Complete Guide to Foreign Companies Entering Japan: Differences and How to Choose Between Subsidiary, Branch, and Liaison Office

Royal Office Official
Jan 12
5 min read

Are you considering expanding your business into Japan but confused about questions like "Which form should I choose to start with?" "What’s the difference between a subsidiary and a branch?" or "How much capital do I need for a visa?"

When foreign companies enter the Japanese market, they mainly have three forms to choose from. Each differs greatly in characteristics, advantages, disadvantages, and the difficulty of establishment. This guide explains everything in simple language with concrete examples, with a special focus on clarifying the capital requirement for the "Business Manager Visa" under the new policy effective October 2025. It’s structured to be easy for beginners to understand—get tips to select the optimal entry form for your company!

First, the Basics: What Are the Three Entry Forms?

Below are the three main ways for foreign companies to enter Japan. We’ll focus on explaining "what each can do," "what they can’t do," and "when to choose each."

Liaison Office: A "Stepping Stone" for Market Research

A liaison office is ideal for the preparatory phase before launching full-scale business operations. Choose this if you want to "explore the Japanese market first without being certain about full entry."

✅What You Can Do:

Market research (e.g., studying Japanese consumer habits)
Information gathering (e.g., finding potential business partners)
Advertising and promotion (e.g., raising awareness of your products in Japan)

❌What You Can’t Do:

Direct sales, contracts, or revenue-generating activities (e.g., selling products or providing paid services)


✨Key Points for Beginners:

・No legal personality (not recognized as an independent company under Japanese law)
・No capital or registration procedures required (start with 0 yen!)
・Cannot open a bank account or rent office space under the liaison office name (use your headquarters’ name or a resident’s personal name)
・Low credibility, but the simplest in terms of procedures—perfect for "testing the waters" before full entry.

2．Branch Office: Operate as Your Headquarters’ "Japanese Outpost"

A branch office functions as the "Japanese arm" of a foreign company. Choose this if you want to conduct ongoing business in Japan while maintaining decision-making authority at your headquarters.

✅What You Can Do:

Conduct business freely (e.g., selling products, providing services)
Open a bank account and rent office space under the branch name
Implement headquarters’ policies directly (maintain consistent management)

❌Things to Note:

No legal personality (treated as part of the foreign headquarters under law)
Liabilities from branch issues (e.g., breach of contract) fall directly on the headquarters
If the headquarters has a large capital amount (e.g., over 100 million yen), corporate inhabitant tax in Japan will be significantly higher


✨Key Points for Beginners:

・Simple setup procedures (no capital required!)
・Can be established quickly (streamlined registration)
・Slightly complex accounting: Tax returns must be consolidated with the headquarters, so you’ll need a tax accountant who can communicate in foreign languages.

3．Subsidiary: Establish an Independent "New Company" in Japan

A subsidiary is set up as an independent Japanese legal entity separate from the foreign headquarters. It’s the most recommended form for companies aiming to "operate stably in Japan long-term."

There are two types of subsidiaries:

Kabushiki Kaisha (KK): Stock Company → Traditional with high credibility
Godo Kaisha (GK): Limited Liability Company → Attractive for low costs and simple operations

✅What You Can Do:

Operate business completely independently (make decisions freely under Japanese law)
Open a bank account, rent real estate, and sign contracts under the subsidiary name
Limit the headquarters’ liability to the amount of capital invested (peace of mind!)

❌Things to Note:

Capital is required (you can set up a subsidiary with as little as 1 yen, but ⚠️ under the new October 2025 policy, 30 million yen or more is mandatory to obtain a "Business Manager Visa")
Most complex setup procedures among the three forms


✨ Key Points for Beginners:

・High credibility (recognized as an independent Japanese legal entity, so easy to gain trust from local partners)
・Ideal for long-term business expansion
・Two types to choose from (details in the next chapter!)

Choosing a Subsidiary: Kabushiki Kaisha (KK) vs. Godo Kaisha (GK)

If you decide to set up a subsidiary, you’ll need to choose between a "Kabushiki Kaisha (KK)" and a "Godo Kaisha (GK)." The simple comparison table below makes it easy for beginners to decide!

Comparison Item	株式会社（KK）	合同会社（GK）
Operational Difficulty	Slightly complex (annual financial disclosure required)）	Simple (no annual financial disclosure required)
Credibility	Very high	Moderate
Decision-Making	Requires a shareholders’ meeting	Approved by investors’ agreement
Profit Distribution	Proportional to capital investment	Flexible
Fundraising	Easy (attracts investors easily)	Slightly difficult

For Beginners: How to Choose Between KK and GK

Choose KK If:
・You want to gain trust from Japanese partners or investors
・You may need to raise funds in Japan in the future
・You aim for large-scale business expansion

Choose GK If:

　　・You want to keep setup and operational costs low

　　・You need quick decision-making (optimal for 100% headquarters-owned subsidiaries)

　　・You want simple operations (reduce accounting hassle)

How to Choose the Right Entry Form (Based on Your Company’s Goals)

Your Company’s Situation/Goals	Optimal Entry Form
Only want to research the Japanese market (no plans to sell yet)	Liaison Office
Want to implement headquarters’ policies directly (simple setup with no capital)	Branch Office
Aim for stable long-term operations (prioritize credibility)	Subsidiary (KK)
Want low costs, simple operations, and quick decision-making	Subsidiary (GK)
Want to obtain a "Business Manager Visa" in Japan	Subsidiary (⚠️ New Policy: 30 million yen capital mandatory)

Simple Checklist for Choosing an Entry Form

Finally, here’s a checklist of questions to help you select the right form. Just match your answers to the options below!

Question	Liaison Office	Branch	Subsidiary (KK)	Subsidiary (GK)
Want to generate sales in Japan immediately?	❌	✅	✅	✅
Want to avoid upfront costs?	✅	✅	❌	△
Plan to operate long-term in Japan?	❌	△	✅	✅
Want to maintain headquarters’ decision-making authority?	₋	✅	❌	❌
Need to gain trust from Japanese partners?	❌	△	✅	△
Want simple operations?	✅	△	❌	✅
Want to obtain a "Business Manager Visa" in Japan?	❌	❌	✅	✅

Summary: Core Takeaways for Beginners

Testing the waters → Liaison Office (0 yen cost, simple procedures)
Maintaining headquarters’ policies → Branch Office (no capital required, quick setup—note liability falls on headquarters)
Stable long-term operations → Subsidiary
- Prioritize credibility/fundraising → Kabushiki Kaisha (KK)
- Low costs/simple operations → Godo Kaisha (GK)

Success in entering Japan depends on aligning your "goals" with your "resources" (budget, personnel, time)! For details on the new policy or step-by-step setup procedures, we recommend consulting a professional administrative scrivener or lawyer to save time and effort.

We wish you every success in the Japanese market!