User Cases: Who Can, Who Can’t Use a Virtual Office Address in Japan?
While many Japanese businesses can make use of virtual offices, there are certain cases and industries where conflicting regulations prevent the use of virtual office addresses in Japan.
Today we’re looking at who can, who can’t, and regulatory concepts in Japan that often hinder virtual address use.
First off, we start with the good news:
Who can use virtual offices addresses in Japan?
General understanding of current regulation allows the majority of businesses in Japan to use a virtual office address on one’s touki (company registration with the Legal Affairs Bureau).
Here’s the quick list of who can use virtual office addresses in Japan:
Regular joint-stock companies, limited liability companies, or limited partnerships
*E-commerce shops can use virtual office addresses under certain conditions and parameters, which we’ll cover in detail in a separate article.
As you can see, the majority of user cases will have no problem using a virtual office address in Japan. However, there are exceptions that we’ll dive into next.
4 regulatory concepts that hinder virtual address use in Japan
Companies that can register as a corporation with a virtual office are those in industries that do not require permits or licenses to operate.
But if your business requires authorization, a license, or a lease contract in order to operate, then it’s likely you’ll be dealing with one of the regulatory concepts listed here.
Within Japan’s regulations, the term to watch for that often rules out virtual office address use is as follows: 「物理的に業務可能なスペース」= “a physical space available for business operations”—which typically requires showing a rental lease contract as proof.
Additionally, industries that require licensing + the display of one’s license in one’s office are also seen as “no-go zones”—because they necessitate actual physical space to display one’s license in a visible location to customers. (E.g., applies to financial business operators, certain legal professions, detectives, etc.)
Another term that should signal caution is 「独立した営業所があること」 = “independent office space”—a phrase frequently used when describing offices that must have their own entrance, which is to ensure security measures for customer privacy. To determine this factor, you may be asked to submit the office floor plan in your lease contract. (E.g., applies to staffing agencies, real estate agencies, certain legal professions, etc.)
Bonus: We get asked this a lot so we’re including it here: Virtual offices in Japan cannot be used on visa paperwork for listing as a person’s place of residence because immigration wants to know where the person will be residing vs. working. Under the same logic, one cannot use a virtual address for any type of official paperwork that asks you to list your place of residence. E.g., you can’t use a virtual address for your My Number card, driver’s license, or other application forms where you need to tell the government where you live.
Those are the basics. But you should also know that interpreting Japan’s regulations is tricky—even for Japanese business owners. And legal counsel will occasionally present differing interpretations. (If you have a particular case in mind, do reach out and ask!)
To play it safe, we’re erring on the side of caution in this article.
Who can’t use virtual office addresses in Japan?
According to a widely accepted understanding of regulations, here are the businesses that should forego virtual office addresses:
Note: The information here cannot substitute for legal counsel.
Certain legal professions 士業
Accountants, scriveners, lawyers, and other professions that end with 「士 」. These professions require registration with governing bodies, such as the Japan Tax Accountants Association, the Japan Judicial Scriveners Association, or the Japan Bar Association, etc. For most of these professions, a lease contract is required to show proof of physical space along with proof of independent office space—to ensure client privacy. Lawyers, in particular have many regulations that govern their physical office space, which conflict with the “virtual office space” concept.
Construction businesses 建設業
Construction businesses are required to have a real office or office space, including signage where one can tell from the outside that it is engaged in construction. Although the approval standards differ from prefecture to prefecture, in most cases virtual offices for businesses in this industry cannot be used for paperwork related to opening or running a construction business in Japan.
Detective agencies 探偵業
When starting a detective business, you must notify the police and receive a "detective business license" from the Public Safety Commission. You are then to post this license in a conspicuous place in your office. This is because detective work is a type of business that may infringe on the rights of others (such as privacy), and the government is in charge of managing detective agencies and making sure that clients do not hire detectives without a license.
Financial business operators 金融商品取引業者
Financial business operators (investment management, investment advisory or agency business, or any other investment-related business) must be registered and must present a Financial Instruments Business Operator Registration Card at their place of business/office. In addition, you must declare the location where you plan to display the card, as well as a drawing of the office and staff assignments. Some financial bureaus may require a copy of the lease agreement. For these reasons, legal advisors generally state that virtual addresses do not comply with regulations that govern offices for finance business operators.
Real estate businesses 不動産業
Real estate businesses are required to obtain a real estate transaction license at the time of opening. As part of the licensing requirements, you must show a lease contract for your office, and the real estate office from which you do business must be highly independent from other offices that might share the same building or floor (this independence is often marked by having its own entryway). Therefore, virtual offices and shared offices are generally seen as unacceptable for real estate use.
Secondhand goods/recycling shops 古物商
If you want to open a secondhand store or recycle store, you must have a license. And a requirement of the secondhand dealer's license is an independent business location, where relevant parties are able to meet with you in person and where you can be reachable should problems with your goods arise. After applying for a secondhand dealer's permit, a physical inspection of the business office may be conducted during the examination to prove the independence from other entities. For these reasons, virtual offices are generally thought to be risky to use for dealership paperwork.
Temporary staffing businesses and job placement businesses 人材派遣業/職業紹介業
When conducting a fee-based job placement business, you must obtain a license from the Minister of Health, Labor and Welfare through the Prefectural Labor Bureau. Part of the conditions of getting a license relates to specifics regarding office space, private interview space, and independent physical space—not shared with other companies, etc. So, generally speaking, many Japanese lawyers that give advice on this topic say virtual offices for placement agencies are a no.
Waste disposal collection 廃棄物処理業
Technically, there is no “rule” that prohibits the use of listing virtual office addresses on paperwork. However, many prefectures also require you to register a parking lot at the time of receiving your permit—so the needs of a waste disposal business owner are often not well-satisfied by virtual office addresses.
Adult entertainment (cabaret clubs, pubs, pachinko parlors, etc.) 風俗営業
This industry category refers to businesses that require an adult entertainment business license, such as pachinko parlors, cabaret clubs, bars, etc. Because this industry has up until now pertained to physical places of congregation, there are very specific requirements regarding where such establishments are allowed to open for business (zoning laws) and regulations regarding building code, which rule out virtual office addresses.
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