Japan PEO Hybrid Structure

Where a Japanese legal entity is required it may still be possible to simplify the structure.

and reduce costs via combining a fully owned Japan subsidiary with a Japan PEO solution

A Business Support Agreement is put in place between your company (outside Japan) and JPS. This agreement is carefully drafted to ensure that your company receives the dedicated support that it requires in Japan while minimizing tax risk – especially Japan permanent establishment (“PE”) risk.

  • JPS’s profesionals will assist you to establish a fully owned Japan subsidiary. Most clients will choose either a Godo Kaisha (“GK”) or a Kabushiki Kaisha (“KK”). Visit our FAQ to learn more about choosing a Japan entity that will suit your needs.
  • Once the new subsidiary is established JPS can handle all the associated requirements including initial corporate tax filings, establishing bank accounts, ongoing corporate tax compliance, and Japanese VAT filings.
JPS takes on the responsibility of Japan work visas, Japan payroll, and associated HR functions for your designated employees. Japanese nationals and foreigners with existing Japan work visas can be immediately brought on board by JPS in Tokyo. JPS transfers visas from previous employers (if necessary) and moves these employees on to the JPS Japan payroll. We pay particular attention to Japanese social security (especially statutory health insurance) since uninterrupted coverage is the number one concern for Japanese employees. For foreigners who do not hold a valid Japan work visa, JPS starts the Japan work visa application process – new approvals typically take six to eight weeks.
Sales to Japanese customers may be made made directly between your company outside Japan and the Japanese customer. Alternatively, it may be possible to make sales directly to Japanese customers from your Japanese subsidiary.

Why Use a Japan Hybrid PEO?

Under this arrangement, employees are hired under a PEO arrangement. At the same time, the client maintains a naked legal entity in Japan. The reasons for having this legal entity in place may include:

  • Some Japanese customers may require that you have a legal entity in Japan.
  • Maintaining a legal entity in Japan can sometimes support a strong image for a foreign company.

How JPS can assist.

Japans ex-Big 4 professionals can support a PEO Hybrid structure via:

  • Providing a PEO solution to support employees in Japan.
  • Initial consulting regarding selecting an appropriate entity.
  • Advice regarding foundation issues including shareholders and paid in capital.
  • Provision of legal registered address and nominee directors (if required).

  • Incorporation of the entity.

  • Basic compliance to ensure that the Japan entity remains in good standing. This generally consists of limited corporate tax compliance and some annual accounting support.