Corporation(Subsidiary) vs Branch office

   Company   Branch 
 Sales activities   Possible   Possible 
 Registration   Required   Required 
 Legal personality   Yes    No 
 Capital    Required   Not required 
 Director / Head   At least 1 Director   At least 1 Head 
 Independent decision making   Possible   Not allowed 
 Responsibility for debts and obligations   The company in Japan   Parent company 
 Bank account   Possible   Possible 
 Property rent   Possible   Possible 
 Accounting    Independent accounting   Part of parent company 
 Visa   Required   Required 

 

Overview of pros and cons

   Company   Branch 
 Pros   High credibility, easier to borrow funds from banks compared with a branch   Allowed  to off set profit and loss when calculating taxable income in home country where parent company locates 
 Easier to obtain management visa for Directors   Slightly cheaper cost for setting up 
 Limited liability
(No responsibility of debts and obligations to parent company) 
 No capital injection required 
 No directors address in Japan required   More difficult to borrow funds from banks in Japan compared with a corporation 
 Cons   Unable to off set profit and loss when calculating taxable income in a country where a parent company locates   Belongs responsibility of debts and obligations to parent company 
 Slightly higher costs for setting up   One of the representatives must have resident registration in Japan (if you can obtain a Visa of permanent resident, spouse,  or business management etc., nationality does not matter) 
 May imposed withholding tax on the transfer of funds from Japan to the home country where parent company locates   May heavily imposed pro-forma standard taxation and the evenly allocated resident tax depending on the amount of capital of the parent company 
 Capital injection is required   Required various documents such as affidavits in foreign languages 
 Required re-registration for director in every 10 years at max