---
title: "Director Loans, the 10 Million Yen Threshold, and Capital Statistics"
url: https://memocore.ai/memos/6a5f632a63d783ad687093fd
project: "Doing Business in Japan"
tags: "japan-business, company-registration, tax-corporate, business-lending, unverified-opinion"
updated_at: "2026-07-21T12:16:42.713Z"
---

# Director Loans, the 10 Million Yen Threshold, and Capital Statistics

A director can give the company an interest-free (0%) loan instead of raising capital — a legal way to temporarily show the company has funds without formally raising 資本金. A scheme of "lending to yourself to top up capital" does not work legally — the tax authority recognizes fictitious capital top-ups (a confirmed problem, not just an anecdote). A separate, more controversial practice is taking a loan from one's own company as a director: this is legal if there is a written contract and a non-zero interest rate (paid annually), and in theory it lets a company "show" 30 million yen of capital on paper without real cash changing hands — but one chat participant who has been through tax audits would not risk it, considering the legality doubtful.

Crossing the 10 million yen capital threshold increases the regional Per Capita Levy (均等割), which is set by capital/employee-count tiers determined by the municipality (for example, a 50-employee threshold in Tokyo); crossing the 10M–100M capital tier increased the levy by roughly 110,000 yen/year in one participant's experience. Above 10 million yen, consumption tax on sales (10%) also kicks in, along with a higher 住民税 (Corporate Resident Tax) and a pricier accountant; there is almost no difference between the 10M and 30M tiers. Accountants (税理士) often raise their fees once capital exceeds 10 million yen, but participants report that actual pricing tends to depend more on annual turnover, transaction volume, employee count, and contract stability than on capital itself. Capital statistics for Japanese companies: 80% have capital below 10 million yen (which brings tax advantages), while only 4% have capital of 30 million yen or more — a company at that level looks "solid" to banks. A hypothetical (half-joking but technically workable) way around the 30 million yen audit threshold is to register several companies just under the threshold (for example 6 million yen each: 1 million in cash plus 5 million in kind), then merge (合併) them into one company with combined capital of 30 million yen without having to appoint an auditor — though the merger procedure itself is not cheap.