Foreign companies can open a branch or a subsidiary in Japan when they decide to expand on the market. The representative office, branch, and subsidiary are the three manners in which a foreign legal entity can operate on the Japanese market.
Because one of the most important differences between the branch and the subsidiary lies in the liability of the foreign company, our team of lawyers in Japan can give you complete legal advice on the most suitable type of structure.
Main differences between the branch and the subsidiary in Japan
The table below highlights the main differences that exist between the branch and the subsidiary.
| Trait | Branch | Subsidiary |
| Liability | The foreign company abroad is fully liable for its branch’s debts in Japan as the branch is not a separate legal entity. | The subsidiary is a separate legal structure from the branch and has the same requirements as a resident company. |
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Minimum capital
|
There is no mandatory minimum share capital for the branch in Japan. |
The subsidiary requires a minimum share capital and one of our lawyers in Japan can give you more details.
|
| Taxes | The branch is taxed on its business profits derived from Japan. |
The subsidiary is taxed on its worldwide income.
|
| Other requirements |
The branch needs a bank account and a local address.
|
The subsidiary needs to have a bank account, a registered office in Japan and at least one company director.
|
Our team of attorneys in Japan can help you with more details information about each of the defining characteristics.
Company formation in Japan
The two business forms, the branch, and the subsidiary are different in terms of corporate status and this means that the registration and reporting requirements will differ.
When choosing the most suitable way to set up the business operations in Japan, foreign business owners should consider both the limits of the branch its benefits and the advantages in terms of liability offered by the subsidiary.
Our law firm in Japan offers complete company incorporation services and you can contact us to request a consultation from one of our attorneys.