US Company Formation from Japan (2026): How to Set Up a US LLC or C-Corp as a Resident or Citizen of Japan

Japanese founders usually come to a US company for one of three reasons. A freelancer or small studio in Tokyo or Fukuoka has American clients who would rather pay a US vendor. An online seller wants to sell on Amazon.com or open a Shopify store priced in dollars. Or a kabushiki kaisha that already sells into the USA wants a local company to hold inventory, hire people and sign contracts. All three can be done from Japan without travelling, and the US side is simpler than most people expect.

The Japanese side is where people get caught out. Japan does not follow the US "check-the-box" system. It generally treats a US LLC as a foreign corporation, even one the IRS ignores, and that single difference changes how LLC profits are taxed in Japan. This guide explains how US company formation works from Japan, then takes US LLC formation and US C-Corp formation separately, with yen examples, so you can decide which suits you before you talk to your tax accountant (zeirishi).

In short: anyone living in Japan, Japanese citizen or not, can own 100% of a US LLC or C-Corporation, formed remotely with no visa or Social Security number. Japan generally treats a US LLC as a foreign corporation, not a pass-through. A US company that pays little US tax and has no office or staff of its own can fall under Japan's CFC rules (タックスヘイブン対策税制), which add its income to the Japanese owner's income. US dividends to a resident of Japan are withheld at 10% under the treaty, and at 0% for a Japanese parent company owning more than 50%. With UCB, a Wyoming LLC with EIN is $249 and a Delaware corporation with EIN is $358, all-in.

Who can set up a US company from Japan

US states do not care where a company's owners live or what passport they hold. A Japanese citizen in Osaka, a foreign engineer living in Tokyo on a work visa, and a Japanese national who has moved to Singapore can all own a US company outright and be its only manager or director. Nobody has to visit the USA, hold a US visa or have a US address. The company does need a registered agent in its state, which is included for the first year in every UCB formation (see registered agent explained).

What decides your Japanese tax is where you live, not your nationality. Japan taxes residents (居住者) on worldwide income and non-residents only on income from Japan. That gives three different starting points:

• A Japanese citizen living in Japan is a permanent resident for tax purposes, taxed on everything earned anywhere, including what a US company earns or pays out.
• A foreign national living in Japan is usually a non-permanent resident (非永住者) for the first five years out of the last ten. Foreign-source income is then taxed in Japan only to the extent it is paid in or remitted to Japan. After that you become an ordinary resident.
• A Japanese citizen living abroad who has left Japan and has no address there is a non-resident. Japan does not tax a US company that has nothing to do with Japan, and what matters is the tax law of the country where you now live.

Most of this guide is written for the first group, residents of Japan, because that is where the Japanese rules bite.

How US company formation from Japan works

The steps are the same whether you pick an LLC or a corporation. You choose a state and a name, the state registers the company, and the IRS issues an Employer Identification Number (EIN), which every US company needs for banking, payment platforms and tax filing. You do not need an SSN or ITIN for this (see EIN for non-residents). The company then opens a US business bank account, which is done online, and you start invoicing.

A detail that surprises Japanese founders: a US company name must be in Latin letters. A katakana or kanji trade name can be used in your marketing, but the legal name on the state record and EIN letter must be romanised, and it should be spelled the same way everywhere, including on the bank application and your website. Signatures are ordinary written signatures. Hanko are not used, and nothing has to be notarised to form the company.

For documents you need a valid passport (a My Number card is not accepted by US banks as identity), proof of your address in Japan, and a clear description of what the business does. For proof of address, a recent utility bill or bank statement in your name is easiest. A juminhyo works if a translation is attached. Foreign residents can use their residence card (在留カード) together with the passport.

US LLC formation from Japan

What the US sees

A single-member LLC owned by a non-resident is a "disregarded entity" for US federal income tax. If all the work is done in Japan, with no US office, staff or agents who conclude contracts in the USA, its income is usually not effectively connected with a US trade or business, and no US federal income tax is due (see effectively connected income explained). The LLC still files Form 5472 with a pro forma Form 1120 every year, reporting money moving between you and the company. Missing it carries a $25,000 penalty, even though no tax was owed (see Form 5472 explained).

Wyoming and New Mexico are the usual states for a Japan-run LLC. They have low yearly costs, owners' names are kept off the public filing, and they make no difference to the company's federal tax.

What Japan sees

Japan's National Tax Agency treats an LLC formed under US state law as a foreign corporation (外国法人) for Japanese tax, whatever the LLC elected in the USA. The logic is that the LLC has its own legal personality under US law, can own property and sue in its own name, and protects its members from its debts, so it looks like a company rather than a partnership. (A US limited partnership, by contrast, is treated as transparent since a 2017 NTA notice. LLCs did not get the same treatment.)

So the same company is invisible to the IRS but is a separate taxpayer in Japan. Three consequences follow for a resident of Japan.

First, profits kept in the LLC are not your income in Japan in the year they are earned, and money you take out is a dividend from a foreign company, not drawings from your own business. Foreign dividends are taxed as miscellaneous comprehensive income at your marginal rate, with income tax up to 45% plus 10% resident tax, and without the dividend credit that dividends from Japanese companies get.

Second, the CFC rules can pull the profits back into your income anyway. If Japanese residents and Japanese companies together own more than 50% of a foreign company, it is a "foreign related company". If you own at least 10% of it, its income can be added to yours each year, depending on how much tax the company pays and how much substance it has:

• A company that pays almost no tax and has no office or staff of its own, and is not managed by itself where it is based, is a "paper company" (ペーパーカンパニー). If its effective tax rate is below 27%, all its income is added to the shareholder's income.
• A company with real activity that still fails the economic activity tests is fully included if its tax rate is below 20%.
• A company that passes the tests but has passive income such as interest, royalties or capital gains can have that passive income included if its rate is below 20%.

A disregarded LLC run from a desk in Japan, with only a registered agent's address in the USA, pays 0% US tax and usually has no fixed place of business or management of its own in the USA. That is close to the textbook paper company, so for many solo founders the CFC rules mean the LLC's profit is taxed in Japan in the year it is earned, as miscellaneous income (雑所得). Losses inside a foreign company cannot be set against your other Japanese income.

Third, there is a permanent establishment question. If the LLC is a foreign corporation and its whole business is run by you from Japan, Japan can argue the LLC has a permanent establishment in Japan and taxes its profits as a foreign corporation doing business in Japan. Your zeirishi will look at how the business actually operates.

None of this makes a US LLC illegal or pointless for a resident of Japan. It means a US LLC is rarely a way to save Japanese tax. It is a commercial tool: a US entity, a US bank account, US payment platforms and US marketplaces. Plan on the profits being taxed in Japan more or less as if you had earned them yourself, with extra filings on top.

A yen example

These are illustrative figures, not a client case, at ¥150 to the dollar.

Aiko is a UI designer in Tokyo with American clients. She forms a Wyoming LLC, opens a US account and invoices $120,000 a year. Software and other costs are $20,000, leaving $100,000 profit, about ¥15 million. She keeps the money in the LLC's US account.

In the USA, the LLC files Form 5472 and a pro forma 1120, and no federal income tax is due because the work is done in Japan.

In Japan, her zeirishi concludes the LLC is a paper company with an effective tax rate of 0%. The ¥15 million is added to Aiko's income as miscellaneous income for the year, even though none of it has reached Japan. Before deductions, income tax at the 33% band works out at about ¥3.41 million, the 2.1% reconstruction surtax adds about ¥72,000, and resident tax at 10% adds about ¥1.5 million, a total of roughly ¥5 million. When the LLC later pays the money out to her, the part already taxed under the CFC rules is not taxed a second time.

Had Aiko invoiced the same clients as a sole proprietor (個人事業主), the profit would have been business income at much the same rates, with the blue return deduction and the ability to offset losses. What the LLC gave her was not a tax saving but a US company her clients were happier to contract with, a US bank account and Stripe in dollars. For her that was worth the extra filings. For another freelancer it might not be.

Consumption tax and invoicing

Services provided from Japan to a client outside Japan for use outside Japan are generally export-exempt for Japanese consumption tax. A Japanese sole proprietor invoicing a US client does not add consumption tax. Since the qualified invoice system started in October 2023, your registration status matters mainly for Japanese customers.

If your US company itself sells digital services to consumers in Japan, such as an app, an online course or a subscription, Japan can require the US company to register as a foreign business for consumption tax. Sales to Japanese businesses fall under the reverse charge.

US C-Corp formation from Japan

What the US sees

A C-Corporation pays US federal tax of 21% on its profits wherever its people work, plus state income tax where it has nexus. Delaware is the standard state for a company that will raise money from US investors. Wyoming works for a small corporation with no investors. The corporation files Form 1120 every year, plus Form 5472 for transactions with its foreign owner (see the 21% corporate tax explained and the C-Corp guide for non-residents).

Dividends paid to a shareholder in Japan carry US withholding tax. The standard rate is 30%, but under the US–Japan treaty it is 10% for an individual, 5% for a company owning at least 10%, and 0% for a Japanese company that has owned more than 50% for at least six months. You claim the treaty rate on Form W-8BEN (individuals) or W-8BEN-E (companies) (see W-8BEN-E vs W-8BEN). Since the 2019 protocol to the treaty, most interest and royalties paid from the USA to Japan carry no US withholding.

What Japan sees

Japan has no classification problem with a corporation: both countries agree it is a separate company. The Japanese questions are what happens to dividends and whether the CFC rules apply.

For an individual resident of Japan, US dividends are taxed in Japan as miscellaneous comprehensive income. The 10% US withholding counts as a foreign tax credit against the Japanese tax. Profit therefore bears 21% US corporate tax, then 10% US withholding, then the balance of your Japanese rate.

For the CFC rules, 21% federal tax is above the 20% threshold that applies to a company with real activity. But if the corporation is a paper company, with no US office, no staff and run entirely from Japan, the threshold is 27%. A corporation paying only federal tax, in a state such as Wyoming or Delaware that does not tax its income because it does no business there, falls below it. A C-Corp is therefore not an automatic escape from the CFC rules for a solo founder in Japan. Substance in the USA is what takes a company outside them. Your zeirishi should also tell you how much of the US corporate tax can be credited where income is included under the CFC rules, because the credit rules are less generous for individuals than for companies.

A Japanese company with a US subsidiary

The most common C-Corp case is a Japanese company setting up a US subsidiary (米国子会社). Here the numbers usually work well.

Take an Osaka kitchenware maker (an illustrative example) that forms a Delaware corporation to import its products, keep stock with a fulfilment centre in California, and sell to American retailers and on Amazon.com. The subsidiary hires a sales manager in Los Angeles. In a year it makes $200,000 profit. It pays $42,000 federal tax, plus California franchise tax because it does business there. It then pays a dividend to its Osaka parent.

Because the parent has owned more than 50% for over six months, US withholding on the dividend is 0% under the treaty. In Japan, dividends from a foreign subsidiary owned at least 25% for six months qualify for the foreign dividend exclusion: 95% of the dividend is excluded from the parent's taxable income, so only 5% is taxed at the corporate rate. The subsidiary has an office and staff and pays more than 20% in combined US taxes, so the CFC rules are not a concern.

A Japanese company should normally use a corporation, not an LLC, for its US subsidiary. Because Japan treats an LLC as a corporation while the USA ignores it, a KK owning a single-member LLC ends up with a hybrid: the KK itself is the US taxpayer on the LLC's US business, with branch profits tax and a US return of its own. A US corporation avoids that mismatch. Pricing between parent and subsidiary must be documented (transfer pricing). See US subsidiary for a foreign company.

Startups raising from US investors

A Japanese startup that wants US venture capital will usually be asked for a Delaware C-Corporation parent, sometimes with the Japanese KK beneath it as a subsidiary (a "flip"). The flip is a legal and tax project, not a filing. Exchanging Japanese shares for shares in a foreign parent can be a taxable event for the Japanese founders, so it needs lawyers and tax advisers in both countries. Forming the Delaware corporation is the easy part (see raising US investment as a foreign founder).

Reporting obligations in Japan

Beyond your tax return (due 15 March), two Japanese reports often come up.

The foreign assets report (国外財産調書) is required from a resident (other than a non-permanent resident) whose foreign assets total more than ¥50 million on 31 December. Since the 2023 tax year it is due by 30 June of the following year. Shares in your US company and money in its US bank account can count towards the threshold, depending on how they are held. Late or missing reports lose a penalty reduction and, in serious cases, carry criminal penalties.

The Foreign Exchange and Foreign Trade Act (外為法) treats buying 10% or more of a foreign company as outward direct investment. For ordinary businesses, prior notification applies only in a short list of restricted industries (fisheries, leather and arms among them), and a post-investment report to the Ministry of Finance via the Bank of Japan is required only for large investments, far above what a typical founder puts into a new US company. Your bank will tell you if a report is needed when you send the capital.

Which state

For a freelancer, agency or online business run from Japan, Wyoming is the default, with New Mexico as the lowest-cost alternative because it has no annual report. Delaware is for a corporation that will raise from investors. If the US business will have a real office, warehouse or staff somewhere, form the company in that state or register it there. California is common for Japanese companies because of Los Angeles and the Japanese business community in Torrance and the South Bay, but it charges a minimum $800 franchise tax each year. See Wyoming LLC for non-residents, California LLC for non-residents, best state for non-residents or the state selector.

What it costs

State fees and the first-year registered agent are included. Your zeirishi's fees in Japan are separate, and worth budgeting for, because the Japanese side of a US company is more work than the US side. See what a US LLC costs every year.

Banking and payments from Japan

Japan is a low-risk country for US banks and fintechs, and residents of Japan are generally accepted for remote business accounts. Applications fail for avoidable reasons: a vague business description ("trading", "consulting"), a website that is empty or only in Japanese, a company name romanised differently on the EIN letter and the application, or the registered agent's address given as the business address. Have an English page that explains what you sell, and use a US business address with your own suite number.

To bring money home, a US account can wire dollars to your Japanese bank or to a multi-currency account. Japanese banks ask the purpose of incoming foreign remittances, so keep the invoices and the company's documents to hand. See US business bank accounts for non-residents, why banks reject non-resident applications and Stripe for non-residents.

If you later move to the USA

Japan is a treaty country for the E-1 and E-2 visas. A Japanese citizen who invests substantially in a real US business can apply for an E-2 visa through it, with an immigration lawyer. Two things change when you move. Once you are resident in the USA, the US company's profits become your US taxable income. And leaving Japan with ¥100 million or more in securities, including shares in your US company, can trigger Japan's exit tax (国外転出時課税) on unrealised gains. If a move is likely, plan the structure for it from the start.

Common mistakes

• Assuming the LLC is a pass-through in Japan because it is one in the USA. Japan generally treats it as a corporation.
• Assuming no US tax means no tax. For a paper company the CFC rules usually bring the profit into your Japanese income anyway.
• Choosing a C-Corp to escape the CFC rules without US substance. At 21% federal tax only, a paper company is still below the 27% threshold.
• Skipping Form 5472 because the LLC owed no US tax.
• Romanising the company name differently on the state record, the EIN letter and bank forms.
• Using an LLC as a KK's US subsidiary, creating a hybrid that complicates both countries' tax.
• Forgetting the foreign assets report once your foreign holdings pass ¥50 million.

Frequently asked questions

Can a Japanese citizen own 100% of a US company? Yes, whether living in Japan or abroad. No US visa, SSN or visit is needed.

Is a US LLC a corporation or a partnership for Japanese tax? Japan's tax authority generally treats an LLC formed under US state law as a foreign corporation, whatever it elected for US tax.

Will my US LLC pay US tax if I work from Japan? Usually not, if there is no US office, staff or agent. It still files Form 5472 and a pro forma 1120 every year.

Does the US LLC reduce my Japanese tax? Rarely. A US company with no tax and no substance is usually caught by the CFC rules, so its profit is taxed in your hands in Japan. The benefits are commercial: US clients, US banking and US marketplaces.

LLC or C-Corp for a company that owns a US subsidiary? A corporation. Japan treats an LLC as a corporation while the USA ignores it, and that hybrid complicates both sides.

How much US tax is withheld on dividends to Japan? 10% for an individual, 5% for a company owning at least 10%, and 0% for a company owning more than 50% for six months, with a W-8BEN or W-8BEN-E.

I am a foreign national living in Japan. Does this apply to me? In your first five years of residence in the last ten, as a non-permanent resident, foreign income is taxed in Japan only when paid in or remitted to Japan, and the foreign assets report does not apply. After that, the same rules apply to you as to a Japanese citizen.

Do I need an ITIN? Not to form the company or get its EIN. See what is an ITIN and who needs one.

How UCB can help

We handle US company formation from Japan remotely: the state filing, EIN, registered agent, US business address and bank application, and afterwards the yearly federal return through our US tax filing service. Your zeirishi handles the Japanese return. We give them the US documents they need, and if the plan looks likely to run into Japan's CFC rules, we will say so before you form. See our formation, EIN and bank account package ($348) and the country guide.

Setting up a US company from Japan? WhatsApp us at +1 315 961 2956 or email enquiries@ucbsolutions.com.