Residency Status and Conditions for Foreigners to Stay in Japan as Self-Employed Individuals
In Japan, work visas are typically obtained by entering into a contract with a registered company (or individual) and becoming a full-time or contract employee. However, in recent years, an increasing number of foreigners wish to work as self-employed individuals, contracting with multiple companies.
So, what are the residency statuses and conditions that allow self-employed individuals to stay and work in Japan?
Can Foreigners Become Self-Employed in Japan?
Depending on the nature of the business, it is possible for foreigners to obtain a residency status and work as self-employed individuals in Japan. In this case, the foreigner enters into a business contract with their clients.
However, there is no specific residency status for self-employed individuals. The type of work visa obtained will depend on the nature of the work being performed.
Conditions for Self-Employed Foreigners to Obtain a Work Visa
Let’s first look at the conditions under which a self-employed foreigner can obtain a work visa.
Income
To obtain a work visa as a self-employed individual, stable income sufficient to support oneself independently is required. Unlike salaried employees, self-employed individuals do not have a fixed monthly salary, making it difficult to prove stable income.
Additionally, income may decrease due to illness or other reasons. For this reason, self-employed individuals face stricter visa scrutiny from the Immigration Services Agency compared to salaried employees.
Contract with Clients
To objectively prove stable income, it is essential to have a business contract with clients. The contract should specify the start and end dates of the contract, the scope of work, and the compensation. The contract must also include these details in writing.
Track Record
When applying for a work visa as a self-employed individual, professional track records are important. Objective proof of past business achievements, qualifications, or awards can be advantageous.
If such records cannot be provided, the applicant must demonstrate that they can generate income using their skills.
Contract Duration
It is a minimum requirement to have at least one business contract lasting a year or more. Ideally, multiple contracts with different clients should be secured. For self-employed individuals to obtain a work visa, it is crucial to demonstrate “continuous and stable” work. Having only one contract is not sufficient.
However, even with multiple contracts, if there are gaps between the end of one contract and the start of another, it may not be considered continuous employment.
Nature of Work
A work visa generally does not allow work outside the scope of the permitted activities. Therefore, the work performed as a self-employed individual must fall within the scope of the work visa obtained.
If the individual wishes to work outside the permitted scope, they must obtain permission for additional activities.
Examples of Work for Self-Employed Foreigners
What types of jobs can foreigners perform as self-employed individuals in Japan? Some common examples include:
- Translators/Interpreters
- Engineers/Programmers
- Designers
- Consultants
- Writers/Copywriters
- Online Instructors/Coaches
- Photographers/Videographers
To work in these roles, the appropriate work visa must be obtained.
Points to Note When Obtaining a Work Visa as a Self-Employed Foreigner
There are specific considerations for self-employed foreigners when obtaining a residency status, which differ from those for salaried employees.
Reporting All Contracts to the Immigration Services Agency
Self-employed foreigners must report all contracts to the Immigration Services Agency. Failure to do so may result in failure to meet the requirements for visa renewal, leading to shortened residency periods or other penalties.
Reports must be submitted within 14 days for changes such as the name or location of the contracting organization, termination of contracts, or new contracts.
Filing Tax Returns
Unlike salaried employees, who have taxes adjusted through year-end adjustments, self-employed individuals must file tax returns. This applies to foreigners as well. They must calculate their income and expenses, determine their annual income from January 1 to December 31, and file their returns between February 16 and March 15.
Failure to file tax returns may result in tax arrears and negatively impact visa renewals, so timely preparation is essential.
Obligation to Enroll in Social Insurance
Similar to tax returns, self-employed individuals must enroll in social insurance, such as national pension and health insurance, just like Japanese citizens. Foreigners are not exempt from this requirement.
Procedures are handled at the local municipal office.
Reporting Changes in Contracting Organizations
Self-employed foreigners must report the termination of contracts with companies by submitting a “Report of Contract Termination with Contracting Organization.” Similarly, they must report new contracts by submitting a “Report of New Contract with Contracting Organization” within 14 days of the contract’s start or end.
Failure to report may result in penalties.
Signing Written Contracts with Clients
To provide proof to the Immigration Bureau, contracts with clients must be in writing. Written contracts not only demonstrate the scope of work and compensation for visa applications but also help avoid unexpected disputes.
It is also important to ensure that the contract is fair and not disadvantageous to the foreigner. For example, it is unacceptable for a self-employed foreigner to receive lower compensation than a Japanese employee for the same work. Therefore, one of the requirements for a work visa is that the foreigner must receive compensation equal to or higher than that of Japanese employees.
Types of Work Visas Available for Self-Employed Individuals
Below are the main types of visas available for self-employed foreigners:
- Engineer/Specialist in Humanities/International Services Visa
- Business Manager Visa
- Status-Based Visas (Permanent Resident, Long-Term Resident, Spouse, etc.)
1. Engineer/Specialist in Humanities/International Services Visa
The Engineer/Specialist in Humanities/International Services Visa (also known as the “Technical/Humanities/International Services Visa”) allows foreigners to engage in technical or specialized international services in Japan. The visa is intended for foreigners who contribute specialized knowledge or skills to Japan.
However, due to the unstable nature of self-employment, obtaining this visa can be challenging, and the conditions are strict.
Self-employed individuals are classified under Category 4, which is not subject to the same requirements as Categories 1-3, which apply to employees of companies or organizations.
Conditions for Obtaining the Visa
- Engage in highly technical or specialized activities based on academic background or professional experience.
- Secure contracts with multiple clients to ensure stability and continuity.
- Contracts must be with Japanese companies or organizations.
- If business scales up or employees are hired, the visa must be changed to a Business Manager Visa.
- Long-term contracts are recommended.
Fields of Work
- Technical Fields: Engineers, Programmers, etc.
- Humanities Fields: Consultants, etc.
- International Services Fields: Translators, Interpreters, Designers, etc.
Application Process and Timeline
- Apply for a Certificate of Eligibility.
- Receive the Certificate of Eligibility.
- Apply for a visa using the Certificate of Eligibility.
- Enter Japan within three months of receiving the Certificate of Eligibility.
The application process typically takes 1-3 months, but it may take longer for complex cases, especially for self-employed individuals.
2. Business Manager Visa
The Business Manager Visa is for foreigners engaged in managing or operating a business in Japan. It allows foreigners to operate a business or manage a corporation in Japan.
However, the conditions for obtaining this visa are stringent.
Conditions for Obtaining the Visa
- Establish an office in Japan.
- Hire at least two full-time employees or invest 5 million yen or more.
- Submit a business plan to prove the stability of the business to the Immigration Bureau.
The process involves creating a business plan and articles of incorporation, opening a bank account, registering the company, and obtaining a certificate of incorporation.
Eased Conditions for Business Manager Visa
The Startup Visa program significantly eases the conditions for obtaining a Business Manager Visa. This is due to the low number of foreigners residing in Japan under this visa and the declining trend in its issuance.
Japan ranks 21st out of 24 countries in the OECD’s attractiveness evaluation, which assesses factors such as the number of multinational companies and tax systems.
The eased conditions aim to encourage foreign entrepreneurs and students to start businesses in Japan.
Application Process and Timeline
- Create a sustainable business plan and outline the business.
- Secure an office.
- Complete company registration procedures.
- Obtain necessary permits.
- Prepare the Business Manager Visa application.
- Submit the visa application.
- Receive visa approval.
The process typically takes 1-3 months for visa approval, with an additional 4-6 months for company setup.
3. Status-Based Visas (Permanent Resident, Long-Term Resident, Spouse, etc.)
Status-based visas are not work visas but allow the holder to work without restrictions. Holders of these visas can start businesses or work as self-employed individuals, just like Japanese citizens.
There are four types of status-based visas:
- Permanent Resident
- Long-Term Resident
- Spouse of a Japanese National
- Spouse of a Permanent Resident
Permanent Resident
Permanent residents have no restrictions on their period of stay and can reside in Japan indefinitely. They have the same freedom in choosing occupations as Japanese citizens but must obtain re-entry permits if they leave Japan.
Conditions for Obtaining Permanent Residency
- Good conduct.
- Sufficient assets or skills to support oneself.
- Residency in Japan must align with the national interest.
Long-Term Resident
Long-term residents are foreigners allowed to reside in Japan for a specified period based on special circumstances. This includes third-country resettlement refugees, third-generation Japanese descendants, and Chinese returnees.
Spouse of a Japanese National
This status applies to spouses, special adoptees, or children born to Japanese nationals. Conditions include proving the marital relationship and the ability to support oneself in Japan.
Spouse of a Permanent Resident
This status applies to spouses of permanent residents. Divorced or widowed individuals are not eligible, and the couple must generally live together.
Support for Foreign Entrepreneurs in Japan
There are various support measures for foreigners starting businesses in Japan. Examples include:
- Startup Visa
- Funding Support for Foreign Entrepreneurs
- Foreign Resident Support Center (FRESC)
Startup Visa
The Startup Visa allows foreigners to stay in Japan for up to one year to prepare for starting a business. During this period, they can open bank accounts, rent offices, conduct market research, and consult with experts.
Conditions for the Startup Visa
- Prepare 5 million yen in capital.
- Submit a business plan demonstrating the need for startup preparation.
- Prove the feasibility of the business in Japan.
- Demonstrate sufficient funds for living and business activities.
Municipalities Offering the Startup Visa
As of January 2021, the following municipalities offer the Startup Visa:
- Sendai City
- Tokyo
- Kanagawa Prefecture
- Niigata City
- Aichi Prefecture
- Hiroshima Prefecture
- Imabari City
- Fukuoka City
- Kitakyushu City
Funding Support for Foreign Entrepreneurs
Tokyo’s funding support project for foreign entrepreneurs provides loans and business support through financial institutions. The project aims to strengthen international competitiveness and create a hub for international economic activity in Tokyo.
Eligibility Criteria
- Obtain business plan approval from the Tokyo Metropolitan Government.
- Have started the business within the last five years.
- Hold a residency status that allows unrestricted work (e.g., Permanent Resident, Spouse of a Japanese National, Business Manager Visa).
- Have the company’s headquarters or main office in Tokyo.
- The business must be a corporation.
Loan Conditions
- Maximum loan amount: 15 million yen (7.5 million yen for working capital only).
- Repayment period: Up to 10 years (with a grace period of up to 3 years).
- Interest rate: Fixed at 2.7% or lower.
- Guarantor: Generally not required.
- Collateral: Unsecured.
Foreign Resident Support Center (FRESC)
FRESC is a government agency that supports foreigners residing in Japan. It provides advice on visa acquisition and legal matters, facilitating a smooth startup process for foreign entrepreneurs.
Features of FRESC
- Free and anonymous consultations.
- Multilingual support.
- Multiple consultation methods (in-person, phone, email, online).
FRESC Offices
FRESC includes the following government agencies:
- General Reception
- Immigration Services Agency (Disclosure Request Office)
- Tokyo Immigration Bureau
- Tokyo Legal Affairs Bureau Human Rights Department
- Japan Legal Support Center (Houterasu)
- Ministry of Foreign Affairs Visa Information
- Tokyo Labor Bureau Foreign Workers Special Consultation and Support Office
- Tokyo Foreign Employment Service Center
- Japan External Trade Organization (JETRO)
- FRESC Help Desk (established during the COVID-19 pandemic)
Contact Information for FRESC
Address: 13F, Yotsuya Tower, 1-6-1 Yotsuya, Shinjuku-ku, Tokyo
Phone: 0570-011000 (Main)
Hours: 9:00 AM – 5:00 PM
Closed: Saturdays, Sundays, Holidays, Year-End Holidays
Conclusion
Self-employed foreigners are often viewed negatively in terms of business continuity compared to corporations, making visa applications more challenging.
However, if you wish to work as a self-employed individual in Japan, it is essential to follow each step of the process accurately. To avoid mistakes and ensure a smooth application, having sufficient knowledge is crucial.
If you are unsure about the procedures or document preparation, seeking assistance from professionals such as administrative scriveners is a good option.