Key Points for Obtaining Work Visas by Recruitment Type for Foreign Employees in Japan

In the modern business environment, where globalization is advancing, it is essential for Japanese companies to secure top talent, regardless of nationality, in order to maintain and enhance their international competitiveness. There is an increasing trend of recruiting management-level and highly specialized personnel from overseas. However, employing foreigners in Japan requires compliance with the complex procedures set forth by the Japanese Immigration Control and Refugee Recognition Act (hereinafter referred to as “Japanese Immigration Law”) and related legal orders from the Ministry of Justice. While the term “visa” is commonly used, legally, the “visa” issued by Japanese diplomatic missions for entry into Japan and the “status of residence” that defines the activities allowed within Japan are distinct. Many of the challenges faced by companies pertain to the acquisition and management of this status of residence. The Japanese status of residence system is strictly operated based on the permitted activities, and companies have a legal obligation to ensure that the foreign nationals they employ obtain the appropriate status of residence according to the job functions they will engage in. This article focuses on three typical recruitment forms that business executives and legal professionals may consider when hiring foreign talent: “appointing foreigners as company officers,” “accepting transferees from overseas affiliates,” and “accepting foreign workers as dispatched employees.” It provides a detailed explanation of the requirements for the necessary status of residence, application procedures, and legal points that companies should particularly note, based on specific legal provisions.

Appointing Foreign Nationals as Executives: The “Business Manager” Residence Status in Japan

When appointing foreign nationals as representatives, directors, or managers of business divisions within a Japanese corporation, it is generally necessary to obtain the “Business Manager” residence status. Under the Japanese Immigration Control and Refugee Recognition Act (Appendix Table 1-2), this residence status is defined as activities involving “the operation of trade or other business, or management of the said business, in Japan.” In the examination for this residence status, not only the applicant’s personal background but also the substance, stability, and continuity of the business they will manage or operate become extremely important factors in the decision-making process.

Criteria for Landing Permission: Requirements Related to the Business Foundation Under Japanese Immigration Control

To obtain the “Business Manager” residence status in Japan, it is necessary to meet multiple criteria set forth by the Ministerial Ordinance that defines the standards under Article 7, Paragraph 1, Item 2 of the Japanese Immigration Control and Refugee Recognition Act (hereinafter referred to as the “Standards Ministerial Ordinance”). Particularly for new businesses, these criteria must be substantiated with objective documentation.

Firstly, it is essential to secure a business office within Japan. This office must be a physical location where business activities are continuously conducted, not merely a contact point. Therefore, virtual offices without substance or spaces under short-term rental contracts are generally not accepted. While it is possible to use a residential property as a business office, strict conditions must be met, such as permission for business use in the lease agreement and a clear distinction between living and business spaces.

Secondly, the applicant must objectively demonstrate their capability and aptitude as a manager to conduct the business. Specifically, this includes having over three years of management experience or a master’s degree or higher in business administration or the field of business they intend to manage.

Thirdly, from the perspective of preventing misuse of the system and ensuring the stability of the business, the employment of at least one full-time staff member is required.

Fourthly, the business must meet certain scale criteria. For stock companies, the amount of capital must be at least 30 million yen, while for limited liability companies, general partnerships, and limited partnerships, the total amount of investment must meet this threshold.

Fifthly, to smoothly operate the business in Japan and communicate effectively with clients and employees, a considerable level of Japanese language proficiency is required for either the applicant or the full-time staff.

Sixthly, the stability and continuity of the business must be recognized as essential. The most critical document in assessing this aspect is the business plan. When applying for residence status, verification of the business plan by a certified public accountant or tax accountant is required, and businesses judged to have a lack of substantial management, such as those relying on outsourcing, are not accepted. This reflects the policy decision that the “Business Manager” residence status should be granted only to those who can contribute to the Japanese economy by managing and administering sustainable businesses.

Application Procedures and Required Documents

When inviting a foreign national residing overseas to serve as an officer in a company, it is common for the accepting company in Japan to act as an agent and apply for the issuance of a Certificate of Eligibility (COE) on behalf of the foreign national.

The point of contact for the procedure is the regional immigration bureau that has jurisdiction over the location of the business office. The standard review period from application to issuance of the certificate is approximately one to three months, but new businesses or complex cases may require a longer period.

The required documents vary depending on the four categories determined by the Immigration Services Agency of Japan, based on the size and reliability of the accepting company. Large corporations that fall under Category 1 (such as companies listed on the Japanese stock exchange) or Category 2 (such as organizations with an annual withholding tax amount of salary income exceeding 10 million yen) benefit from significantly simplified documentation due to their social credibility. On the other hand, newly established companies and many small and medium-sized enterprises, which fall under Categories 3 and 4, are required to provide detailed documents to prove the legality and stability of the business from the ground up.

The following documents are commonly required for all categories:

• One copy of the Certificate of Eligibility application form
• One photograph
• One self-addressed return envelope

These forms can be downloaded from the Immigration Services Agency of Japan’s website under “Residence Status ‘Business Manager'” (URL: https://www.moj.go.jp/isa/applications/status/businessmanager.html).

For companies that fall under Categories 3 and 4 and are applying for foreign nationals engaged in the management of the business, the following documents are generally required in addition to the above:

• A copy of the business plan
• A certificate of registered company information
• A copy of the company’s articles of incorporation
• A copy of the financial statements for the most recent fiscal year (for existing businesses)
• Documents confirming a capital contribution of at least 5 million yen (such as a copy of a bank passbook)
• A copy of the real estate registry or lease agreement for the business office
• Photographs of the interior and exterior of the business office
• A copy of the notification of establishment for the salary payment office, etc.
• A copy of the articles of incorporation that stipulate officer remuneration or minutes of the shareholders’ meeting where officer remuneration was resolved

This category system reflects the risk-based approach of the Immigration Services Agency of Japan in assessing the reliability of companies. Companies in Categories 1 and 2 are considered to have already secured stability due to external evaluations by the market or tax authorities. In contrast, new businesses in Categories 3 and 4 lack such external evaluations, so the applicants bear the responsibility of proving the soundness and future prospects of the business from scratch through business plans and financial-related documents.

Transfers from Overseas Parent or Subsidiary Companies: The ‘Intra-Company Transferee’ Residence Status in Japan

When global businesses need to transfer employees working at overseas locations to their Japanese branches, the ‘Intra-Company Transferee’ residence status is applied. Under Japanese immigration law, this residence status is defined as activities where “staff of a public or private institution with a head office, branch, or other business office in Japan are transferred for a fixed period to a business office in Japan from a business office abroad to engage in activities” at that office. The scope of activities is limited to those that fall under the ‘Engineer/Specialist in Humanities/International Services’ residence status.

Essential Requirements for Acquisition

To obtain the status of residence for “Intra-company Transferee” in Japan, several stringent requirements must be met.

Firstly, the scope of the transfer is limited. It includes not only movements between the head office and branches within the same company but also transfers between parent companies and subsidiaries, or between subsidiaries themselves.

Secondly, just before applying, it is necessary to have been continuously employed for more than one year at the head office, branch, or related company overseas. This requirement ensures that the applicant is a regular employee of the corporate group and prevents abuse of the system.

Thirdly, the nature of the work to be engaged in Japan must involve technical knowledge in science, engineering, etc., or knowledge in the humanities such as law, economics, etc., or work requiring thought or sensitivity based on foreign culture. Simple labor, such as factory line work, is not permitted.

Fourthly, the amount of remuneration received in Japan must be equal to or greater than the remuneration received by Japanese nationals engaged in the same work. This is an important provision to prevent the intra-company transferee system from being used as a means of supplying inexpensive labor.

Application Procedures and Documents

The application process typically begins with the submission of a request for a Certificate of Eligibility (COE). In Japan, the host institution applies on behalf of the foreign employee to the regional immigration bureau that has jurisdiction over the institution’s location. The standard review period ranges from one to three months.

The required documents vary depending on the category (1 to 4) of the accepting company, similar to the “Business Management” category.

The following documents are common to all categories:

• One copy of the Certificate of Eligibility (COE) application form
• One photograph
• One self-addressed stamped envelope

The application form can be obtained from the Immigration Services Agency of Japan’s website under “Status of Residence ‘Intra-Company Transferee'” (URL: https://www.moj.go.jp/isa/applications/status/intracompanytransfee.html).

For companies in categories 3 and 4, the following additional key documents are required in addition to the above:

• Copy of the transfer order or a document such as a notice of working conditions that clarifies the activities, duration, position, and remuneration in Japan
• Documents clarifying the capital relationship between the original and the destination company
• The applicant’s resume
• Documents issued by the overseas workplace immediately before the transfer, certifying the job description, position, remuneration, and period of employment
• Materials clarifying the business content of the destination company (such as company brochures, certified copies of commercial registration, etc.)
• Copies of the most recent fiscal year’s financial statements of the destination company

Comparison Between “Intra-Company Transfers” and “Engineer/Specialist in Humanities/International Services” Residency Status in Japan

While “Intra-Company Transfers” and the general professional residency status of “Engineer/Specialist in Humanities/International Services” overlap in the scope of work they cover, there are critical differences in their requirements. Notably, the presence or absence of educational requirements is significant. To obtain the “Engineer/Specialist in Humanities/International Services” status, one generally needs a university degree or over ten years of professional experience. However, “Intra-Company Transfers” do not require such educational background or long-term professional experience. Instead, they require at least one year of work experience at the transferring company.

This system design can be a strategic tool for global companies to flexibly place key personnel who may lack formal education but have accumulated company-specific skills and know-how through years of service across borders. In other words, by setting the requirement of at least one year of continuous service, the Japanese government confirms that the applicant is an essential member of the corporate group and, in return, waives the educational requirements. Therefore, companies need to strategically choose which residency status is most suitable based on the educational background and work history of the talent they wish to hire.

Key Points When Accepting Foreign Nationals as Temporary Staff in Japan

Utilizing staffing services to employ foreign talent allows companies the flexibility to manage their workforce, while also carrying unique legal risks. In this arrangement, a tripartite relationship is established between the foreign workers, the staffing agency (dispatching company), and the client company (the company that actually directs the work). Legally, the employer of the foreign workers is the staffing agency, which is responsible for applying for and managing residence status, as well as paying wages. However, the client company cannot escape its responsibilities under Japanese immigration law.

Duties of Verification and the Risk of the Crime of Promoting Illegal Employment at the Client Company

The most crucial legal obligation for the client company is to verify that the foreign workers they accept have a valid residence status that permits them to engage in the work intended by the company. It is extremely risky to take the staffing agency’s word that “the procedures are without issue.”

Article 73-2 of the Japanese Immigration Control Act defines the “crime of promoting illegal employment.” This crime targets not only those who employ illegal workers but also those who “place under their control” and allow illegal work activities. In a staffing contract, foreign workers perform tasks under the direction and control of the client company, which can be seen as having “placed under their control,” potentially making the client company liable for the crime of promoting illegal employment. If a temporary worker does not have a valid residence status or engages in activities beyond those permitted, the client company cannot simply claim ignorance and may be subject to criminal penalties.

To avoid this risk, the client company must take the following measures:

Firstly, before concluding a staffing contract and before the foreign worker starts their duties, it is essential to check the original residence card and keep a copy. The residence card will confirm three key points: the type of “residence status,” the expiration date of the “period of stay,” and whether there are “work restrictions.”

Secondly, it is crucial to strictly verify that the work assigned is within the scope of activities permitted by the foreign worker’s residence status. For example, if you accept an IT engineer with the residence status of “Engineer/Specialist in Humanities/International Services” through a staffing service, you cannot assign them to simple labor tasks such as working on an assembly line in a factory or customer service in a store. Such a mismatch in job content constitutes illegal employment. The client company must specify the intended work content in the staffing contract with the staffing agency and mutually confirm that it falls within the scope of the residence status.

Furthermore, based on Japan’s Worker Dispatch Law, the client company also bears certain responsibilities under labor laws, such as the management of the safety and health of dispatched workers. Additionally, the “Guidelines for Proper Management of Employment of Foreign Workers” set by Japan’s Ministry of Health, Labour and Welfare prohibit discriminatory treatment based on nationality and demand the provision of appropriate working conditions, which are also interpreted to apply to the client company. The client company must recognize that it bears responsibilities not only under immigration law for verifying residence status but also under labor regulations, and must establish a compliance system accordingly.

Summary

The process of employing foreign staff in Japan varies significantly depending on the type of employment, with different laws and procedures to follow. For executive recruitment, obtaining the “Business Manager” residence status is necessary, and the feasibility of the business plan and the stability of the business foundation are strictly scrutinized. When transferring personnel from an overseas affiliate, the “Intra-company Transferee” residence status is appropriate, and while the educational requirements may be waived, the work experience at the transferring entity is emphasized. Additionally, when accepting dispatched workers, not only the dispatching agency but also the receiving company bears the risk of being charged with the crime of promoting illegal employment, thus there is a strict obligation to independently verify the compatibility of the residence status and the job description. These procedures require specialized knowledge, and proceeding with caution based on appropriate legal advice is key to ensuring compliance and achieving smooth talent acquisition.

Monolith Law Office has a proven track record in providing legal services related to the employment of foreign talent for numerous clients within Japan, as discussed in this article. Our firm employs several English-speaking attorneys with foreign legal qualifications, enabling us to offer optimal solutions tailored to the needs of businesses in both Japanese and English, for complex procedures related to Japanese immigration law and related regulations. From the appointment of foreign executives to intra-company transfers and the acceptance of dispatched workers, our experienced team of specialists provides strong support in resolving legal challenges that arise in all these scenarios.