- Introduction: The Legal Violations Behind “6x Profit Increase”
- 1. Case Overview: First-Ever Prosecution Under the Minpaku New Law
- 2. What is the Minpaku New Law? Essential Knowledge for Foreign Entrepreneurs
- 3. Why Do Foreign Entrepreneurs Easily Fall into Legal Violations?
- 4. Impact on Visa Status: How Business Failure Can Lead to Loss of Residency Status
- 5. What Company Managers and HR Personnel Employing Foreign Nationals Should Know
- 6. Steps to Legally Operate a Minpaku Business
- 7. What to Do if a Violation is Discovered? Response Methods and Consulting Specialists
- 8. Support Available from Administrative Scriveners: From Visa Applications to Business Compliance
- 9. Summary: What You Can Do Now for Long-Term Success
- Conclusion: Creating an Environment for Secure Business Operations
Introduction: The Legal Violations Behind “6x Profit Increase”
In January 2025, a Chinese national who operated a minpaku (vacation rental) management company in Tokyo and others were referred to prosecutors for violating the Housing Accommodation Business Act (commonly known as the Minpaku New Law). The suspects stated, “We did it to increase profits. Sales increased about six times,” but ultimately faced criminal charges and lost social credibility.
This case contains important lessons for foreign entrepreneurs in Japan and for managers and HR personnel at companies employing foreign nationals. In this article, from the perspective of an administrative scrivener (gyoseishoshi), we will analyze this case in detail and explain key points that foreigners should be aware of when conducting business in Japan.
1. Case Overview: First-Ever Prosecution Under the Minpaku New Law
What Happened
The representative of minpaku management company “K-carve life” in Shinjuku, Tokyo—a 34-year-old Chinese national man—and a 32-year-old female company executive were referred to prosecutors for operating minpaku rentals in violation of Arakawa Ward ordinances. According to the Tokyo Metropolitan Police, this is the first case nationwide of prosecution under the Minpaku New Law.
Specific Violations
- False Reporting: Between June and July 2024, they actually operated for 49 days including weekdays, but falsely reported to the Arakawa Ward mayor that they only operated for 8 days on weekends
- Ignoring Business Improvement Orders: They ignored business improvement orders issued in December 2024 and failed to submit regular reports
- Ordinance Violations: Arakawa Ward ordinances prohibit minpaku operations from “Monday noon to Saturday noon,” which they ignored
Business Scale and Revenue
The company operated 21 minpaku rooms across five wards: Arakawa, Minato, Shinjuku, Sumida, and Toshima. For the Arakawa Ward minpaku in question, they are believed to have earned approximately 22 million yen in sales since starting operations in March 2022.
2. What is the Minpaku New Law? Essential Knowledge for Foreign Entrepreneurs
Background of the Housing Accommodation Business Act (Minpaku New Law)
The Minpaku New Law, enacted in 2018, legalized the minpaku business, which had previously been in a gray zone, allowing operations under certain rules. It also aimed to address accommodation shortages due to the increase in foreign tourists visiting Japan.
Main Rules of the Minpaku New Law
- Annual Operating Days Limit: In principle, up to 180 days per year
- Notification System: Notification to the prefectural governor (or mayor of cities with public health centers) is required
- Sign Display: Obligation to display signs indicating it is a minpaku facility
- Hygiene Management: Regular cleaning, ventilation, etc.
- Noise Prevention Measures: Consideration for neighboring residents
- Creation and Storage of Guest Registers: Identity verification and record-keeping
Additional Regulations by Local Governments
Importantly, not only national laws but also individual municipalities establish their own regulations through ordinances. For example:
- Operating Area Restrictions: Prohibition of operations in exclusively residential zones
- Further Restrictions on Operating Days: Permission only on weekends, etc.
- Operating Hours Restrictions: Prohibition of weekday operations, etc.
In the Arakawa Ward case, there was a unique regulation prohibiting “operations from Monday noon to Saturday noon.”
3. Why Do Foreign Entrepreneurs Easily Fall into Legal Violations?
Language Barriers
Japanese laws and ordinances are written in Japanese and contain many technical terms. Even those fluent in Japanese may find it difficult to accurately understand legal terminology.
Information Access Disparity
Most municipal websites and information sessions are provided only in Japanese, making it difficult for foreigners to access necessary information.
Cultural Background Differences
Business practices that were acceptable in one’s home country may be illegal in Japan. Additionally, lack of understanding of Japanese business culture, such as “reporting, communication, and consultation” (ho-ren-so) and “compliance emphasis,” can be a factor.
Existence of “Invisible Regulations”
Many are unaware that multi-layered regulations exist, including not only national laws but also prefectural ordinances, municipal ordinances, and even industry self-regulations.
4. Impact on Visa Status: How Business Failure Can Lead to Loss of Residency Status
Relationship Between Criminal Cases and Visa Status
Foreigners need an appropriate visa status to reside in Japan. Criminal cases can have the following impacts:
- Revocation of Visa Status: May fall under “grounds for revocation of visa status” under immigration law
- Denial of Period of Stay Extension: May be judged as having “bad conduct” during renewal
- Deportation: For serious crimes, may be subject to forced repatriation
Important Points for Business Manager Visa
When conducting businesses such as minpaku, many foreigners obtain a “Business Manager” visa status. To maintain this status:
- Business Continuity: The business must actually be operating
- Legality: Business operations must comply with laws
- Economic Foundation: Stable income and business scale
If business operations cease due to legal violations, these requirements cannot be met, and visa status renewal may not be approved.
5. What Company Managers and HR Personnel Employing Foreign Nationals Should Know
Side Business Management of Employees
Be careful if foreign employees are conducting businesses such as minpaku as side jobs:
- Permission for Activities Outside Visa Status: Foreign nationals working on employment visas need “permission for activities outside their visa status” to engage in side businesses
- Verification of Side Business Content: If the side business violates laws, it can affect the company’s reputation
- Consistency with Visa Status: Whether the side business is not overwhelming the main job
Importance of Compliance Training
It is important to regularly provide training to foreign employees on Japanese laws and business etiquette. Especially:
- The complexity of Japanese regulations
- Differences in ordinances by municipality
- Risks of violations
Collaboration with Specialists
Companies employing foreign nationals should collaborate with specialists such as administrative scriveners and social insurance labor consultants to properly manage visa status and labor affairs.
6. Steps to Legally Operate a Minpaku Business
Step 1: Preliminary Research
- Confirm National Laws: Understand the basic rules of the Minpaku New Law
- Confirm Municipal Ordinances: Check the ordinances of the prefecture/municipality where you plan to operate
- Confirm Zoning: Check whether the urban planning zoning allows minpaku operations
Step 2: Notification Preparation
- Collect Necessary Documents: Floor plans of the housing, certificate of registered matters, consent forms, etc.
- Facility Preparation: Installation of fire prevention equipment, sanitary facilities
- Sign Preparation: Signs indicating it is a minpaku facility
Step 3: Submission of Notification
- Online Notification: Use the minpaku system operation platform
- Document Submission: Submit required documents to the municipality
- Obtain Notification Number: A notification number is issued when the notification is accepted
Step 4: Start Operations and Ongoing Management
- Regular Reports: Report operating days, etc. every two months
- Record Keeping: Creation and storage of guest registers
- Legal Compliance: Adhere to rules such as operating day limits
7. What to Do if a Violation is Discovered? Response Methods and Consulting Specialists
Administrative Guidance and Business Improvement Orders
When violations are discovered, administrative guidance and business improvement orders are issued first. If you respond appropriately at this stage, you may be able to avoid criminal prosecution.
Early Consultation with Lawyers and Administrative Scriveners
If you suspect a violation or receive administrative guidance, consult a specialist immediately:
- Lawyers: Response when criminal charges are filed
- Administrative Scriveners: Consultation on administrative procedures and impact on visa status
Minimizing Impact on Visa Status
Even if criminal charges are filed, appropriate responses may minimize the impact on visa status:
- Immediate cessation of violations
- Sincere reflection and apology
- Measures to remedy damages
- Assessment of impact on visa status by specialists
8. Support Available from Administrative Scriveners: From Visa Applications to Business Compliance
Support for Visa Status Applications
- Business Manager Visa Applications: Preparation of business plans and necessary documents
- Period of Stay Extensions: Proof of continuous business operations
- Change of Visa Status: Status changes accompanying changes in business content
Pre-Business Consultation
- Legal Research: Investigation of relevant laws and ordinances
- License and Permit Verification: Identification of necessary licenses and permits
- Risk Assessment: Advance evaluation of legal risks
Agency for License and Permit Applications
- Minpaku Notifications: Agency for notifications under the Minpaku New Law
- Other Licenses and Permits: Restaurant operation licenses, used goods dealer licenses, etc.
Ongoing Compliance Support
- Regular Legal Checks: Response to legal amendments
- Report Preparation Support: Assistance with regular reports to authorities
- Trouble Response: Consultation on responses to administrative guidance
9. Summary: What You Can Do Now for Long-Term Success
Compliance is Not a “Cost” but an “Investment”
Legal compliance takes time and money, but it is an investment in long-term business success. As in this case, pursuing short-term profits through legal violations can result in losing everything.
“I Didn’t Know” is Not an Excuse
Under Japanese law, the excuse of “I didn’t know” is generally not accepted. Being a foreigner is not grounds for exemption from legal violations.
Collaboration with Specialists is Key to Success
Understanding and responding to Japan’s complex regulations alone is difficult. Collaborating with specialists such as administrative scriveners, lawyers, and tax accountants leads to safe and reliable business operations.
Three Actions You Can Take Right Now
- Legal Compliance Check of Current Business: Verify whether your business complies with laws
- Consultation with Specialists: If you have concerns, consult an administrative scrivener immediately
- Continuous Information Gathering: Regularly check information on legal and ordinance amendments
Conclusion: Creating an Environment for Secure Business Operations
As an administrative scrivener, I have supported many foreign entrepreneurs and companies employing foreign nationals. I have seen many times how foreigners who work diligently and aim for success in Japan become involved in legal troubles because they “didn’t know.”
Japan is a nation governed by law, and compliance with rules is valued above all else. However, those rules are complex and difficult for foreigners to understand. That is precisely why support from specialists is necessary.
If you have concerns or questions about visa applications, visa status, or the legality of your business, please feel free to consult. I will do my utmost to support you so that your business in Japan can be safe and sustainable.
Reference Links
- Original Article: https://news.yahoo.co.jp/articles/e584167499fce73eaf25a45654b8ea4f01794696
- Japan Tourism Agency “Minpaku System Portal Site minpaku”
- Immigration Services Agency “List of Residence Statuses”
For questions or consultations regarding this article, please feel free to contact Niseko Visa and Immigration Support center.
