What Should Foreign Business Owners Watch Out for When Applying for Japanese Subsidies?

The Relationship Between Residence Status and Subsidy Eligibility

Which residence statuses can apply for subsidies

In Japan, not every residence-status holder is eligible to apply for subsidies. This is the first thing a foreign business owner must understand.

The Business Manager residence status is currently the most common status under which Chinese business owners in Japan apply. Holding this status means the Japanese government has already recognized your business activities, which lays the foundation for applying for government subsidies. Under the rules of the Japan Immigration Services Agency, foreigners holding Business Manager residence status receive equal treatment with Japanese nationals when applying for subsidies.

Highly Skilled Professional residence-status holders are likewise eligible to apply. This status category is aimed mainly at foreigners with specialized skills, including R&D personnel, IT engineers, and designers. Holders of this status are often more competitive when applying for startup subsidies or R&D-related subsidies.

Technical Intern Training and Specified Skilled Worker residence statuses are generally not eligible to apply for subsidies, because these two statuses are designed for the temporary employment and training of foreign labor rather than independent business operation.

Permanent Resident and Spouse of Japanese National status holders apply for subsidies on exactly the same footing as Japanese nationals, with no restrictions whatsoever.

Therefore, before deciding to apply for any subsidy, the first step is to confirm your residence-status category. We recommend logging in to the Japan Immigration Services Agency website or checking your residence card to make sure your status meets the application conditions.

A word of caution on changing residence status

If you are considering changing from another residence status to Business Manager status, be sure to understand the time cost of this process. Reviewing a change of residence status usually takes two to four weeks, and during this period you should pause any subsidy application to avoid inconsistencies when your status is being certified.

A common mistake is this: a business owner submits a subsidy application, but during the review period their residence status is changed, causing the application to be rejected. Therefore, we recommend that you begin preparing your subsidy application only after your residence status is fully confirmed and stable for more than three months.

Japan's Major Subsidy Types and Application Conditions

Small Business Sustainability Subsidy (Sustainability Subsidy)

This is one of the most common subsidy programs provided by the Japanese government, especially since the pandemic. The subsidy amount is 200,000 yen per month (for corporations) or 100,000 yen per month (for sole proprietors), usually payable for three months.

Application conditions include:

• The business must have started operating before January 2020
• After 2020, the average monthly sales over any consecutive three months fell 50% or more compared with the same period the previous year, or a single month fell 50% or more
• At the time of application you must hold a valid residence status

For Chinese business owners in Japan, the advantage of this subsidy is that the application is relatively simple; the required documents include the tax return, proof of bank account, proof of identity, and so on. Many Chinese-owned food-service, retail, and service businesses successfully applied for this subsidy after being affected by the pandemic.

Business Reconstruction Subsidy (Business Restructuring Subsidy)

This subsidy program is larger in scale, with amounts ranging from 1 million yen up to 100 million yen, and its main purpose is to help companies carry out major business transformations.

The application conditions are relatively strict:

• The company must implement "business reconstruction" (事業再構築)—that is, a fundamental reform of its operating methods, products, services, and so on
• A detailed business plan including financial projections and an implementation timeline must be submitted
• The subsidy period is usually six months to two years

For Chinese business owners, if you plan to shift a physical store toward e-commerce, or to develop a new product line, this subsidy is worth applying for. One Chinese business owner from Beijing obtained 3 million yen through this subsidy, using it to build an online sales channel and take the brand international.

Startup Subsidy (Startup Subsidy)

If you are the operator of a newly established company and have held Business Manager residence status for no more than seven years, you can apply for a startup subsidy. The amount is usually 500,000 yen to 2 million yen.

When applying, you need to prepare:

• A startup plan (including financial projections)
• Certificate of company registration
• Proof of residence status
• The lease agreement or proof of ownership for the business location

This subsidy is especially attractive to newly established Chinese entrepreneurs. One entrepreneur from Shanghai obtained 1.5 million yen in support through this subsidy, using it to open a Japanese-cuisine workshop.

Particular Obstacles for Foreign Business Owners and How to Solve Them

The challenge of language and document preparation

The biggest practical obstacle in a Japanese subsidy application is language. The vast majority of subsidy applications are conducted entirely in Japanese, and the documents that must be submitted are numerous.

We recommend the following strategies:

1. Hire a professional translator or advisor – The cost is usually 5,000–15,000 yen, but this investment greatly improves your approval rate. Many subsidies are worth 5 million–10 million yen, against which the translation fee is negligible.

2. Prepare complete originals and copies – Many applications require both the original and a Japanese translation to be submitted in duplicate. We recommend preparing three copies of all documents, including:

   • Residence card (front and back)
   • Certificate of company registration
   • Proof of bank account
   • Tax returns (past three years)
   • Proof of social insurance enrollment

3. Use the government's consultation windows – Subsidy consultation centers (補助金相談窓口) are set up throughout Japan, and the economic-development departments of most local governments can consult in English or arrange an interpreter, completely free of charge.

Tax compliance requirements

When you apply for a subsidy, the government strictly reviews your tax records. For foreign business owners, this is especially important, because the tax authorities often scrutinize foreign business owners more closely.

Points to make sure of:

• Income tax filing – A complete filing record for the past three years. If you have any underreporting or late filing, you must file a correction (修正申告) immediately
• Consumption tax registration – If your annual sales exceed 10 million yen, you must complete consumption tax registration and file on time
• Social insurance – Make sure the social insurance contribution records for you and your employees are complete. Any arrears will cause the subsidy application to be rejected
• Withholding income tax – If you have employees, you must withhold and file withholding income tax on time

One Chinese business owner from Wenzhou was once refused a subsidy application because of a three-month gap in social insurance payments. He later paid the back premiums and supplemented his application materials before finally being approved.

Bank accounts and proof of fund flows

Foreign business owners must be able to clearly demonstrate the source and flow of the company's funds. This means:

1. Open a Japanese bank account – If you do not have one yet, open one immediately. Some banks have additional requirements for foreigners opening accounts, such as a Japanese guarantor or the original residence card.

2. Keep complete transaction records – All bank statements for the past three years must be kept in full. Banks can provide bilingual (Chinese-English) statements; we recommend keeping the originals.

3. Record cash transactions – If your business involves cash income (such as a retail store or restaurant), you must record it in detail in a cash register book and be able to explain how the cash was deposited.

The government is especially wary of company accounts with unclear fund sources or that show money-laundering characteristics. Therefore, even for an ordinary family loan, it is best to provide a loan agreement and the corresponding transfer records.

The Application Process and Time Planning

The preparation phase before applying (2–3 months)

Month 1: Gather subsidy information and confirm eligibility

• Visit Japan's comprehensive subsidy website (補助金ポータル)
• Check the local-government subsidy information for your area
• Confirm whether your residence status meets the application conditions
• Contact at least two or three subsidy consultation windows to confirm eligibility

Months 2–3: Organize the required documents and financial data

• Prepare tax returns for the past three years
• Collect proof of identity such as the company registration certificate and residence card
• Prepare bank statements and accounting vouchers
• File a correction return if needed

The formal application phase (1–2 months)

Pre-submission checklist:

• Confirm the application deadline (every subsidy has a fixed application period, usually one to three months)
• Prepare the application forms (most subsidies require submission in a designated format)
• Prepare the business plan (if required)
• Confirm the reasonableness of the amount submitted

Applications are usually made in the following ways:

1. Online application system – You need to register an account and upload documents; the most common platform is e-Gov (the electronic government services portal)
2. Paper mail application – Some local subsidies still accept paper applications, which must be printed, signed, and mailed as prescribed
3. Submission to local government – Some small-scale subsidies are submitted directly to the relevant department of your prefecture or city

The review period (1–3 months)

After submitting your application, you usually have to wait one to three months for the review. During this period you may receive:

• A request to submit additional materials – The subsidy management department may request extra documents, and you need to respond quickly (usually within a 10–14 day deadline)
• A request for supplementary explanation – Some documents may require further clarification

We recommend keeping the contact phone number of the application department so you can ask directly if a problem arises.

The execution phase after approval (3–12 months)

After receiving the approval notice:

• Sign the subsidy agreement
• Begin business activities or purchase equipment according to the designated schedule
• Regularly keep all receipts and invoices
• Submit progress reports at regular intervals

This phase is the most prone to problems. Some business owners are not careful enough about preserving evidence after obtaining the subsidy, ultimately failing to complete the disbursement smoothly. We recommend setting up a dedicated folder and filing all subsidy-related expenditure vouchers by category.

Frequently Asked Questions (FAQ)

Q1: I hold Business Manager residence status, but my company has been established for less than three months. Can I apply for a subsidy?

A: Most subsidies require the company to have been operating for a certain period. The startup subsidy has the most lenient requirement, asking that the company have been established within three years. But many other subsidies (such as the Sustainability Subsidy and the Business Reconstruction Subsidy) require the company to have operated for at least one year and preferably to have a complete tax-filing record. If your company is very new, we recommend first applying for the startup subsidy designed specifically for newly established firms. In the meantime, fully prepare your financial records during the waiting period to lay the groundwork for future subsidy applications. Generally, once your company's first full fiscal year has ended, you can consider applying for most mainstream subsidies.

Q2: My personal income tax filing was one year late (late filing). Will this affect my subsidy application?

A: It will have an effect, but not necessarily an outright rejection. Late filing or underreporting of taxes is a key focus of subsidy review. First, you need to file a correction (修正申告) immediately, explaining the reason for the late filing. If the reason is reasonable (for example, a nationally recognized emergency in the prior year), the chances of approval are higher. Second, when resubmitting your subsidy application, we recommend also submitting the documentation of your correction filing. Many success stories show that promptly remedying the issue earns more trust from the reviewer than concealing it. A business owner from Hangzhou, upon discovering a one-year late-filing record, immediately filed a correction and explained the reasons in detail in the application, and ultimately still passed the subsidy review. The key is to address the problem proactively rather than passively.

Q3: If I change my company's representative or business partner during the subsidy application, will it affect the application?

A: It depends on the timing and scope of the change. If the change of company representative occurs at least six months before the application, there is usually no impact. But if the change occurs after the application, during the review period, or after approval, it may cause the application to be rejected or require additional documents to be submitted. Most importantly, any major corporate change must be reported to the subsidy management department immediately. If you conceal the change information and it is later discovered, not only will the subsidy be canceled, but you may also face the legal consequence of having the subsidy clawed back. A business owner from Anhui brought in a new investor shortly after approval; he immediately reported this change to the subsidy department and submitted the new company registration certificate and partnership agreement. Although the disbursement was delayed, the whole process was ultimately completed successfully. Therefore, transparency is the first principle.

Q4: I am a foreigner, but I have a spouse and children in Japan. Can they help me apply jointly or act as guarantors?

A: Legally speaking, a subsidy application is made on a company basis, not an individual basis. Therefore, the status of your spouse or children will not directly affect your eligibility. But they can help in the following ways: if they are Japanese nationals, they can serve as the company's contact person or guarantor to add credibility to the application; if the company has a Japanese co-manager or director, the subsidy review department often regards the risk as lower. However, this is not required. Many companies operated entirely by foreigners have also successfully applied for subsidies. The key factors are the company's financial condition, the reasonableness of the business plan, and tax compliance. A female business owner from Taiwan runs a beauty salon entirely on her own; with sound tax records and a clear business plan, she ultimately obtained the subsidy smoothly, without gaining any advantage from a spouse or family background.

Q5: I have a company in China and have also set up a company in Japan. Can I apply for subsidies from both countries at the same time?

A: This touches on an important legal issue. Japanese subsidies usually require that a company not simultaneously receive a subsidy for the same purpose from another government or international organization. If you are also receiving government subsidies in China, you must clearly disclose this in your Japanese subsidy application. Some types of subsidies may allow multiple subsidies (as long as the purposes do not overlap), while others strictly prohibit it. We recommend confirming clearly with the subsidy consultation department before applying. Specifically, fully disclose any subsidies or funding you receive in China in the "other funding sources" or "subsidy history" section of the application form. Concealing this information, once discovered, will cause the application to be rejected and damage your credit record. A Chinese business owner with a company in Shanghai honestly disclosed the Chinese-government startup subsidy he had received when applying for a Japanese subsidy; after verification, the review department found the two subsidies served different purposes and ultimately still approved the Japanese application. Transparent disclosure often carries lower risk than concealment.

Key Strategies for a Successful Application

Draw up a clear business plan

The root cause of many failed subsidy applications is that the business plan is not specific enough. We recommend your plan include:

• A clear problem diagnosis – Describe the specific problems you currently face
• A solution – Explain how your subsidy will specifically solve this problem
• Quantifiable goals – For example, "increase sales by 30%" or "reduce costs by 20%" rather than "improve the business"
• A detailed timeline – List implementation steps by month or quarter
• Financial projections – Show specific figures for the subsidy input and expected returns

Build a communication relationship with the subsidy department

Do not wait until the formal application to contact the subsidy department. You should begin building communication from the preparation phase. Attend free subsidy consultation sessions multiple times so the reviewers get to know you and your company. The benefits of doing so are:

• Discovering potential problems in your application earlier
• Getting targeted advice to improve your application
• Building a good relationship of trust

Prepare backup options

Do not pin all your hopes on a single subsidy. Prepare two or three subsidy applications at the same time, so that even if one is rejected, you have other opportunities. Different subsidies have different focuses; choose the few that best match your company's development to apply for.

Conclusion

As a Chinese business owner in Japan, applying for subsidies does involve some additional challenges, but these challenges can be entirely overcome with thorough preparation and professional assistance. The core points are:

1. Confirm your residence status – Business Manager residence status is the primary status for applying
2. Maintain tax compliance – This is the foundation of all subsidy reviews
3. Prepare thorough documents – Foreign applicants need more ample evidence
4. Consult professionals early – The investment in translation and advisory fees is worth it
5. Maintain transparent communication – Proactively disclosing a problem earns trust more easily than having it discovered passively

The Japanese government in fact welcomes qualified foreign business owners applying for subsidies; this is a policy orientation to promote economic activity. Your status as a foreigner is not a disadvantage—as long as your company operates in compliance, keeps clear finances, and has a feasible plan, you have every chance of obtaining subsidy support.

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Need professional help? If you have any questions about a subsidy application, or need advice tailored to your specific situation, you are welcome to contact us for a free preliminary assessment. With years of experience helping foreign business owners successfully apply for subsidies, we can help you avoid common pitfalls and maximize your chances of approval.