🇯🇵 EOR Guide —
Japan
Everything you need to know about using an Employer of Record in Japan — provider fees, compliance risks, hire speed, and EOR vs direct employment.
Employer SS (approx)
~16% of gross salary
Minimum wage (Tokyo)
¥1,163/hr (2024)
Minimum annual leave
10 days (after 6 months)
Standard working hours
8hrs/day, 40hrs/week
Overtime premium
25% (60hrs+/month: 50%)
EOR providers active
Deel, Remote, Globalization Partners, Velocity Global
Our Recommendation
EOR with careful provider selection — Japan requires specialist knowledge
Japan is one of the most complex EOR markets in the world. Strong employee protections, a four-pillar social insurance system, complex tax withholding, and cultural expectations around employment make specialist provider selection critical. Use only providers with a proven Japan track record. Plan for slow onboarding (4–8 weeks).
EOR provider fee range for Japan
Rates vary by provider, headcount, and benefits scope. Always request itemised quotes from at least three providers.
EOR vs Direct Employment
EOR advantages in Japan
- Hire without a KK entity
- Provider handles shakai hoken (social insurance)
- Access to limited EOR provider network in Japan
EOR limitations in Japan
- 12–20% markup
- Fewer providers than Western markets
- Cultural expectation of direct employment at senior levels
- Termination still complex even via EOR
Direct employment advantages
- Full entity control
- Direct employment relationship valued culturally
- No markup at scale
Direct employment limitations
- KK setup takes 2–3 months, ¥10m capital
- Complex four-pillar social insurance system
- Very strong employee protections — termination extremely difficult
Local Entity Options
Setting up a legal entity in Japan.
If you outgrow EOR or prefer direct employment, these are the main legal structures available in Japan for foreign companies.
Godo Kaisha (GK) — Limited Liability Company
Setup time
7–21d
Est. cost
$3,000
Min. capital
None
Corp. tax
23.2%
Div. WHT
20.42%
VAT rate
10%
Annual obligations
- Annual financial statements
- Corporate tax return
- Consumption tax return
- Monthly withholding tax returns
Overview
Simpler and cheaper to set up than KK. No minimum capital. Used by Apple, Amazon, and many foreign tech companies in Japan as the holding/operating entity. Less prestigious for Japanese business relationships than KK but operationally equivalent. No requirement for Japanese resident director (unlike KK). Lower formation costs. Can convert to KK later if needed.
Kabushiki Kaisha (KK) — Joint Stock Company
Setup time
14–30d
Est. cost
$5,000
Min. capital
None
Corp. tax
23.2%
Div. WHT
20.42%
VAT rate
10%
Annual obligations
- Annual financial statements
- Corporate tax return (NTA)
- Consumption tax return
- Monthly withholding tax returns
- Social insurance monthly declarations
Overview
Most prestigious corporate structure in Japan. No minimum capital (was JPY 10M until 2006 reform). At least 1 director — must have a registered address in Japan (can be a resident individual). Representative director must be a Japan resident. Registered office in Japan required. Corporate tax ~23.2% (national) + local taxes = effective ~30-33%. Consumption tax 10% — registration required when taxable sales exceed JPY 10M in base period. Bank account opening can take 4-8 weeks.
Branch (Shiten)
Setup time
3000d+
Est. cost
—
Min. capital
$45
Corp. tax
23.2%
Div. WHT
20.42%
VAT rate
10%
Annual obligations
- Annual financial statements of parent
- Japanese corporate tax return
- Consumption tax return
Overview
Foreign companies can register a branch (shiten) in Japan. Registration with Legal Affairs Bureau required. Must appoint a representative in Japan. No separate legal entity — parent fully liable. Branch profits subject to Japanese corporate tax. Branch remittances may trigger Japanese withholding tax. Less flexible than GK for governance and profit repatriation.
Compliance Risks
Key EOR compliance risks in Japan.
Discuss each of these with your chosen provider before signing.
Termination protection
HighJapan has some of the strongest employee protections in the world. Dismissal without objectively reasonable grounds is void under the Labour Contract Act. Plan entry and exit strategies carefully.
Four-pillar social insurance
HighJapanese employers must enrol employees in health insurance (kenpo), pension (kosei nenkin), employment insurance (koyo hoken), and workers compensation (rousai).
Residency and visa requirements
HighWorking in Japan requires a valid work visa. Processing can take 6–12 weeks. Your EOR cannot sponsor visas for all visa types — confirm your employee eligibility before engagement.
Year-end tax adjustment (nenmatsu chosei)
MediumUnlike most countries, Japan year-end tax settlement is handled by the employer, not the employee. Your EOR must run this process correctly in December each year.
Cost Estimator
Estimate your Japan EOR cost.
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