Economic & Business Laws — Japan

Economic and Business Laws for Immigrants in Japan

Japan's legal framework for foreign residents involves several distinct systems—immigration status, business registration, investment regulation, and labor protections—that interact in ways immigrants often find confusing. Below is a structured overview current as of general knowledge; verify specifics with Japan's Immigration Services Agency (ISA), JETRO, or a licensed immigration lawyer (gyoseishoshi) before making decisions, as visa categories and thresholds change periodically.

1. Right to Work by Visa Type

Japan does not have a single "work visa"—it issues status-specific residence permits tied to activity type.

Work-Authorized Statuses

• Engineer/Specialist in Humanities/International Services: Most common for office professionals, engineers, translators; tied to a specific employer and job description
• Highly Skilled Professional (HSP): Points-based system; offers longer visa duration, work flexibility, faster PR eligibility (as fast as 1 year), and spousal work rights
• Specified Skilled Worker (Tokutei Ginou): For 14 designated industries (construction, agriculture, nursing care, food service, etc.); Type 1 (max 5 years, no dependents) and Type 2 (renewable, dependents allowed, path to PR)
• Business Manager: For those starting/managing a company in Japan
• Intra-company Transferee: For employees transferred from overseas branches

Limited or No Work Rights

• Student visa: Permits work only with a "Permission to Engage in Activity Other Than That Permitted" (shikaku gai katsudo), capped at 28 hours/week (40 hours during long school breaks)
• Dependent (spouse/child of work-visa holder): Similarly requires permission, capped at 28 hours/week unless upgraded to independent work status
• Temporary Visitor: No work permitted under any circumstances
• Technical Intern Training: Restricted to approved training placements only; historically criticized for exploitation (see labor section below)

Unrestricted Work Rights

• Permanent Resident, Spouse/Child of Japanese National, Long-Term Resident: No restrictions on employer or job type
• Specified Skilled Worker Type 2 and HSP holders after conditions met: broader flexibility

Key rule: Working outside your permitted scope of status is illegal and can result in deportation, even if the employer initiated it.

2. Starting a Business as a Foreigner

Business Manager Visa Requirements

• Minimum capital investment of ¥5 million (~$33,000-35,000, fluctuates with exchange rate) OR employment of 2+ full-time staff in Japan
• Must secure a physical office (virtual offices/home addresses often rejected)
• Business plan must show viability; renewal requires demonstrating actual operations, revenue, and often profitability
• Initial visa often granted for 1 year, requiring renewal scrutiny

Alternatives

• Startup Visa (local government programs): Tokyo, Fukuoka, and other municipalities offer 6-month pre-status visas allowing entrepreneurs to establish the business before meeting full capital/staffing requirements
• J-Startup visa (national-level pilot programs expanding this concept)

Company Structures

• Kabushiki Kaisha (KK): Standard corporation, more credibility, higher setup cost (~¥240,000+ in registration taxes)
• Godo Kaisha (GK): Japan's LLC equivalent, cheaper setup (~¥60,000+ registration tax), less prestige but increasingly used by foreign SMEs and even Google Japan, Amazon Japan historically used this structure

Registration Steps

• Reserve company name and define articles of incorporation
• Notarize articles (KK only)
• Deposit capital in a Japanese bank account (chicken-and-egg problem for new arrivals—see banking section)
• Register with the Legal Affairs Bureau (Homukyoku)
• Register for taxes, social insurance, and pension

Verify current capital deposit rules—historically foreigners without residency needed a resident representative to open the initial capital account, though this has loosened in some jurisdictions.

3. Foreign Investment Restrictions

Foreign Exchange and Foreign Trade Act (FEFTA)

Governs most inbound investment; generally liberal, but with prior notification requirements for:

• National security-sensitive sectors: weapons, aircraft, nuclear, dual-use technology, cybersecurity, and (since 2020 amendments) semiconductors and certain critical infrastructure
• Designated industries: agriculture, fisheries, oil, leather/tanning, broadcasting (media ownership caps foreign voting rights at 20%), and some utilities

Investment Thresholds

• Acquiring 1% or more of listed companies in designated sensitive sectors triggers prior notification to the Bank of Japan/Ministry of Finance
• Post-2020 amendments tightened scrutiny significantly amid economic security concerns—expect continued regulatory evolution here

General Business Ownership

• No general restriction on 100% foreign ownership of Japanese companies outside sensitive sectors
• Real estate purchase by foreign entities is largely unrestricted (see below)

This area changes with geopolitical conditions—confirm current FEFTA screening lists with JETRO or METI before any acquisition.

4. Property Ownership Rights for Non-Citizens

• No nationality or residency requirement to purchase real estate in Japan—unlike many countries, foreigners (residents or non-residents) can buy land and buildings outright with full freehold ownership
• No visa is granted through property purchase—Japan has no "golden visa" program
• Financing is the main practical barrier: Japanese banks are typically reluctant to issue mortgages to non-permanent residents, non-citizens, or those without long Japan-based income history
• PR holders and long-term residents have significantly better mortgage access
• Some banks (e.g., Prestia/SMBC Trust, Shinsei) have foreigner-friendly mortgage products, though rates/terms may be less favorable
• Property taxes: Fixed asset tax (~1.4% annually) and city planning tax apply regardless of nationality
• Recent scrutiny: 2021 land-use law restricts foreign ownership near military bases and border islands, requiring disclosure/review—a narrow but real exception to the general openness

5. Banking Access for New Immigrants

This is one of the most practically difficult areas for new arrivals.

Common Barriers

• Many banks require a Japanese phone number, which itself often requires a bank account or residence card—creating a circular problem
• Residence card (zairyu card) with 6+ months remaining validity is typically mandatory
• Some major banks historically resisted opening accounts for those with very short residence terms (under 6 months) or tourist status

Practical Path

• Japan Post Bank (Yucho): Traditionally the most foreigner-accessible option, with simplified account opening
• Regional/city banks: Increasingly foreigner-friendly, especially in areas with large immigrant populations
• Digital-first banks (Sony Bank, Rakuten Bank, PayPay Bank): Growing in popularity for English-language support and lower bureaucracy, though a residence card is still required
• My Number (individual taxpayer number) is often requested alongside residence card

For Business Banking

• Corporate account opening is notoriously slow and strict—banks scrutinize business substance, especially for foreign-owned entities, due to anti-money-laundering compliance
• Expect weeks-to-months of processing; having a Japanese co-founder, accountant (zeirishi), or judicial scrivener facilitate the process significantly helps

6. Labor Law Protections for Immigrant Workers

Foreign workers are generally covered by the same core labor laws as Japanese nationals, though enforcement gaps exist for some visa categories.

Core Protections (Labor Standards Act)

• Minimum wage (varies by prefecture—Tokyo ~¥1,163/hour as of recent years; regional minimums lower; verify current rates, revised annually each October)
• Maximum standard working hours: 8 hours/day, 40 hours/week, with overtime premiums (25%+ for overtime, 35%+ for late-night/holiday work)
• Mandatory enrollment in social insurance (health insurance, pension) and labor insurance (workers' comp, unemployment insurance) for most full-time employees, foreign or not
• Paid annual leave accrual rights identical to Japanese workers after 6 months of continuous service

Areas of Particular Concern for Immigrants

• Technical Intern Training Program: Long documented by NGOs, UN bodies, and the US State Department's Trafficking in Persons reports as prone to wage theft, passport confiscation, and excessive debt-bondage-like recruitment fees in home countries. Reforms are ongoing (a replacement "Employment for Skill Development" system was legislated in 2023-2024 to phase in, allowing job transfers—verify implementation status, as this is actively evolving)
• Contract vs. reality mismatches: Some employers list different job duties than actually performed, technically illegal but historically under-enforced for intern trainees
• Language barriers in understanding contracts—no legal requirement for employers to provide contracts in the worker's native language, though best practice guidelines encourage it

Enforcement Resources

• Labor Standards Inspection Offices (Roudou Kijun Kantokusho): Can be contacted regardless of immigration status; retaliation for filing complaints is illegal
• General Union and other labor unions increasingly organize foreign workers, particularly in eikaiwa (English teaching) and service sectors
• Undocumented workers technically retain labor law protections for wages already earned, though reporting violations carries deportation risk—a serious practical deterrent

Union Rights

• Foreign workers have the same right to join or form labor unions under the Trade Union Act, regardless of visa status

---

Key Recommendations

• Before working: Confirm your specific residence status permits your intended work activity—check your residence card's back side, which lists any work restrictions
• Before starting a business: Consult JETRO's free business setup advisory services and a gyoseishoshi lawyer early
• Before major transactions: Confirm current FEFTA screening thresholds with METI, as these have tightened in recent years
• For banking: Japan Post Bank is often the most reliable first step for new arrivals
• For labor issues: Labor Standards Inspection Offices are free, confidential (to a degree), and legally obligated to assist regardless of nationality

All monetary figures, visa category rules, and regulatory thresholds should be verified against current ISA, METI, and JETRO publications, as Japan has been actively revising immigration and investment policy in recent years.

More about immigrating to Japan