A German e-commerce company entered the Japanese market without setting up a legal entity. They sold products via domestic marketplaces while shipping directly from overseas warehouses. Local tax risks and compliance complexity emerged quickly.
The Challenge
The client began cross-border B2C sales into Japan without a local subsidiary, relying on third-party logistics and payment platforms.
This triggered complex tax considerations regarding import duties, consumption tax, and VAT equivalency.
They were unfamiliar with Japan’s rules for determining tax liability and the differences from the EU VAT system.
There was confusion about whether transactions qualified as asset transfers or service provision, and how to book them correctly.
Import-related costs like customs duties, shipping fees, and prepaid consumption taxes needed clear accounting rules.
The client lacked internal expertise on Japan’s evolving qualified invoice system and its implications for deduction eligibility.
Their use of platforms such as Amazon and Rakuten raised additional questions about source-based taxation and potential withholding obligations.
Japanese contracts required local compliance clauses, yet the client’s HQ legal team had no Japanese tax exposure.
They also faced challenges in vendor payment reconciliation and needed to know how to properly manage document retention and statutory deadlines.
Above all, they needed bilingual support that could communicate clearly with both their EU finance team and local Japanese logistics vendors.
What did epic do
Epic conducted a full review of the client’s sales flow and import structures to identify indirect tax exposure.
We mapped out the correct consumption tax treatment based on transaction types and roles in the supply chain.
Customs handling procedures were aligned with a compliant booking structure, and duties were properly matched to goods sold.
We coordinated with the client’s European accounting team and delivered English-language tax treatment guidance to bridge knowledge gaps.
Epic also provided bilingual documentation and training on Japan’s new invoice system and its cross-border application.
We reviewed contracts with domestic EC platforms, customs agents, and logistics partners to determine tax obligations and risk points.
Potential withholding tax triggers were identified and explained, leading to renegotiation of several agreements.
Ongoing bookkeeping and monthly reporting were standardized to match EU-VAT logic while remaining Japan-compliant.
The Results
- Indirect tax classification and customs treatment aligned with Japanese law
- Full visibility into withholding tax risks and resolution through contract review
- Proper VAT-to-consumption tax accounting structure implemented
- English-language internal documentation provided to EU HQ
- Japanese invoice system compliance enabled ahead of deadline
