem with using one’s home address as the head office.

Nevertheless, it is important to note that for home addresses under a lease or rent agreement, if the agreement (contract) enforced specifies the use of the home as “for residential purposes only” or “not for business purposes”, then in principle, it is not allowed to be used as a head office. However, if there is a special agreement between the lessor and lessee allows the lessee to use the property for business purposes (regardless of whether the term “residential” is used in defining the use of the property in the lease contract). Still, it is necessary to confirm with the property owner when planning to use the leased property for business.

Regarding the “Business Manager” Visa Requirements

This visa is for foreigners who will engage in the management or operation of a business in Japan. One of the issuance requirements of the business manager visa is the presence of an establishment within Japan. For the definition of the term “establishment”, we refer to Section 2 of the General Rules of the Japan Standard Industrial Classification.

General Rules of the Japan Standard Industrial Classification

Section 2　Definition of Establishment

For the purpose of the Japan Standard Industrial Classification, establishment refers to the unit of location of economic activities and shall in principle comply with the following requirements.

(1) Economic activities are conducted under a single business principal, occupying a certain place or plot of land.
(2) Production or supply of goods and services is conducted continuously with personnel and facilities provided for this purpose.

Source: Ministry of Internal Affairs and Communications: General Rules of the Japan Standard
Industrial Classification http://www.soumu.go.jp/main_content/000323744.pdf

Regarding (1) above, a certain place or plot of land used where economic activities are conducted requires the presence of equipment or facilities as well as signage/indicators that show the existence of the establishment. As for the requirement of “continuous conduction of the production or supply of goods and services” stated in (2), short-term lease agreements such as those on a monthly-basis for the home to be used as the head office agreement, it will not be approved as a business establishment (see Table 2-1)

Table 2-1 ＜Examples of cases where residences are allowed to be registered as a business establishment and cases where they are not allowed＞

Allowed cases	① The entrances to the residential part and the business part of the establishment are different ② There is signage on the entrance of the establishment shows the company name ③ Various office equipment is set-up in the establishment
Not allowed cases	① No clear signage on mailbox, entrance, and the like that clearly shows location of business establishment ② No equipment or facilities necessary for the operation of business are set-up

(Note) This topic is further discussed from Q89 to Q96.

When foreigners engage in the management or operation of a business in Japan, it is necessary for them to acquire the business manager visa. While there is no problem with actually using one’s residence as the head office location, it is not considered a business establishment when applying for the business manager visa. Therefore, when considering on applying for a business management visa, unless the residence does not meet the requirements to be recognized as a business establishment, it will not be accepted as a head office location.

Regarding Licensing Requirement(s) for Approval

Depending on the business, there may be certain necessary procedures (such as obtaining permits and licenses) that needs to be done with local government units prior to commencing business in Japan. Such requirements vary according to industry, but oftentimes they require an establishment where business will be conducted. If unable to fulfil such requirements, one will not be allowed to conduct business at all.

When planning to use one’s residential address as the head office address, it is therefore necessary to check beforehand what requirements and licenses/permits there are prior to conducting business.

Since the requirements vary between local government units, confirm with the appropriate offices.