Most companies planning a Japan launch reach the "which structure" decision before they reach the finance team. By the time a CFO or controller gets asked to approve the plan, the question has narrowed to a single line: what does this actually cost in year one? That question is harder to answer than it looks, because a Japan launch without a local entity is rarely a single line item. It is usually a combination: an import structure (Importer of Record, or IOR, or Attorney for Customs Procedures, or ACP) for goods, an Employer of Record (EOR) arrangement for the first local hire, or both running in parallel. This post walks through how to build a realistic year-one budget across all three, and where companies most often get the arithmetic wrong.
Start by Separating the Two Budgets
IOR, ACP, and EOR are not line items on the same budget category. They sit on two entirely separate cost tracks, because they solve two entirely separate problems under two entirely separate legal frameworks.
(a) The goods track (IOR or ACP). This covers government-mandated customs duty and import consumption tax, plus a service fee for the party that carries importer liability. It only applies if physical goods are entering Japan.
(b) The people track (EOR). This covers the Employer of Record's service fee plus the statutory employer burden: social insurance contributions, labor insurance, and payroll administration for a Japan-based hire. It only applies if a person is being engaged in Japan.
A company doing both needs to budget both tracks independently and add them together. A company doing only one does not need to model the other at all. The most common budgeting mistake is treating "Japan market entry cost" as one number when it is actually the sum of unrelated cost structures, or worse, assuming a quote for one automatically covers the other.
Track One: Budgeting the Goods Side
Whether the goods track runs through IOR or ACP, the underlying cost anatomy has three parts, and only one of them changes with the structure chosen.
Government-mandated costs (fixed regardless of structure). Customs duty and import consumption tax are set by Japan's tariff schedule and consumption tax rate, not by the provider. Import consumption tax is currently assessed at 10% of the CIF value plus duty, and for companies making taxable Japan sales, it is generally recoverable as an input tax credit rather than a permanent cost. Duty rates vary by HS code classification and can be 0% for many categories of industrial and capital equipment. These figures do not move whether the company chooses IOR or ACP, so they belong in the budget as a fixed line regardless of structure.
The service fee (varies by structure). Under IOR, Aplash takes title to the goods, advances duty and tax capital, and carries full importer liability, which is priced into a higher service fee. Under ACP, the manufacturer remains the named importer and Aplash acts only as the Japan-resident procedural agent, which typically carries a lower fee but shifts registration and tax-recovery administration onto the manufacturer. A full breakdown of each fee's drivers is in the dedicated IOR and ACP cost posts linked below; the budgeting point here is simpler: do not compare the two fees without also pricing in the administrative burden ACP shifts onto your own team.
Ancillary logistics costs (structure-independent, provider-dependent). Freight, port handling, and customs broker charges sit outside both the IOR and ACP service fee and should be scoped separately with the relevant logistics providers.
For budgeting purposes, the practical takeaway is that the "cheaper" of IOR and ACP on a headline service fee is not necessarily cheaper once the manufacturer's own administrative cost of running ACP is included. Model both on a total-cost-of-compliance basis, not on the service fee alone.
Track Two: Budgeting the People Side
EOR budgeting has a different shape entirely, because it scales per employee rather than per shipment.
(a) The EOR service fee. Typically structured as a monthly per-employee charge covering payroll administration, contract management, and the EOR's role as the legal employer of record.
(b) Statutory employer burden. Japan's social insurance system requires employer-side contributions to health insurance, pension, and labor insurance on top of gross salary. This is not an EOR markup; it is a statutory cost that would apply equally to a company employing someone through its own Japan entity. Budgeting only the EOR service fee while ignoring the statutory employer burden is the single most common EOR budgeting error, because the burden is often larger than the fee itself.
(c) Onboarding and one-time costs. Initial setup, background checks where applicable, and first-month administrative work are typically front-loaded into the first billing cycle rather than spread evenly across the year.
The full breakdown of what counts as employer burden versus service fee is in the dedicated EOR total-cost post linked below. For year-one budgeting, treat the EOR line as: (service fee x 12) plus (statutory burden as a percentage of gross annual salary) plus onboarding costs, not as the service fee alone.
Combining Both Tracks: The Common Real-World Case
A meaningful share of companies entering Japan need both tracks in the same year: a manufacturer shipping equipment to a Japan customer while also placing a local sales or technical hire to support the account. In that scenario, the two budgets run in parallel and do not offset each other. There is no combined discount for running IOR or ACP alongside EOR, because Aplash is performing two structurally unrelated engagements, not one bundled product. Budget them as two separate cost centers that happen to share a launch timeline.
This is also where companies most often ask the wrong follow-up question: whether it would be cheaper to just incorporate a Japan entity and run both functions in-house. That comparison is worth running properly rather than assumed.
When Incorporation Beats the Combined IOR/ACP Plus EOR Cost
A Japan KK (株式会社, joint-stock company) or GK (合同会社, limited liability company) carries its own fixed annual cost base: statutory accounting, corporate tax filing, a registered office, and, where a Japan-resident director is required, that director's compensation. These costs do not scale down for a small operation, which is why entity formation is a poor year-one choice for a company still validating demand.
The comparison that actually matters is not "IOR versus entity" or "EOR versus entity" in isolation, but the combined IOR/ACP-plus-EOR annual spend against the combined entity fixed-cost base, at the specific shipment volume and headcount the company expects. Below a certain combined volume and headcount, the non-entity path is reliably cheaper because entity overhead is fixed and non-entity fees scale with actual activity. Above that threshold, and once a company has durable reasons for Japan legal presence beyond the immediate launch (sustained revenue, a growing team, a subsidiary strategy), the arithmetic can shift toward incorporation. The right move for most companies in their first year of Japan activity is to run the non-entity structures, track actual shipment volume and headcount against a revisit point, and re-run the comparison once real data exists rather than projecting it up front.
Building the Year-One Number
To assemble an actual budget rather than a rough estimate, a company needs the following inputs ready before requesting proposals:
(a) For the goods track: HS code or product description, approximate CIF value per shipment, expected shipment frequency, and whether the goods carry additional regulatory requirements (PSE, Radio Act certification, food or cosmetics regulation, medical device classification) that add compliance scope beyond standard customs clearance.
(b) For the people track: number of hires in year one, role type and approximate gross salary band, and expected start date, since onboarding costs and statutory registration lead times affect the first billing cycle.
(c) For the structure decision itself: whether the company wants to be named as importer (pointing toward ACP, subject to the non-resident prerequisite) or wants the importer role and its liability handled by Aplash (pointing toward IOR), and how much internal administrative capacity exists to run ACP's tax and registration requirements if that path is chosen.
With those inputs, a formal proposal can price each track on the actual shipment and hiring profile rather than a generic estimate, which is the only version of a Japan year-one budget worth presenting internally.
Conclusion
A Japan market-entry budget is not one number and should not be requested or modeled as one. It is the sum of a goods-track cost (government duty and tax plus an IOR or ACP service fee) and, where applicable, a people-track cost (EOR service fee plus statutory employer burden), each scoped independently and neither discounted by the presence of the other. The entity-versus-non-entity comparison belongs at the combined level, not the single-service level, and is worth revisiting on actual first-year data rather than settling in advance. Companies that separate these tracks from the outset avoid the two most common Japan budgeting errors: treating IOR, ACP, and EOR as substitutes for one number, and comparing entity cost against only one of the two non-entity tracks instead of both together.
This article is informational only and does not constitute legal, tax, or regulatory advice. Fee structures vary by engagement profile; contact Aplash for a formal proposal tailored to your shipment and hiring plan. Last updated: July 2026. Aplash is a regulatory strategy and market entry firm.