Japan – Self-Employment

How does self-employment work for expats in Japan?

Japan’s immigration framework governs not only where foreign nationals may reside, but also precisely which activities they are permitted to carry out while in the country. What other nations commonly refer to as a “work permit” takes the form in Japan of a Status of Residence (在留資格, Zairyū Shikaku), a classification that dictates whether a person may engage in paid work, pursue study, live with family, or conduct specific categories of business activity.

Any foreign national wishing to receive payment for work must obtain authorisation through a work visa aligned with their particular occupation. Certain groups — permanent residents, long-term residents, and spouses or children of Japanese citizens or permanent residents — are exempt from these restrictions and carry inherent work authorisation. This parallels distinctions drawn in other immigration systems between time-limited leave and open-ended settlement status: the more permanent your standing, the fewer constraints you face.

A common question among foreign residents is whether they can transition to freelance work, take on multiple clients, or operate independently under their existing visa. In short, freelancing is permissible in Japan provided you maintain at least one primary sponsoring employer and confine your freelance activity entirely to the scope permitted by your current visa category.

Operating an independent business or managing a company is a separate matter and is governed by stricter rules — particularly following the sweeping reforms introduced in October 2025. You cannot lawfully run a business while in Japan on a tourist visa or visa waiver; these carry no entitlement to any form of paid activity, including establishing a sole proprietorship. Permissible pathways include the Business Manager visa and status-based visas such as permanent residency, spousal visas, and long-term resident status. Breaching the conditions attached to your visa can lead to deportation or future entry bans.

What are the different self-employment and business structures available in Japan?

Several distinct legal forms are available to independent workers and entrepreneurs in Japan. The most appropriate choice will depend on your objectives, your visa situation, and how much exposure to personal liability and administrative complexity you are prepared to accept.

Sole Proprietorship — Kojin Jigyo (個人事業)

The Kojin Jigyo (個人事業) is the simplest form through which an individual can trade or provide services under their own name without forming a corporate entity. Because a Kojin Jigyo has no separate legal personality, the owner and the business are treated as one — you bear personal responsibility for all contracts, debts, and tax liabilities. This closely resembles the sole trader model in countries such as the UK and Australia, or the auto-entrepreneur arrangement in France, where no corporate shield exists. It is the structure most commonly adopted by freelancers, independent consultants, small traders, remote workers, and content creators.

Godo Kaisha — GK (合同会社)

The Godo Kaisha (GK), introduced in 2006, is Japan’s equivalent of a limited liability company. It is a comparatively modern structure designed with simplicity and adaptability in mind. For foreign founders, the GK’s appeal lies largely in its lower cost and faster formation compared to a KK — there is no requirement for notarisation when establishing a GK, which saves both time and expense. GKs operate without formal shareholder meetings or a board of directors. Those who own and run a GK do so as “members,” similar to an LLC structure, and may manage the entity directly or designate a managing member, reducing ongoing compliance obligations.

Kabushiki Kaisha — KK (株式会社)

The Kabushiki Kaisha (KK) is Japan’s established corporate form, broadly equivalent to a C-corporation or “Co., Ltd.” in other jurisdictions. KKs are the dominant business structure in Japan and are widely regarded as carrying the greatest institutional credibility. Banks, suppliers, and potential clients typically extend more trust to a KK by default. For a foreign founder, opting for a KK can convey a serious, long-term commitment to the Japanese market, which may prove advantageous when negotiating contracts or attracting employees.

Partnership structures and branches

Gomei Kaisha (general partnerships) and Goshi Kaisha (limited partnerships) provide differing degrees of liability protection and management flexibility, though they are rarely selected in practice because of their structural complexity and the unlimited liability that falls on at least some partners. A branch office operating in Japan must designate at least one representative who resides in the country — this person need not be a Japanese citizen but must hold a valid visa and residency status that authorises them to oversee the branch’s activities.

How do you register as self-employed in Japan?

Registering a sole proprietorship is handled directly through your local tax office (Zeimusho) and involves no minimum capital and no government fee. The process is considerably more straightforward than incorporating a company. Crucially, however, you must already hold the correct visa or residency status before you begin — the act of registering does not itself confer any right to work.

1. Confirm your visa eligibility. Sole proprietorship is open only to those with appropriate authorisation: holders of a spouse of Japanese national visa, long-term resident visa, permanent resident visa, or spouse of permanent resident visa; holders of a working holiday visa without work restrictions; holders of a dependent, student, or cultural activities visa who have obtained immigration permission to engage in other activities for up to 28 hours per week; and those with stable contracts with Japanese companies in a field consistent with their visa category, where a sponsoring company is prepared to provide the necessary documentation.
2. Prepare your documents. You will need your residence card (Zairyu Card), your MyNumber (individual identification number), a completed “Notification of Business Commencement” form (開業届, Kaigyo Todoke), and if you intend to use the advantageous Blue Return tax filing system, a completed application for Blue Return status (see the taxes section below).
3. Submit the Kaigyo Todoke to your local tax office (Zeimusho). The business commencement notification must be filed with the tax office within two months of starting your business. Submission can be made in person or through the government’s e-Tax online portal.
4. Switch your social insurance if leaving employment. Moving away from employed status means transferring from Social Insurance to National Health Insurance (Kokumin Kenko Hoken) and National Pension (Kokumin Nenkin). This applies even where you continue working with the same organisation, if the nature of your engagement changes from an employment contract to a service or freelance contract. The switch is handled at your local ward office or city hall.
5. Complete any sector-specific licences. Many sole proprietors work in fields such as IT consulting, translation, writing, teaching, e-commerce, or content creation without additional licensing. That said, regulated professions — including law, real estate brokerage, and medicine — require specific licences or may necessitate a different business structure altogether.
6. Begin filing annual tax returns. As a sole proprietor, you are responsible for self-assessing and reporting your own income through the annual tax return (kakutei shinkoku), since income tax is not automatically withheld from your earnings as it would be under employment. Consult the National Tax Agency (NTA) for current filing deadlines and e-Tax guidance.

There is no government fee to register as a sole proprietor (as of 2025). Always verify current requirements with your local Zeimusho or the NTA’s English-language portal.

How do you set up a company in Japan as an expat?

A widespread misconception is that owning or directing a Japanese company requires Japanese citizenship or permanent residency. In reality, non-residents may legally form a KK or GK — but doing so does not grant any right to work in Japan. Simply appearing on the company register as a director or shareholder does not circumvent immigration requirements. To actively manage and operate your Japanese business, you must hold a Business Manager visa, bearing in mind that the eligibility criteria for this visa were substantially revised in October 2025.

2025 Business Manager Visa requirements

Under the revised rules, which came into force on October 16, 2025, applicants must satisfy the following conditions: capital or total investment of at least ¥30,000,000; at least one full-time employee residing in Japan (excluding the manager); a minimum of three years of management experience or a relevant master’s degree; Japanese language proficiency at approximately B2 level (JLPT N2) — held by either the manager or a full-time member of staff; and a business plan reviewed by an approved professional.

These reforms mean the Business Manager Visa is no longer a realistic option for small solo ventures or freelancers at an early stage of their career. If your aim is to work independently rather than to build a company with employees and substantial capital, this visa route is effectively closed to you under the current framework.

Step-by-step: incorporating a GK or KK

1. Choose your structure. Foreign entrepreneurs generally weigh up the Kabushiki Kaisha (KK) against the Godo Kaisha (GK). Both offer limited liability and are accessible to non-residents, but they differ in formation procedure, cost, governance requirements, and how they are perceived in the marketplace.
2. Choose and verify a company name. The name you select must comply with Japanese naming regulations and must not already be in use. You can check availability through the Corporate Number Publication Site.
3. Secure a registered office address. Every company requires a registered address in Japan. Virtual office services are widely available and are routinely used by newly established businesses.
4. Draft Articles of Incorporation. For a Kabushiki Kaisha, the Articles of Incorporation must be notarised at a Notary Office (公証役場) prior to submission. This requirement does not apply to a Godo Kaisha.
5. Deposit your capital. While the legal minimum capital for both a KK and GK is technically ¥1, a credible amount is needed in practice — and for Business Manager Visa purposes, the threshold is now ¥30,000,000 (as of 2025). Funds should be deposited into a personal account before a corporate bank account is opened.
6. Register with the Legal Affairs Bureau (法務局). Submit your Articles of Incorporation, director and shareholder details, registered address, and registration tax payment. As of December 2024, for a KK: stamp duty on paper Articles of Incorporation is ¥40,000 (waived when using electronic articles); registration tax is ¥150,000 or 0.7% of capital, whichever is greater; certified copy fees are approximately ¥2,000; company seals cost ¥5,000–¥30,000 depending on quality. For a GK, a flat government registration fee of ¥60,000 applies and no notarisation of Articles is required.
7. Open a corporate bank account. Securing a corporate bank account in Japan can be a protracted process for foreign-owned entities without a Japanese resident. Working with a legal representative or, where necessary, using a Japanese partner’s personal account as a temporary measure for holding funds are approaches sometimes taken to navigate this hurdle.
8. Register for tax, social insurance, and employment insurance with the NTA, your local pension office, and the Labour Standards Inspection Office as applicable. All corporations in Japan — regardless of their size — must enrol company officers receiving remuneration and any employees in social insurance.

Engaging a judicial scrivener (司法書士) or administrative scrivener (行政書士) typically adds ¥50,000–¥150,000 in professional fees to the overall cost (as of 2024). Always verify current registration fees with the Ministry of Justice Legal Affairs Bureau and consult JETRO (Japan External Trade Organization) for up-to-date investor guidance.

Can you work as a digital nomad in Japan?

Japan formally introduced its Digital Nomad Visa (Status of Residence: Designated Activities) on April 1, 2024. This created an official channel for location-independent workers — a pathway that had not previously existed and marks a notable departure from the country’s traditionally cautious approach to immigration.

Who is eligible?

The visa is aimed at individuals employed by an overseas corporation or working as a self-employed contractor for foreign clients who wish to remain in Japan while working remotely. Applicants must be nationals of a country or territory that has a tax treaty with Japan and qualifies for visa-exempt entry. As of 2026, more than 50 countries appear on the eligible list, among them the United States, Canada, United Kingdom, Australia, Singapore, South Korea, and Taiwan. The current list should always be confirmed with the Ministry of Foreign Affairs of Japan.

Key requirements

• Income: Applicants must demonstrate an annual income of at least ¥10,000,000 (approximately $67,000–$70,000 USD depending on prevailing exchange rates), assessed against the most recent year’s gross earnings. The requirement is for sustained, active income — not simply a high bank balance.
• Health insurance: You must hold private health insurance covering death, injury, and illness throughout your entire stay. Because Digital Nomad Visa holders are ineligible to enrol in Japan’s National Health Insurance scheme, a policy with substantial coverage limits is a mandatory condition. A minimum coverage amount of ¥10,000,000 is required.
• Duration: The Digital Nomad Visa is granted for six months and cannot be extended. However, applicants may apply again once six months have elapsed following the expiry of their initial visa.
• Family: Visa holders may bring their spouse and dependent children to Japan under the same visa framework, provided individual private health insurance policies are obtained for each family member.

How to apply

Unlike standard work visas, the Digital Nomad Visa ordinarily does not require a Certificate of Eligibility (COE) issued by an immigration office within Japan. Applications are submitted directly to a Japanese Embassy or Consulate in your country of residence. Documents typically required include a valid passport, a completed visa application form with photograph, evidence of income (such as bank statements, tax returns, or employment contracts), proof of remote work arrangements, and a valid insurance certificate.

Limitations to be aware of

Japan’s Digital Nomad Visa is more constrained than equivalent programmes in several other countries, owing to its non-renewable structure and the comparatively high income threshold. It is intended for those who work remotely for foreign organisations and is not well suited to freelancers whose clients are based in Japan. If you do not meet the income or nationality criteria, available alternatives include a standard work visa linked to a sponsoring employer, the Highly Skilled Professional (HSP) visa, or the Startup Visa offered by select municipalities (see below).

What taxes and social contributions apply to self-employed expats and business owners in Japan?

Japan’s tax framework stacks national income tax, local inhabitant tax, enterprise tax, and consumption tax on top of mandatory social security contributions. For the self-employed, who do not benefit from automatic tax withholding at source as employees do, the annual tax return (kakutei shinkoku) is the central mechanism for declaring and settling tax obligations each year.

National income tax

Japan applies a progressive rate structure to individual income, with tax increasing in line with earnings. National income tax rates run from 5% on income up to ¥1,950,000 to 45% on income exceeding ¥40,000,000 (as of 2025 — confirm current brackets with the NTA). A Special Reconstruction Income Tax surtax of 2.1% is levied on top of national income tax, applicable through 2037.

Local inhabitant tax (Juminzei)

Resident tax (jūminzei) is a locally administered levy calculated on the previous year’s income, collected between June and May or payable in four instalments. The rate stands at approximately 10% of taxable income plus a flat per-capita charge. Added to national income tax, the combined effective burden can be considerable — broadly comparable to the combined federal and state tax load experienced in certain other countries.

The Blue Return system

Sole proprietors may apply for Aoiro Shinkoku (Blue Return) filing status, which entitles them to deduct up to ¥650,000 from business income (as of 2025, when filing electronically). This represents a substantial advantage over the standard White Return and is widely recommended. The application must reach your local Zeimusho by March 15 of the current tax year, or within two months of commencing business for new registrants.

Consumption tax (JCT)

Japan’s consumption tax (消費税, Shohizei) currently stands at 10%, with a reduced rate of 8% applying to food and beverages and certain other categories of goods (as of 2025). Businesses are generally exempt from collecting consumption tax in their first two years of operation unless taxable sales exceed ¥10,000,000 in the relevant base period. Refer to the NTA for current thresholds, particularly given the implications of the qualified invoice system (Tekikaku Seikyusho) introduced in October 2023 for sole proprietors working with VAT-registered clients.

Social contributions for the self-employed

Self-employed individuals must join National Health Insurance (Kokumin Kenko Hoken) and National Pension (Kokumin Nenkin) rather than the social insurance scheme that covers employees. The National Pension contribution stands at ¥16,980 per month (¥203,760 per year) as of 2025. National Health Insurance premiums vary by municipality and are calculated on the basis of your prior year’s income — your local city or ward office can provide current rates. Unlike salaried employment, where contributions are split equally between employer and employee, self-employed individuals bear the full cost on their own.

Corporate tax for company owners

Companies pay corporate income tax at both national and local levels. The effective combined rate for small and medium-sized enterprises broadly falls in the 23–34% range, depending on company size and income (as of 2025). A preferential corporate tax rate of 15% applies to SMEs on a portion of their income and has been maintained for at least two years under the 2025 tax reform proposals. Always confirm the current corporate tax position with JETRO’s tax overview or the NTA. Japan maintains tax treaties with more than 70 countries, which may influence how your overseas income is treated — a qualified tax accountant (税理士, zeirishi) can advise on your specific circumstances.

Are there any incentives, grants, or programmes to encourage expat entrepreneurs in Japan?

Japan has been progressively broadening its support for foreign entrepreneurs, with a particular focus on technology, sustainability, and innovation. A range of programmes operates at both national and municipal level.

Startup Visa (スタートアップビザ)

Available in selected cities including Tokyo and Fukuoka, the Startup Visa offers temporary residency of six to twelve months to entrepreneurs who are preparing to launch an innovative business, typically in tech or sustainability sectors. It is designed to provide time for market research, securing investment, and establishing premises before the holder transitions to a Business Manager Visa. Applicants are generally required to obtain endorsement from a designated local authority and to present a credible business plan. Conceptually, this resembles the stepping-stone function of pathways such as the Global Talent visa in other countries — it is an entry point rather than a permanent status. Requirements vary between cities, so prospective applicants should consult the investment promotion authority of their target municipality for current eligibility criteria.

JETRO investment support

JETRO (Japan External Trade Organization) is the national body with responsibility for promoting inward investment. It provides free advisory services covering business establishment procedures, regulatory requirements, and introductions to relevant authorities. JETRO’s “Invest Japan” programme offers practical, no-cost support for foreign entrepreneurs exploring the possibility of establishing a business in Japan — a valuable first port of call before engaging paid legal advisers.

J-Startup programme

The J-Startup programme, run by the Ministry of Economy, Trade and Industry (METI), selects high-potential startups to receive targeted support, including preferential access to government procurement, introductions to investors, and representation at international events. While the programme primarily targets companies already operating in Japan, it reflects the government’s broader commitment to cultivating a startup ecosystem — investment in Japanese startups reached ¥850 billion (approximately $6 billion) in 2023, according to industry figures.

Regional incentives and free zones

Certain Special Economic Zones (国家戦略特区, Kokka Senryaku Tokku) offer simplified regulatory procedures and, in some instances, enhanced tax incentives for qualifying businesses. Tokyo, Osaka, and Fukuoka are among the designated zones. The Cabinet Secretariat’s National Strategic Special Zones website lists current participating municipalities and qualifying criteria — these details can change and should be confirmed before factoring them into any business plan.

What are the practical challenges of being self-employed or running a business in Japan?

Japan is a society that places great value on order, procedure, and adherence to rules. This makes for a predictable and generally equitable business environment, but it also means that administrative processes tend to be thorough, documentation-heavy, and conducted almost entirely in Japanese. Expats who underestimate this reality are likely to encounter significant friction.

Language barriers in official processes

Official forms, tax filings, and legal documents are overwhelmingly in Japanese. While the NTA and some immigration bodies provide English-language guidance, the forms themselves are typically available in Japanese only. The government’s e-Tax system offers limited English functionality. Most expat business owners find that partnering with a bilingual zeirishi (tax accountant) or gyoseishoshi (administrative scrivener) is not merely helpful but effectively indispensable — especially for company formation, visa renewals tied to business performance, and annual tax filings.

Banking access for self-employed foreigners

For foreign companies without a Japan-resident officer, opening a corporate bank account can be a drawn-out and uncertain process. Sole proprietors may initially use a personal bank account to receive business income, but dedicated business accounts require confirmed residency, an address registered in Japan, and in some cases a Japanese guarantor or reference. Online banking and fintech options — such as GMO Aozora Net Bank — have eased the path somewhat for newer businesses, but applicants should still expect the process to take weeks rather than days.

Invoicing and the Invoice System (適格請求書)

Japan’s qualified invoice system, introduced in October 2023, requires businesses to issue invoices bearing a registration number in order for their clients to reclaim consumption tax credits. If you serve corporate clients, you are likely to encounter pressure to register for consumption tax and obtain an invoice registration number — even if your turnover falls below the standard ¥10,000,000 threshold. This can bring administrative obligations earlier than anticipated. It is worth consulting a zeirishi before deciding whether voluntary registration is appropriate in your situation.

Business culture and relationship-building

Errors in business etiquette — such as mishandling the exchange of meishi (business cards) or failing to observe appropriate levels of hierarchical respect — can damage professional relationships. Taking time to understand Japanese business norms is a sound investment. Japanese business culture places a high premium on long-term relationships, consensus-driven decision-making, and dependability. Sole proprietors who make the effort to align with these expectations tend to build more lasting client relationships than those who operate on purely transactional terms.

Visa renewal and business performance

For Business Manager Visa holders, renewal is conditional on the continued viability of the business. Immigration authorities review tax records, financial statements, and evidence that the business is genuinely active. Even when income is low, filing a tax return remains essential — particularly for visa renewal purposes or to claim a refund if one is due. Incomplete or delayed filings can put a visa renewal at risk, even where the underlying business is otherwise functioning well.

Professional advisers to consider engaging

• 税理士 (Zeirishi) — a licensed tax accountant for bookkeeping, Blue Return support, and annual tax filings
• 司法書士 (Shiho Shoshi) — a judicial scrivener for company registration and legal documentation
• 行政書士 (Gyosei Shoshi) — an administrative scrivener for visa applications, business licences, and government filings
• 弁護士 (Bengoshi) — a lawyer for contracts, disputes, and complex corporate law matters

Frequently asked questions

Can I be employed full-time and also run a self-employed business in Japan at the same time?

This may be possible, but it hinges on both your employment contract and your visa category. Many Japanese employers include clauses in their contracts prohibiting secondary employment (副業, fukugyō), so reviewing your contract before taking any steps is essential. From an immigration standpoint, any freelance work must remain within the activity scope permitted by your current visa. If income from sources other than your primary employer exceeds ¥200,000 in a tax year, you will also be required to file an annual tax return with the NTA. Always seek clarification from your employer and a qualified adviser before proceeding.

How do I handle invoicing clients based outside Japan?

You are free to invoice overseas clients in any mutually agreed currency. Income received from foreign clients remains subject to Japanese income tax if you are a tax resident of Japan — which generally means being present in the country for 183 days or more within a tax year under most treaty arrangements. Thorough records of all international transactions should be maintained. Note that consumption tax (JCT) does not ordinarily apply to services exported to overseas clients, though specific rules govern cross-border digital services — a zeirishi is best placed to advise on your particular circumstances.

What happens to my business if my visa changes or expires?

This risk deserves careful planning. Should your Business Manager Visa lapse or not be renewed, you lose the legal right to manage or operate your Japanese company. A registered GK or KK continues to exist as a legal entity regardless of the director’s visa status, but active management becomes impossible. Begin your visa renewal process at least three months before the expiry date, and ensure all business documentation — including tax filings, financial statements, and employee records — is current and accurate, as immigration authorities scrutinise these during renewal.

Do I need a Japanese address to register a sole proprietorship or company?

Yes. A registered address in Japan is a prerequisite for both a sole proprietorship and a corporate entity. For sole proprietors, this is typically the home address registered with your local ward or city office. Companies may use a virtual office address, and such services are widely available and commonly used — particularly in Tokyo’s central business districts. Before committing to a provider, verify that the address will be accepted by the Legal Affairs Bureau and by major banks.

Is there a minimum income requirement to maintain a self-employed visa status?

No single formal threshold exists, but immigration authorities expect a self-employed person’s business to generate stable income sufficient to sustain their livelihood in Japan. For freelancers operating under a work visa with a sponsoring company, an informal benchmark of approximately ¥2,000,000 per year (around ¥200,000 per month) is commonly cited by practitioners as of 2025, though this reflects practical experience rather than any codified rule. For Business Manager Visa holders, the overall viability of the business — including its ability to employ staff and meet capital requirements — forms part of the assessment. The Immigration Services Agency of Japan publishes current guidance on this.

Can I work as a freelancer in Japan without a sponsoring company?

The legal picture here is complicated. Most work visa categories require at least one Japan-based sponsoring company whose activities correspond to the scope of your visa. Without one, freelancing is generally not permitted unless you hold permanent residency, a spousal or long-term resident status, or an equivalent unrestricted standing. Since the October 2025 reforms, the Business Manager Visa has also ceased to be a viable route for independent freelancers, given its requirements for substantial capital investment and at least one full-time locally based employee. Permanent residency or marriage to a Japanese national or permanent resident continues to offer the most unrestricted basis for self-employment.

What is the Blue Return (Aoiro Shinkoku) and should I use it?

The Blue Return is an elective tax filing method available to sole proprietors that confers meaningful financial benefits: a deduction of up to ¥650,000 from business income (as of 2025 when filing electronically), the ability to carry forward losses for as many as three years, and more accommodating treatment of business expenses and depreciation. In exchange, you are required to maintain proper double-entry bookkeeping records. For the majority of expat sole proprietors with a consistent income stream, the Blue Return is clearly the more advantageous option — but you must apply in advance at your local Zeimusho. Consult the NTA or a zeirishi for the application deadline in your first year of business.

Are there English-language resources available for navigating Japan’s business registration processes?

Yes, a number of official and quasi-official sources provide support in English. JETRO’s Invest Japan portal is the most thorough, offering detailed guidance on incorporation procedures, tax registration, and visa requirements. The NTA publishes English-language information on income tax and consumption tax obligations. The Immigration Services Agency of Japan makes visa requirement details available in English. JETRO’s regional offices also provide free English-language consultations, and numerous major cities operate multilingual business support centres specifically for foreign entrepreneurs.