Executive Pay for Business Manager Visa in Japan

Setting executive compensation is a crucial factor when applying for or renewing a Business Manager Visa in Japan. Determining an appropriate salary not only increases the chances of a successful visa application but also helps establish a stable foundation for living in Japan.

Key points of this article are as follows:

✓Changes to executive compensation must, in principle, be made only once a year and within three months from the start of the fiscal year. ✓Executive compensation must be paid at regular intervals in the amount previously reported to the tax office. ✓For single applicants, a monthly salary of ¥180,000 to ¥200,000 or more is a general guideline. If aiming for permanent residency, a monthly salary of at least ¥250,000 is recommended.✓Not enrolling in social insurance or failing to pay premiums may negatively impact the renewal of a Business Manager Visa.

This article covered how to appropriately set executive compensation, provided benchmarks for salary levels, highlighted important considerations, and outlined key points for those aiming to obtain permanent residency.

1.What is a Business Manager Visa Japan?

The Business Manager Visa is a work visa required for foreign nationals to operate or manage a company in Japan. It was previously known as the “Investor/Business Manager Visa,” but the name was changed to “Business Manager Visa” as it became available even without foreign capital investment.

While Japanese nationals and permanent residents can engage in business management without restrictions, foreign nationals are subject to limitations based on their residence status. However, by obtaining a Business Manager Visa, foreigners can also manage and operate businesses within Japan.

Below, we will explain the overview and requirements for obtaining a Business Manager Visa in detail.

1-1. Duration of Stay and Renewal Frequency for the Business Manager Visa Japan

The Business Manager Visa is generally granted for a period ranging from 3 months to 5 years, with the initial visa typically issued for 1 year. For those entering Japan to prepare for company establishment, a 4-month visa may be issued.

When renewing the Business Manager Visa, the length of stay—6 months, 1 year, 3 years, or 5 years—is determined based on the stability and performance of the business.

However, even if a long-term visa is granted once, it is not automatically renewed. Each renewal is subject to review, so maintaining stable business operations is essential.

1-2. Activities Permitted Under the Business Manager Visa Japan

With a Business Manager Visa, a wide range of business activities are permitted in Japan. It provides opportunities not only to start a new business and expand your potential but also to join an existing Japanese company, take part in its management, or even succeed a business.

There are no specific restrictions on the type of business, and as long as the activities are legally permitted, you can operate various kinds of businesses just like a Japanese national.

1-3. Requirements for Obtaining a Business Manager Visa Japan

The requirements for obtaining a Business Manager Visa differ depending on whether you are starting a new business in Japan or working as a manager in an existing company. The specific requirements for each case are outlined below.

1.Starting a Business in Japan

• You must secure a physical office space within Japan.
• You are required to either hire at least two full-time employees or invest a minimum capital of ¥5 million.
• It is important to demonstrate the appropriateness, stability, and continuity of the business.
• The visa applicant must be directly involved in the management of the business.

2.Working as a Manager in an Existing Company

• At least three years of practical experience in business management or administration is required (this may include time spent studying relevant subjects at a graduate school).
• The applicant must receive compensation equal to or higher than that of a Japanese national in a similar position.
• The applicant must be directly engaged in the company’s management duties.

For detailed requirements and the application process, please refer to the related articles.

2.How to Set Executive Compensation for a Business Manager Visa Japan: Guidelines and Benchmarks

When applying for a Business Manager Visa, how executive compensation is determined is a key factor. Under the Companies Act in Japan, executive compensation must be set either in the company’s articles of incorporation or by a resolution at the shareholders’ meeting.

In practice, since amending the articles of incorporation can be time-consuming, compensation is usually decided at a shareholders’ meeting. Therefore, if the articles do not specify the amount, a resolution must be passed at the shareholders’ meeting (or a members’ meeting in the case of an LLC).

This section provides a detailed explanation of the deadline for setting executive compensation and benchmark salary levels.

2-1. Deadline for Setting Executive Compensation

Executive compensation must be determined within three months from the establishment of the corporation and paid as a “fixed and regular salary” (teiki-dōgaku kyūyo), meaning the same amount must be paid on a fixed date at least once a month. This system is designed to prevent corporations from manipulating profits intentionally.

The determined salary must be transferred from the company’s bank account to the executive’s personal account, with a clear transaction record. Failure to comply with these rules may result in the compensation not being recognized as a deductible expense, potentially leading to unexpected tax liabilities.

From the second fiscal year onward, executive compensation must also be set within three months from the start of the fiscal year.

2-2. Recommended Salary Levels for Executive Compensation

To obtain a Business Manager Visa, it is essential to set an appropriate level of executive compensation. If the salary is set at zero, immigration authorities may determine that the applicant cannot sustain a living in Japan, making visa approval difficult. While the exact amount depends on individual circumstances, a minimum monthly salary of ¥180,000 is recommended for single applicants with no dependents.

However, considering recent inflation, a monthly salary of at least ¥200,000 is more realistic for living in urban areas. Those who are married or have dependents will need to set a higher salary accordingly.

Moreover, for those aiming to obtain permanent residency in the future, a monthly executive salary of ¥250,000 or more is ideal.

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3.Key Points to Check When Setting Executive Compensation

Executive compensation is not only crucial for obtaining a Business Manager Visa but also serves as an indicator of the business’s stability. Several factors should be considered, such as maintaining a reasonable balance with employee salaries and ensuring consistent payment after visa approval.

Below are the key points to keep in mind when setting executive compensation.

3-1. Do Not Set Executive Compensation Lower Than Employee Salaries

In store-based businesses or industries that require hiring employees, executive compensation should not be set lower than that of regular employees. A low salary for the executive may raise doubts about whether the applicant is truly managing the business. Immigration authorities may suspect that the executive holds only a nominal title while actual operations are being handled by employees.

To demonstrate business stability, executive compensation should generally be the highest within the company. This serves as important evidence that the executive is actively involved in the management. Additionally, when employing foreign staff, compensation must be equal to or higher than that of Japanese employees.

3-2. Executive Compensation Must Be Paid Regularly Even After Obtaining the Business Manager Visa Japan

Since executive compensation must be paid as a fixed and regular salary, the same amount must be paid at consistent intervals. This rule continues to apply even after obtaining the Business Manager Visa.

Even during periods of low sales, payment of the predetermined executive salary is required. If the salary is not being paid as scheduled, immigration authorities may question the stability of the business or raise concerns about the applicant’s ability to maintain a stable living foundation in Japan.

Therefore, it is essential to continue paying the same amount of executive compensation regularly until the next visa renewal.

4.Key Considerations When Aiming for Permanent Residency with a Business Manager Visa

Obtaining permanent residency in Japan offers advantages such as greater stability and the ability to conduct business activities without the limitations of the Business Manager Visa. For this reason, many individuals aim to acquire permanent residency as part of their long-term plans.

However, the requirements for permanent residency are stricter than those for the Business Manager Visa.

This section highlights the key points to consider when aiming for permanent residency.

4-1. Hold a Visa with a 3-Year or 5-Year Period of Stay

If you are aiming for permanent residency, you must hold a Business Manager Visa with a 3-year or 5-year period of stay. Additionally, you are required to have resided in Japan continuously for 10 years, with the most recent 5 years spent working under a valid work-related visa status.

For the 5-year work requirement, time spent under other work visa categories can be combined to meet the requirement.

When first obtaining a Business Manager Visa, most applicants are granted a 1-year stay. This is because newly established companies are not yet considered stable.

The Immigration Services Agency places strong emphasis on business stability during renewal reviews. Achieving two or more consecutive fiscal years with a profit significantly increases the chances of being granted a 3-year visa.

4-2. Annual Executive Compensation of at Least ¥3,000,000

Executive compensation is a key requirement for obtaining permanent residency. As part of the application, you will need to submit proof of annual income for the past five years, so it is important to plan accordingly.

For applicants with a work-related visa, an annual income of at least ¥3,000,000 is generally considered the minimum benchmark. Since executive compensation is typically the main source of income for those holding a Business Manager Visa, a monthly salary of at least ¥250,000—totaling ¥3,000,000 or more annually—is recommended.

4-3. Operating Profit Must Be in the Black

When applying to switch from a Business Manager Visa to permanent residency, one of the key factors considered during the review is the financial stability of the company. In particular, maintaining a positive operating profit is an important criterion.

For instance, if the company is in a state of excess debt, it may be seen as a sign that the business owner is unable to secure a stable income. Furthermore, if the company has recorded consecutive operating losses, immigration authorities may consider the risk of reduced executive compensation during the review process.

If the company is in a state of insolvency, it is unlikely that the applicant, as the business manager, will be deemed to have stable earnings. Therefore, having a positive operating profit for at least the last two fiscal years is strongly recommended.

4-4. Enroll in Social Insurance and Pay Taxes as a Company

Enrolling in social insurance and properly paying taxes as a company is extremely important when aiming for permanent residency. Social insurance—which includes employee pension insurance and health insurance—is mandatory even for companies with only one executive. This is because such companies are classified as mandatory coverage workplaces.

If a company fails to enroll in social insurance or falls behind on premium payments, the likelihood of permanent residency approval significantly decreases. Authorities closely examine whether payments have been made properly, and any noncompliance can make approval difficult.

Additionally, social insurance enrollment plays a major role in renewing the Business Manager Visa. Delays or failures in payment can hinder the visa renewal process. Therefore, it is essential to complete the enrollment procedure as soon as the company is established.

4-5. Prepare a Guarantor for Your Application

When applying for permanent residency, the guarantor must be either a Special Permanent Resident, a Permanent Resident, or a Japanese national, and it is generally preferred that the guarantor has an annual income of at least ¥3,000,000.

The guarantor’s responsibilities include confirming the applicant’s compliance with laws and covering potential expenses for living and repatriation. However, under the Immigration Control Act, guarantors are not legally or financially liable in principle.

That said, there is a moral responsibility involved. If the guarantor fails to fulfill their role in the event of an issue, they may lose eligibility to serve as a guarantor in the future.

Furthermore, involvement in intentional misconduct such as submitting false applications may result in criminal liability and become subject to police investigation, so careful attention is required.

5.Conclusion

This article explained the key points regarding executive compensation under the Business Manager Visa. To summarize:

✓Changes to executive compensation must, in principle, be made only once a year and within three months from the start of the fiscal year. ✓Executive compensation must be paid at regular intervals in the amount previously reported to the tax office. ✓For single applicants, a monthly salary of ¥180,000 to ¥200,000 or more is a general guideline. If aiming for permanent residency, a monthly salary of at least ¥250,000 is recommended.✓Not enrolling in social insurance or failing to pay premiums may negatively impact the renewal of a Business Manager Visa.

To obtain and renew a Business Manager Visa, the amount and consistency of executive compensation are crucial factors. If the salary is too low, it may be seen as a sign of business instability, potentially leading to visa renewal being denied.

It is essential to follow the principle of “fixed and regular salary payments,” meaning the same amount must be paid each month regardless of business performance. Especially for those aiming to obtain permanent residency in the future, securing a monthly salary of at least ¥250,000 is highly recommended.

If you find it difficult to set the appropriate executive compensation or navigate the visa application process, it is advisable to consult with a certified immigration specialist (Gyoseishoshi).

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