The Guide to Closing a Company in Japan

Closing a KK (株式会社 / Kabushiki Kaisha) or GK (合同会社 / Godo Kaisha) in Japan is a structured multi-step legal process under the Companies Act (会社法 / Kaisha-hō). Most founders underestimate what is involved.

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Key Takeaways: 

Before you start, here is what to plan for:

Closing a company in Japan is a two-step process where you first vote to stop operations and publish an official notice giving creditors two months to claim what they are owed. After that, you simply pay off any remaining taxes and debts, distribute the leftover assets to shareholders, and file the final closing paperwork.

• Minimum timeline: 4 – 6 months for a clean case no disputes, no tax audits, no employees
• Realistic timeline: 9 – 12 months if the National Tax Agency audits your returns, creditors object, or financial restatements are needed
• Mandatory bottleneck: A 2 – month creditor notice period (債権者公告 / Saikenja Kōkoku) is legally required and cannot be shortened
• Cost range: ¥300,000 – ¥800,000 in professional and government fees for a straightforward dissolution
• Two filings + two tax returns are mandatory regardless of company size or activity level

If you are still deciding whether to close or exploring alternatives like selling the business, see our full guide on setting up and operating a business in Japan for broader lifecycle context. 

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What Does Closing a Company in Japan Involve?

Closing a company is a two-phase legal process:

1. Dissolution (解散 / Kaisan)

• A shareholders’ resolution to cease operations.
• The company still exists legally but cannot take on new business obligations.

2. Liquidation (清算 / Seisan)

• Settling debts (in priority order: taxes → employee wages → creditors → intercompany loans).
• Distributing remaining assets to shareholders.
• Filing final tax returns (dissolution-year + liquidation-period).
• Deregistration at the Legal Affairs Bureau (法務局 / Hōmukyoku).

Both phases must be completed for the company to formally cease to exist.

Who Can Close a Company in Japan?

Any shareholder or member with sufficient voting rights can initiate the process. Key points:

• Foreign nationals and non-resident owners can pass a dissolution resolution from overseas
• Physical presence in Japan is not required
• Working with a local professional typically a judicial scrivener and tax accountant makes coordination significantly easier

How Long Does Closing a Company Take?

The mandatory two-month creditor notice period sets a hard floor on the timeline. From there:

• Minimum 4 to 6 months for a clean KK or GK no employees, no outstanding creditor disputes, no lease complications
• 9 to 12 months if the National Tax Agency audits the final returns, unknown creditors raise objections after the Official Gazette notice, or prior-year financials need restatement

For full lifecycle context, see our guide on setting up a business in Japan.

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What Are the Options for Closing a Company in Japan?

Your route depends on the company’s financial position. Choose before starting any paperwork.

Voluntary Dissolution (Normal Liquidation)

The standard route for solvent companies where assets are enough to cover all debts. This is what the rest of this guide covers in detail.

• Shareholders pass a dissolution resolution
• A liquidator is appointed
• Creditors are notified and the two-month waiting period begins
• Debts are settled, assets distributed, and the company is deregistered

Special Liquidation

Used when a company decides to close it has negative net assets and cannot complete normal liquidation independently. This route is supervised by a court and is more complex and significantly longer than voluntary dissolution.

Bankruptcy

Used when the company cannot repay its debts at all and creditors or the company itself petition the court. Substantial advance fees are required to cover court and trustee costs. Most small companies in financial difficulty opt for voluntary dissolution with parent company support rather than bankruptcy.

Selling the Company Instead

Dissolution is not the only exit. If the business has ongoing value clients, contracts, staff, or intellectual property selling shares or assets may be worth exploring before committing to closure. A sale avoids the dissolution procedures entirely but involves its own legal and tax obligations. Our guide to changing your business structure in Japan covers conversion and restructuring options relevant at this stage.

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What Are the Step-by-Step Procedures for Closing a Company in Japan?

The following covers normal voluntary liquidation, which applies to the large majority of small foreign-owned KK and GK companies.

Step 1 – Prepare Before the Dissolution Resolution / 解散決議前の準備 / Kaisan Ketsugi Mae No Junbi 

This is the most important step. Once the dissolution resolution passes, the company enters a roughly two-month period during which it cannot make payments to most creditors. This is not a grace period it is a legal restriction.

Before calling the shareholders’ meeting, the company should:

• Terminate outstanding contracts and supplier agreements
• Settle or negotiate any outstanding payables
• Give employees proper notice or pay in lieu
• Review office lease terms for early exit penalties
• Align with any creditors on remaining obligations

If outstanding obligations cannot be covered, the parent company or sole owner will typically need to provide a loan to the subsidiary before the resolution is passed.

Step 2 – Pass a Dissolution Resolution at the Shareholders’ Meeting / 株主総会での解散決議 / Kabunushi Sōkai De No Kaisan Ketsugi 

A special resolution is required:

• Shareholders holding more than half of total voting rights must be present or represented
• More than two-thirds of those present must approve the resolution
• For single-shareholder companies, written unanimous consent can substitute for a formal meeting though meeting minutes must still be prepared as an attachment to the dissolution registration

At the same meeting, shareholders appoint a liquidator. In most small companies, the representative director takes on this role.

Step 3 – Register Dissolution and Liquidator Appointment With the Legal Affairs Bureau / 法務局 / Hōmukyoku

• File within 15 days of the resolution date
• Registration license tax is required at this filing
• Dissolution registration resets the company’s fiscal year the new liquidation fiscal year starts the day after the dissolution date

Step 4 – Notify Tax Authorities

After the Legal Affairs Bureau registration is confirmed, notify the relevant tax offices of the dissolution and liquidator appointment. The required notifications and applicable deadlines are listed in the table below.

Notification	Office	Required	Deadline
Dissolution notification and liquidator appointment	Tax Office (税務署, Zeimusho)	Yes	Submit promptly after LAB registration. No statutory deadline file without delay
Dissolution year tax return	Tax Office (税務署, Zeimusho)	Yes	Within 2 months of the dissolution date
Dissolution notification	Local Tax Office (地方税務署, Chihō Zeimusho)	Yes	Varies by municipality
Dissolution notification	Municipal Office (市区町村役場, Shikuchōson Yakuba)	Yes	Varies by location
Health insurance and pension cancellation	Pension Office (年金事務所, Nenkin Jimusho)	If enrolled	Promptly after employees leave
Labor insurance cancellation	Labor Standards Office (労働基準監督署 / Rōdō Kijun Kantokusho)	If employees were hired	Promptly after all employment ends
Employment insurance cancellation	Hello Work (ハローワーク)	If employees were hired	Promptly after all employment ends
Final liquidation completion notification	Tax Office and Local Tax Office	Yes	After Legal Affairs Bureau deregistration

Step 5 – Notify Creditors and Publish in the Official Gazette / 官報公告 / Kanpō Kōkoku

Creditors who do not respond within this window may have reduced standing, but known creditors must still be notified individually regardless of the Official Gazette notice. In some structures, creditors can still pursue the parent company after the liquidation is complete.

• The liquidator must notify all known creditors individually in writing
• A creditor call notice must be published in the Official Gazette (官報 / Kanpou)
• A minimum of two months must pass from the publication date before liquidation can be completed

Skipping the Official Gazette publication carries legal risk and is not recommended, even for companies with no known third-party creditors.

Step 6 – Prepare the Dissolution Balance Sheet and Asset Inventory / 解散貸借対照表の作成 / Kaisan Taishaku Taishōhyō no Sakusei 

The liquidator prepares a balance sheet and property inventory as of the dissolution date. For a KK this is approved at a shareholders’ meeting. For a GK it is delivered as a notification to members.

Step 7 – Settle Debts and Distribute Remaining Assets / 債務弁済と残余財産の分配 / Saimu Bensai to Zan’yō Zaisan no Haibun

After the two-month creditor window closes:

• Settle all valid creditor claims in the correct priority order
• Distribute any remaining assets to shareholders or members
• Close all corporate bank accounts

The general order of payment priority: taxes due → employee wages and final obligations → third-party creditors → intercompany loans → residual distribution to shareholders.

Step 8 – File Final Tax Returns / 確定申告 / Kakutei Shinkoku

Two separate returns are required this is one of the most commonly missed requirements:

• Dissolution-year return: covers the fiscal year ending on the dissolution date
• Liquidation-period return: covers the period from the dissolution date through to liquidation completion

Both must be filed and all taxes paid before final deregistration can proceed. For a full overview of Japan’s corporate tax obligations, see our guide to accounting and bookkeeping for startups in Japan.

For a full breakdown of Japan’s tax and payroll deadlines, watch: Japan Tax & Payroll Calendar: What Every Foreign-Owned Company Must Know

Step 9 – Register Completion of Liquidation With the Legal Affairs Bureau / 清算結了登記 / Seisan Ketsuryō Tōki

This is the second and final Legal Affairs Bureau filing the legal act that ends the company’s existence. A Certificate of Registered Closure is issued approximately two weeks after the application is accepted.

Step 10 – Complete Final Notifications / 最終届出 / Saishū Todokede

Notify the Tax Office and local tax office of the completed liquidation, cancel any remaining official registrations, and confirm the corporate bank account is closed.

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How Much Does Closing a Company in Japan Cost?

The table below covers a straightforward voluntary dissolution of a small, clean KK or GK with no employees or major creditor disputes. Companies with employees, outstanding leases, or complex financials will pay more.

Cost Category	Who It Goes To	Applies To	Estimated Cost	Notes
Dissolution registration tax	Legal Affairs Bureau	KK and GK	¥39,000	Paid via revenue stamp at filing
Liquidation completion registration tax	Legal Affairs Bureau	KK and GK	¥2,000	Second LAB filing at end of liquidation
Official Gazette publication (官報)	National Printing Bureau	KK and GK	¥35,000–¥45,000	Mandatory creditor call notice. Cost varies by line count
Certified copy fees	Legal Affairs Bureau	KK and GK	¥1,000–¥3,000	Required for post-closure tax notifications
Judicial scrivener (司法書士) fees	Professional	KK and GK	¥80,000–¥200,000	Covers both LAB filings. Higher if translation required
Tax accountant dissolution-year return	Professional	KK and GK	¥80,000–¥150,000	Return for the fiscal year ending on dissolution date
Tax accountant liquidation-period return	Professional	KK and GK	¥80,000–¥150,000	Separate return for the liquidation period. Billed independently
Translation costs	Professional	Non-Japanese directors	¥20,000–¥50,000	Required if director documents are in a foreign language
Employee termination pay	Employees	Companies with staff	30 days salary per employee minimum	Pay in lieu of notice if no 30-day advance notice given. Contractual severance may add to this
Office lease early exit penalty	Landlord	Companies with leases	1–6 months’ rent	Varies by contract. Check lease terms before passing dissolution resolution
Corporate Inhabitant Tax (minimum) during liquidation	Municipal/prefectural government	KK and GK	~¥70,000 per year until deregistration	Accrues until Legal Affairs Bureau deregistration is complete
Accounting and bookkeeping during liquidation	Professional	KK and GK	¥30,000–¥60,000 per month	Ongoing until final returns are filed and liquidation is complete

Total for a straightforward dissolution (KK or GK, no employees, no lease complications): approximately ¥300,000 to ¥800,000 in professional and government fees combined.

For a broader picture of business costs in Japan, see our Complete Guide to the Cost of Setting Up a Company in Japan.

What Tax Obligations Apply When Closing a Company in Japan?

Dissolution Tax Return / 解散事業年度の確定申告 / Kaisan Jigyō Nendo no Kakutei Shinkoku

The dissolution date resets the company’s fiscal year. A tax return is required for the period from the start of the final regular fiscal year to the dissolution date. Key points:

• Filed and paid before or alongside the dissolution registration process
• Triggers a new fiscal year the liquidation period starting the day after dissolution

Liquidation-Period Tax Return / 清算事業年度の確定申告 / Seisan Jigyō Nendo no Kakutei Shinkoku

A second, separate tax return is required for the liquidation period itself. This is a distinct fiscal year for Japanese tax purposes and requires its own:

• Corporate tax filing
• Balance sheet
• Income statement

The dissolution-year return is due within 2 months of the dissolution date. The liquidation period return must be filed within 30 days of the liquidation completion date this is the tighter and more commonly missed deadline and both must be filed and taxes fully paid before the final Legal Affairs Bureau deregistration can proceed.

Corporate Inhabitant Tax (Minimum Tax) / 法人住民税均等割 / Hōjin Jūminzei Kindōwari

Every registered company in Japan owes a minimum Corporate Inhabitant Tax regardless of revenue. For most small companies in Tokyo with capital under ¥10 million, the combined minimum is around ¥70,000 per year. This liability continues until Legal Affairs Bureau deregistration is complete.

This is why inactive companies that never formally dissolve are a persistent problem for foreign founders who leave Japan. The minimum tax accumulates silently every year. If you have an inactive company, close it properly rather than letting it sit.

Consumption Tax Final Return / 消費税確定申告 / Shōhi Zei Kakutei Shinkoku

• Required only if the company was consumption-tax registered
• Covers all taxable transactions during the dissolution and liquidation period
• Not applicable if annual taxable sales were below ¥10 million and the company was never registered

Defense Special Corporate Tax April 2026 Onwards / 防衛特別法人税 / Bōei Tokubetsu Hōjinzei

From April 2026, a 4% surtax on corporate tax applies in Japan. Companies dissolving after this date should note:

• The surtax applies to both the dissolution-year return and the liquidation-period return for periods falling after April 2026
• SMEs receive a ¥5 million deduction before the surtax is calculated, which effectively eliminates it for many small companies
• Confirm the impact with your tax accountant when planning the dissolution timeline

Residual Asset Distributions / 残余財産の分配 / Zan’yō Zaisan no Haibun 

When remaining assets are distributed to shareholders after debts are settled, this may trigger additional tax obligations:

• Income tax or capital gains obligations may apply depending on the amount distributed relative to original capital contributions
• Treatment differs depending on whether the recipient is a Japanese or non-Japanese resident
• Structure this with a tax accountant before making any distribution

For a full breakdown of Japan’s tax obligations for businesses, see our guides on Japanese Tax Laws: A Guide for Startups and A Guide to Japanese Taxes for New Businesses.

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What Happens to Employees When Closing a Company?

Notice Requirements / 解雇予告 / Kaiko Yokoku 

Japan’s Labour Standards Act is strict on termination. Company closure is a valid reason for dismissal, but the rules still apply fully:

• 30 days written notice required before any termination
• Pay in lieu of notice (即時解雇手当 / Sokoji Kaiko Teate) can substitute if notice is not given in advance
• Employees on medical leave, maternity leave, or childcare leave cannot be dismissed during those protected periods even during dissolution

Social Insurance and Payroll Wind-Down / 社会保険・給与の精算 / Shakai Hoken / Kyūyo no Seisan 

• Cancel social insurance enrollment (health insurance and pension) when employees leave
• Settle final payroll in full, including any accrued paid leave employees are entitled to
• Submit final reports to Hello Work (ハローワーク) if the company was registered for employment insurance
• Cancel the company’s payroll office registration with the Tax Office

Severance / 退職金 / Taishokukin 

There is no statutory severance requirement in Japan. 

However:

• Employment contracts and company rules (就業規則 / Shuugyo Kisoku) often specify severance amounts
• Paying below what contracts require is a common cause of Labor Tribunal claims during dissolution
• These disputes can extend the overall closure timeline significantly and add unexpected costs

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What Happens to a Business Manager Visa When Closing a Company?

A Business Manager Visa is tied to the company that sponsors it so if that company is dissolved, the visa holder must take action promptly.

Visa Status After Dissolution / 解散後のビザステータス/ Kaisan Go no Visa Jōtai 

• Immigration authorities must be notified of company closure
• The visa does not automatically lapse on the date of dissolution
• The holder cannot continue to operate a business in Japan without a valid company basis
• Overstaying or failing to update visa status creates significant complications with immigration

Options After Company Closure / 閉鎖後の選択肢 / Heisa Go no Sentakushi 

Founders who intend to stay in Japan have several paths:

• Transition to another visa category spouse visa or permanent residency if eligible
• Apply for a new Business Manager Visa once a new company is established and meets requirements
• Change to a different status temporarily while preparing a new business
• Depart Japan

For a full walkthrough of the updated Business Manager Visa requirements, watch: Japan Business Manager Visa 2025: New Rules, Higher Costs & How to Apply Before the Deadline

For the full application process and current requirements, see our guides on How to Get a Business Manager Visa in Japan and the Business Manager Visa service page.

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How Does Closing a Branch Office Differ?

Branch Office Closure Process / 支店閉鎖手続き/ Shiten Heisa Tetsuzuki 

The foreign parent company remains liable for any outstanding claims against the branch after closure — and this liability is open-ended. There is no time limit. If creditors surface after the branch is closed, the parent company must respond and pay immediately if demands are made. Clear all known liabilities before filing closure paperwork. Branch office closure is simpler than dissolving a KK or GK. 

Key differences:

• No two-month creditor waiting period the mandatory creditor notice window does not apply in the same way as KK/GK dissolution
• A one-month Official Gazette notice period is required for the representative’s resignation
• The Legal Affairs Bureau must be notified of the closure
• A closure registration certificate is issued approximately two weeks after filing

What Are the Most Common Mistakes When Closing a Company in Japan?

Many of the same traps that catch founders at their first fiscal year close also apply during dissolution. Watch: Common Mistakes at First Fiscal Year Close

Not Settling Obligations Before the Dissolution Resolution

Once the dissolution resolution passes, the company cannot make most payments to third-party creditors for approximately two months. 

Founders who skip this preparation step find themselves:

• Unable to pay suppliers or settle contracts during the mandatory waiting period
• Forced to have the parent company absorb the liabilities
• Delayed on the overall liquidation timeline

Ignoring the Minimum Corporate Inhabitant Tax on Inactive Companies

Most founders assume that stopping operations means the company stops costing money. It does not. A dormant company in Japan continues to owe minimum Inhabitant Tax every year until it is formally deregistered. After a few years abroad, founders often return to find an unexpected tax bill waiting. If you have an inactive company close it properly.

Underestimating the Timeline

The two month creditor window alone means the process cannot be completed in under four months even in a best case scenario. 

Common timeline surprises include:

• A National Tax Agency audit of the final returns adds months
• Unknown creditors responding to the Official Gazette notice after you assumed none existed
• Employee Labor Tribunal disputes that must be resolved before liquidation can complete

Failing to File Both Tax Returns

One return is not enough. The dissolution-year return and the liquidation-period return are two separate, mandatory filings. 

Missing either:

• Delays the final Legal Affairs Bureau registration
• Triggers late-filing penalties
• Can prompt a tax audit that extends the entire timeline

Closing the Corporate Bank Account Too Early

The corporate account must remain active throughout the liquidation process to:

• Receive any final receivables
• Settle remaining payables
• Accept the residual asset distribution before the account is formally closed

Close it only after all financial transactions are complete and the liquidation registration is ready to file.

Handling Employees Incorrectly

The most common employee mistakes during dissolution:

• Terminating without the required 30-day notice or pay in lieu
• Ignoring contractual severance amounts specified in employment contracts
• Failing to cancel social insurance registrations properly
• Dismissing employees in protected periods (medical leave, maternity leave, childcare leave)

Any of these can result in Labor Tribunal claims that extend the timeline and add unexpected costs.

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Frequently Asked Questions

Can I close my company in Japan from overseas?

Yes as a non-resident shareholder can pass a dissolution resolution and manage the process remotely and what you will need:

• A judicial scrivener in Japan to handle the Legal Affairs Bureau filings
• A tax accountant to prepare and file the two required returns
• A Japan address on file for official correspondence during the process

See our guide on starting a company in Japan without residency for more on how non-resident ownership works in practice.

What happens if my company has debts it cannot repay?

If the company has negative net assets and cannot complete normal liquidation, it must follow special liquidation procedures under court supervision. If the shortfall is manageable, the parent company or owner can provide a loan to cover outstanding debts before the dissolution resolution is passed, allowing normal liquidation to proceed.

Do I need a Japanese lawyer or accountant to close my company?

Two professionals are needed:

• Judicial scrivener (司法書士 / Shihōshoshi ) for both Legal Affairs Bureau filings
• Tax accountant (税理士 / Zeirishi ) for the dissolution year and liquidation period returns

Neither is technically legally required, but attempting both in Japanese without professional support is not realistic for most foreign founders. Working with a bilingual professional significantly reduces risk and delays.

Can a dissolved company be restored?

Under Japan’s Companies Act, a dissolved company that has not yet completed liquidation can pass a resolution to rescind the dissolution they provide

• The original dissolution was voluntary
• Liquidation is still in progress and not yet complete

Once liquidation is complete and the company is deregistered at the Legal Affairs Bureau, it cannot be restored. Starting a new company is the only option.

What is the minimum time required to close a KK or GK?

In a best-case scenario clean financials, no employees, no third-party creditors, all shareholders aligned, no tax audit the minimum is approximately four months. 

The breakdown:

• Two months for the mandatory creditor notice period
• Two to four weeks for Legal Affairs Bureau processing at each filing
• Additional time for tax return preparation and payment processing

Most real-world closures take five to six months as complex cases can take twelve months or longer.