Should a foreign company open a branch or a subsidiary in Japan?
A branch is a registered extension of the foreign parent company without separate legal personality, while a subsidiary such as a KK or GK is a separate Japanese legal entity. The choice affects liability, tax treatment and how the business is perceived by Japanese banks and clients.
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How it works
A branch is registered by filing details of the foreign company and appointing a representative in Japan, and its profits are generally taxed as part of the foreign company's Japan-source income. A subsidiary is incorporated as a new Japanese company, files its own accounts, and its liability is generally separated from the parent.
Commonly mixed up with
A branch is sometimes assumed to shield the parent company from Japanese liability in the same way a subsidiary would. A branch does not have separate legal personality, so the parent company remains directly responsible for the branch's obligations.
Should a foreign company open a branch or a subsidiary in Japan?
| Knowledge, Tokyo | Business and finance |
|---|---|
| Short answer | A branch is a registered extension of the foreign parent company without separate legal personality, while a subsidiary such as a KK or GK is a separate Japanese legal entity. The choice affects liability, tax treatment and how the business is perceived by Japanese banks and clients. |
| How it works | A branch is registered by filing details of the foreign company and appointing a representative in Japan, and its profits are generally taxed as part of the foreign company's Japan-source income. A subsidiary is incorporated as a new Japanese company, files its own accounts, and its liability is generally separated from the parent. |
| Commonly mixed up with | A branch is sometimes assumed to shield the parent company from Japanese liability in the same way a subsidiary would. A branch does not have separate legal personality, so the parent company remains directly responsible for the branch's obligations. |
| Last reviewed | 2026-08-08 |
Short questions
- Which structure is faster to set up?
- Timelines depend on the specifics of each filing, and both require registration with the Legal Affairs Bureau.
- Does a branch pay Japanese tax?
- A branch is generally taxed on its Japan-source income.
- Can a branch later become a subsidiary?
- A foreign company can incorporate a separate subsidiary at a later stage.
- Does a subsidiary limit parent company liability?
- A subsidiary is a separate legal entity, which generally separates its liabilities from the parent.
- Where can I find guidance comparing the options?
- The Japan External Trade Organization publishes guidance for foreign companies entering Japan.
Sources
More in this track
- What is the difference between a KK and a GK company in Japan?
- What are the main steps to incorporate a company in Japan?
- When does a business have to register for Japanese consumption tax?
- How does corporate tax work for a company in Japan?
- What must an employer set up before hiring staff in Japan?
- What is Japan's qualified invoice system for consumption tax?
- What support exists for foreign companies investing in Japan?
- What should a new business know about office space in Tokyo?
- What business support does the Tokyo Metropolitan Government provide?
These pages explain how the rules work and link the authority that owns them. They are not legal, tax or immigration advice, and amounts and thresholds change, so open the source before you act.
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