Several mandatory steps are required to open a foundation in Japan and the process starts with selecting the form of the future foundation. Registration is also required in most cases and the process can differ slightly between the two accepted forms.
Setting up a foundation in Japan is easier when enlisting the assistance of our local specialists. In addition to guidance for company formation in Japan, we can also help those interested in creating a foundation.
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Types of foundations in Japan
A foundation is an entity established for non-profit purposes. Unlike in the case of company registration in Japan, the resulting foundation will not be used for commercial or trading purposes, but for private or voluntary activities that aim to support culture and education, have religious purposes, are involved in sustainability, and other such purposes.
Those who open a foundation in Japan will typically choose between two forms of engaging in such business, the general incorporated foundation or the public interest incorporated foundation. The latter usually has a broader scope than the former.
For the purposes of those who will open a foundation in Japan, the general incorporated foundation will be the preferred choice, as the public interest foundation will often carry out government-approved public interest projects.
The difference between the two types of entities can be outlined in more detail upon request by our experts in company registration in Japan. If you are considering starting this type of company and don’t know which country to choose, we recommend you to contact our partners Bridgewest – a firm specialized in offshore company formation matters.
How to open a foundation in Japan
The main steps for setting up a foundation in Japan under the form of a general incorporated foundation include:
- Deciding the structure of the foundation;
- Choosing the name of the general incorporated foundation and including the mandatory Japanese characters that accompany it, and refer to the type of entity. General incorporated foundations cannot use names that are misleading or that would lead to them being mistaken for a general incorporated association;
- Drawing up the constitutive documents;
- Establishing the management structure (see below for more details);
- Ensuring that the minimum amount of assets is provided for (3 million yen or approximately USD 20,500 for the general incorporated foundation and more in the case of a large-scale general incorporated foundation, approximately 20 million yen or more);
- Registering the foundation with the authorities. The registered address of the foundation will be that of its main office (as stipulated in its constitutive documents).
The organization of a general incorporated foundation will include, at a minimum, a board of trustees, a board of directors, a counsellor, and an auditor. The boards must have a minimum membership, and other conditions apply.
The following information is included in the general incorporated foundation’s Articles of Incorporation:
- The foundation’s purpose;
- Its name;
- The location of its main office;
- The name and address of the founder;
- The founder’s contributions to the foundation’s assets.
Foundation liability and compliance in Japan
Founders who register a foundation in Japan should also know that they are liable in respect to the activities of the foundation. The founders (and foreign founders) can be liable for the compensation of damages as well as when they act in bad faith or are negligent in the performance of their duties. The foundation director and auditor also have the same level of liability and must act in good faith in the dealings of the foundation.
Some key issues regarding taxation for those who open a foundation in Japan include:
- Tax deductions for contributions made to foundations;
- A rate of 23.4% corporate tax is applicable to foundations in general;
- A lower rate of 15% corporate tax when the revenue of the foundation is below 8 million yen.
Our team that can help you with company registration in Japan can also assist you if you wish to set up a foundation.
Contact us for more information on the general incorporated foundation or if you have other questions about doing business in Japan.