Side-Job Rules on a Work Visa: Directorships, Sole Proprietorships, and Income Limits

An ordinary work (engineer) visa holder can, in theory, own another company as a director, but cannot officially work for it or draw a salary without 資格外活動許可 (permission for activity outside one's status). Exactly how engineers obtain such permission remains unclear — there was no legal clarity on this point in discussion. By law, an employee has the right to freelance (副業) in time free from the main job; a blanket employer ban on side jobs can be struck down by a court as invalid under Article 90 of the Civil Code (violation of public order). However, dismissal is possible if the side job interferes with the main job, discloses confidential information, damages the employer's reputation, or amounts to competition. Companies with 10 or more employees are required to maintain work rules (就業規則) that include side-job policy; the Ministry of Health, Labour and Welfare's 2023 (厚労省) model rules permit side jobs with caveats. Before taking on a side job it is worth checking the employment contract for a 副業 ban — Rakuten, for example, explicitly bans side jobs by contract, while other companies allow them. On an ordinary work visa it is legal to freelance as an individual (have a contract with a client, receive payment), but registering as a sole proprietor (個人事業主) on such a visa was called a "gray zone" in some parts of discussion and confirmed as legal in others: 業務委託 (contracted work) within the scope of 技術・人文知識・国際業務 (Engineer/Specialist in Humanities/International Services) status does not require a separate permit if the activity stays within one's professional field. Activity outside that field requires a separate 個別許可 (individual permit). Hiring people as a sole proprietor on a work visa is not allowed — a work visa implies working for a Japanese company, not building one's own. Immigration publishes no clear limits on how much side income a sole proprietor on a work visa may earn. There are noted cases of penalties — including a visa shortened to 1 year — even for small amounts of income unrelated to the visa's stated field; this remains a gray area. An employer usually cannot see extra income through 年末調整 (year-end tax adjustment)/源泉徴収票 (withholding statement), but may notice a rise in municipal resident tax (住民税) if it is not paid separately; on the 確定申告 (final tax return) one can elect to pay 住民税 oneself (自分で納付), in which case the payment notices go directly to the employee rather than through the employer. Immigration can, in theory, track hired individuals through 雇用保険 (employment insurance). On an HSP (High Skilled Professional) visa, registering a sole proprietorship is officially allowed. On the engineer track specifically, however, HSP holders are not officially permitted to side-job as a sole proprietor, though they can side-job as 経営者 (a company director). See: Work Visas and Side Jobs (副業): Overview; Directorship Risk on a Work Visa: Overview.