Japanese Residency/Citizenship Via Investment
Several countries have residency/citizenship schemes for foreign investors. You invest a certain amount of money and get a residence visa or citizenship there. This usually requires hundreds of thousands of dollars for second-tier countries, or over a million dollars for first-tier countries. Did you know that you can become a resident of Japan via investing less than US$50,000?
The mechanism: start a company in Japan, then use it to sponsor yourself for an Investor/Business Manager visa. You only need to invest ¥5 million in capital into the business. This is almost unbelievable considering the difficulty of doing the same thing in other countries in the region. To achieve the same thing in Korea, one must invest ₩300 million (300 million Korean won, over US$253,000). Mainland China requires a Chinese business partner and lots of red tape. This is to ensure that China eventually holds the reins of the business venture there. You can’t do it on your own. By contrast, you can own your own business and be your own boss indefinitely in Japan without already being wealthy.
Overview Of The System
What You Can Do
Most importantly, you can live in Japan legally. What kind of work you do in Japan is up to you. Of course you can run your own business. Alternatively, you can work for another company. You call yourself a “consultant” and have the other company sign a contract with your company instead of you. They pay your company that you control. Your company (i.e. “you”) pays you.
That’s great and all, but what about the long term?
- After five years in Japan, you may apply for Japanese citizenship.
- Some prefer to keep their original citizenship, and aren’t from countries with which dual citizenship with Japan is permissible. In that case, after ten years, you may apply for Japanese permanent residency. For most purposes, permanent residency is just as good as citizenship, but you can keep your original passport.
- If you score enough points on the immigration points system, permanent residency is possible in just one year.
What About That ¥5 Million In Capital?
Does the ¥5 million in capital you use to start the business/get the visa, just sit there, doing nothing? Or, Heaven forbid (as is the case in some countries with immigration-by-investment programs), is it a “donation” to the government? Fortunately, the answer is “No!” You can use/invest that money, for example in Japanese real estate. Therefore, becoming a resident in Japan doesn’t actually mean tying up or losing ¥5 million, it simply means relocating it. To a place known for its low-risk, high-return investments. After starting your business, you could invest that capital in property in the Niseko ski resort area, generating 7% ROI.
Of course, it’s your company that technically owns the capital/investments bought with that capital. However, who’s the daihyō (代表, representative director), who decides how to control the money and to whom to pay it? You are. Basically, your company is a “holding company.” A holding company is a company that mainly manages other companies or assets (in this case, probably assets). Holding companies can own patents, real estate, stocks, trademarks, etc. A holding company is an ownership structure. Its purpose is to possess assets. One example is Seven & I Holdings (est. 2005). They own the Itō-Yōkado department store chain, 7-Eleven including Seven-Eleven Beijing and Hawaii, Seven Bank, and Sōgō & Seibu. You can own a similar company (though [probably] on a smaller scale), and use it for self-sponsoring your residence visa. It can even sponsor others, such as a housekeeper or other personal help.
Briefly, How Does It Work?
In short, you register a company. Then you invest ¥5 million in capital into it and meet a few other requirements. Apply for a visa. Enjoy your life in Japan.
Aren’t There Lots Of Requirements With An Extremely High Bar, Though?
Many potential Japan residents can save ¥5 million in capital if they really put their minds to it. However, when researching the Investor/Business Manager visa, there are certain other publicized requirements that scare them off.
For example, they may read that they need to employ at least two full-time employees (read: seishain [正社員], permanent employees). Oh, and those employees have to be Japanese citizens, permanent residents, spouses/children of a citizen/PR, or long-term residents. You can’t just hire your foreign buddies. You might read that you need >3 years of experience in business management operations prior to receiving the visa. That one can substitute years spent towards an MBA for years of experience is little comfort for those without MBAs. You might also read the “no less remuneration” requirement. That is, you, as the manager, cannot receive less remuneration than a Japanese person would for the same work. If a Japanese manager would receive $100,000 a year, then you’d need to receive $100,000 a year.
These requirements make it look almost impossible for most people to start a holding company in Japan. They make it look like the sole domain of rich, already-successful foreigners. However, fortunately, the immigration office looks the other way on most of these requirements. Even if you’re unable to get an Investor/Business Manager visa, there’s another option, as well. You can have a Japanese business partner set it up and sponsor your Engineer/Specialist in Humanities/International Services visa.
The Process Of Setting Up The Company And Getting The Visa For Residency In Japan
Setting Up The Company: Preparing To File
Experts recommend that you set up a kabushiki gaisha (K.K, 株式会社), or joint-stock company. This is the most respectable. You can be the representative director, or daihyō (代表). In the past, the representative director had to be a resident of Japan; this is no longer the case. There has to be a board of directors and a shareholder meeting at least once a year. The process of incorporation takes about three months.
Another choice, instead of a joint-stock company, is basically an LLC. In Japanese, this is “gōdō-gaisha” (合同会社) or “G.K.” Although this requires less capital, lower fees, and is less complicated, it’s also not as respectable as a K.K.
You will need an office. A small office is okay. It may be possible to use a serviced office or home office. However, a virtual office is not. Therefore, coworking spaces such as WeWork are a no-go.
Another thing that you will require is “articles of incorporation.” A template is available online. In addition to these documents, more required documents should include business activities, company obligations, and the director/shareholder relationships. It’s better if all these documents are in Japanese. Have the documents notarized (though you can skip this step if registering the less-recommended G.K), which costs ~¥50,000.
For the next step, it’s advisable to utilize the services of an accountant, financial advisor, and/or lawyer. Submit an application form, along with the registration of the company inkan. An inkan (印鑑) is a seal/stamp that the company (or a representative of the company) uses to sign documents. Enclose letters from directors, in the application packet, as well. These should confirm that they assume office at the company.
When applying, application fees vary depending on whether the company is a K.K or G.K. It’s cheaper if it’s a G.K (¥70,000), but a K.K (¥160,000) is more respectable. A K.K is more likely to get you the visa you want.
Next, you deposit incorporated capital. For the K.K→Investor/Business Manager visa route, this is generally ¥5 million.
Registering the company does not technically require any special visa status. However, to actually run it, you must have the correct visa.
When The Process Is Successful
You’ll receive a company seal certificate and registry certificate. At this point, you can open the official company bank account. Using said bank account, you can rent office spaces, enter into employment contracts, and sponsor visas (including for yourself). Make sure to register both the directors and employees with either Social Insurance OR National Pension/National Health Insurance. These are like Japan’s “Social Security,” and it’s a requirement that employees be in them. At this point, you can apply for a visa and business license. The total process, from zero to having a completely licensed company, takes about three months. At this point, if it’s a K.K, you can even take it public and list it on a Japanese stock exchange.
As for other obligations, you’ll need to hold a board meeting before the end of its elected fiscal year. Make sure to keep a record of accounts and make annual filings to the tax office. If you have employees besides yourself, make sure to read up on/understand the Labor Standards Act and its laws.
The Visa (That Allows Residency)
The precursor to a visa is the “Certificate of Eligibility.” This applies not only to Investors/Business Managers, but also foreigners on work visas, student visas, etc. It’s a yellow piece of paper that basically certifies that you meet the requirements for a given activity. It takes 4~6 weeks to get one.
After getting your CoE, you can either get your new visa in about 2~3 days. Or you can change your Status of Residence if already in Japan; this takes ~2 weeks.
After Getting The Residency Visa
Mind the annual tax filing deadlines. Although it’d be advisable to use a tax accountant, it’s possible to do it yourself.
Fortunately, your new Status of Residence in Japan makes your activities, by their very definition, “business.” Therefore, there are numerous tax writeoffs. Your housing, transportation, vacations, and income become “employer-provided housing,” “commuting allowance,” “employer-funded home leave,” and “off-shore payment of compensation.” You can deduct these from your taxes.
Japanese Residency/Citizenship Via Investment: Conclusion
Unlike many other developed countries that require millions of dollars, or at least hundreds of thousands of dollars to secure residency, Japan only requires an investment of about $50,000. Not only does the creation of a joint-stock company (K.K) get you a visa, it also bestows tax benefits. You can then invest the capital in lucrative Japanese real estate, generating passive income. Or you can use it for pretty much whatever else you please.