Expense Apportionment for Home Offices and Lease Contract Requirements Under the Business Manager Visa#

When starting a business in Japan and acquiring or renewing a “Business Manager” visa, securing an appropriate office space is one of the most critical requirements. Many entrepreneurs, particularly in the startup phase, consider using a portion of their personal residence as an office to reduce costs. They often attempt to apportion rent and utilities as corporate expenses (known as Anbun in Japanese accounting).

However, applicants must exercise extreme caution. Even if expense apportionment is permissible under Japanese tax law, it does not guarantee that the facility meets the “securing a place of business” requirement under the Immigration Control and Refugee Recognition Act. This article explains the consistency required between expense processing and property contracts for home offices, viewed from the practical perspective of immigration procedures.

The Crucial Distinction Between Tax Law and Immigration Law#

The fundamental premise to understand is that the criteria used by the National Tax Agency and the Immigration Services Agency (ISA) are distinct and separate.

For tax purposes, even if a property is a dual-use home and office, it is generally accepted to treat a portion of the rent and utilities as corporate expenses based on the ratio of business use (e.g., floor area or hours of usage). However, what matters in an immigration examination is the physical and legal reality of whether “business can be conducted properly and continuously in that location.”

Simply because an expense is recorded on a tax return does not mean the ISA will recognize the location as a legitimate office. The ISA strictly examines whether the property has secured usage rights specifically for business purposes—not just residential—and whether there is a clear demarcation between living and business spaces.

Corporate Lease vs. Personal Lease Contracts#

In the examination for a Business Manager visa, the general rule is that the lease agreement should be in the “Corporate Name” and the purpose of use must be for “Business” (e.g., store, office).

If you intend to use a home rented under an individual’s name as an office and have the company bear a portion of the rent (expense apportionment), you must overcome the following significant hurdles:

Landlord’s Consent for Business Use If the personal lease agreement specifies the purpose as “Residential Only,” registering the company at that address or conducting business activities without permission may constitute a breach of contract. The Immigration Bureau requires documentation proving that the property owner (landlord or management company) explicitly consents to the property being used as a corporate office.
Execution of a Sublease Agreement A “Sublease Agreement” must be concluded between the individual (as the original tenant) and the corporation. This agreement formalizes the arrangement where the individual rents a portion of the property to the company. Crucially, this subleasing arrangement also requires the consent of the original landlord.
Consistency in Purpose of Use If the “Purpose of Use” section of the original lease states only “Residence,” it will not be accepted as an office as is. A special clause allowing “Office/Residence” use or a separate letter of consent from the landlord is mandatory.

Visualizing “Apportionment”: Requirement for Physical Independence#

Apportioning expenses implies that there is a clear boundary defining “where the company space begins and ends.” The requirements for a home office in immigration examinations are rigorous regarding this physical separation.

Independent Entrance: Ideally, there should be separate entrances for the residential and office areas.
Separation of Traffic Flow: The office space should be accessible without passing through private living areas (such as the living room, bedroom, or kitchen), or it must be clearly partitioned by walls and doors.
Signage: A signboard or nameplate with the corporate name must be displayed on the mailbox and entrance, making it recognizable as a business establishment from the outside.
Office Equipment: The space must be equipped with necessary office infrastructure, such as computers, telephones, desks, and bookshelves, sufficient to conduct business activities.

Simply opening a laptop in a corner of a living room is not recognized as a place of business. You must prove through floor plans and photographs that the living space and business space are not commingled.

Handling Utilities and Communication Costs#

Similar to rent, utility costs (electricity, water, gas) and internet communication fees must be handled carefully. Ideally, these contracts should be in the corporate name. If they remain in the individual’s name, they must be apportioned based on a reasonable standard, and records must be kept showing that the corporation is reimbursing the individual.

During the immigration examination, you may be asked to submit copies of receipts or bank passbooks to verify that these payments are actually being made by the corporation. Instead of treating these vaguely as “borrowing from directors” in accounting books, it is crucial for proving the continuity and reality of the business to establish a track record of monthly settlements based on fixed amounts or actual costs.

Conclusion#

While it is not impossible to apportion home-office expenses in a Business Manager visa application, the burden of proof is significantly higher compared to renting a dedicated office space.

Expense processing for tax optimization and office requirements for visa acquisition are two different matters. The fact that “the company pays the rent” is insufficient on its own. You must objectively prove via contracts, consent letters, and physical layouts that “the corporation has the legitimate right to occupy the space and conduct business there.”

To ensure that cost-saving measures do not become the reason for a visa denial, applicants must constantly verify the consistency between their contractual arrangements and the actual state of their business operations. Compliance with the strict interpretation of “business continuity” and “facility exclusivity” is the key to a successful application.