Q45: A foreign friend is establishing a company in Japan, and the capital will be transferred into my bank account. Will income tax be applied to the transferred amount?

Japanese Certified Public Accountant ・Tax Accountant Hiroya Aihara
Ringo Tax Corporation

A: No, income tax does not apply just because of the deposit of capital.

Explanation

When a foreigner is assisting with the establishment of a company in Japan and the capital is transferred into their bank account, there might be concerns about income tax. However, there is no need for such worries. The deposit of capital alone does not trigger income tax in Japan. In this case, the transferred capital is merely being held by the collaborator and does not constitute an act of obtaining an economic benefit. In reality, a bank account for the corporation will be set up after the company is established, and the capital will be deposited into that account. Therefore, income tax is not applied to the capital transferred into the collaborator's bank account. Understanding the tax implications related to company establishment in Japan is important for foreigners.

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