Japan Highly Skilled Professional Visa: Are RSUs and Stock Options Included in Annual Income Points?

This article is written by a Japanese local.

In the points calculation for Japan’s “Highly Skilled Professional (HSP)” visa, “Annual Income” carries significant weight. Particularly for elite professionals working at foreign tech giants (like GAFA) or rapidly growing startups, whether stock options and RSUs (Restricted Stock Units)—which often make up a large portion of their compensation—can be counted as annual income is a critical issue that dictates their shortest path to Permanent Residency.

This article explains the strict definition of annual income under the Immigration Control Act and the objective procedures required to reliably incorporate equity compensation into your projected annual income.

1. The Strict Definition of “Annual Income” and Its Two Barriers

[Summary] Stock at the mere “Grant” stage cannot be included. Only equity that will “Vest” within the upcoming year and whose cost is borne by a Japanese entity is recognized as annual income.

The fundamental rule is that annual income for HSP points is defined as the “remuneration expected to be received from the host organization in Japan over the upcoming year.” Many applicants mistakenly sum up the “total value of future expected stock” and face rejection. Immigration’s screening focuses on two main points.

(1) Proving “Certainty”: Will It Vest Within the Next Year?

Even if your employment contract states, “You are granted RSUs worth 10 million JPY,” if they vest over a four-year period, you can only include the “2.5 million JPY portion scheduled to vest within the upcoming year” in your points calculation. Unvested stock with no guarantee of actual realization cannot be included in the projected annual income under immigration law.

(2) The Barrier of “Remuneration from a Foreign Entity”

If equity is granted directly by a U.S. headquarters and the Japanese subsidiary is not involved in bearing the cost, it is generally not considered “remuneration from an organization in Japan” and is excluded from annual income. To bypass this, you must submit a secondment agreement or an intercompany charge-back agreement (proving the Japanese entity pays the headquarters for the stock value), logically establishing that the equity is “compensation for services rendered in Japan.”

2. Procedures to Add RSUs (Restricted Stock Units) to Annual Income

[Summary] To include RSUs, you must ensure perfect consistency among the explicit mention in the employment contract, the vesting schedule, brokerage account balances, and tax withholding slips.

Compared to stock options, RSUs have a clear value at the time of vesting and are often subject to withholding tax as salary, making them relatively easier to recognize as annual income. However, providing the following objective set of evidence is essential.

• English Contracts and Japanese Translations: The employment contract or Grant Notice must explicitly state that RSUs are provided as compensation for labor.
• Vesting Schedule: Corporate-issued data clearly showing when and how many shares are scheduled to vest within the upcoming year.
• Consistency with Tax Documents: If you have RSUs that vested previously, they must be correctly declared and taxed as employment income on your Japanese “Tax Withholding Slip (Gensen Choshuhyo)” or “Final Tax Return.” If there is even a 1 JPY discrepancy between tax records and what you declare to Immigration, it will be ruthlessly excluded from points as opaque income.

3. The Challenge of “Valuation” for Unlisted Stock Options

[Summary] Because unlisted stock options lack objective market prices, you must attach valuation certificates from third-party entities like tax accountants to prove the validity of the valuation.

For unlisted stock options granted by startups, the biggest issue is how to calculate “what those rights are worth right now.” Since there is no public stock price like listed companies, immigration examiners cannot calculate the value themselves.

Instead of a self-proclaimed stock price by the applicant or company, you must attach a “Stock Valuation Report” (using methods like Net Asset Value or DCF) prepared by a third party, such as a tax accountant or certified public accountant, or objective data from recent fundraising rounds. Without this procedure, the value of the stock options will be processed as “incalculable (Zero JPY).”

4. Practical Q&A (Stock Price Fluctuation Risks and ESPP)

[Summary] A drop in projected income due to falling stock prices becomes a risk at renewal. Furthermore, discounts from self-funded ESPPs (Employee Stock Purchase Plans) are generally not included in annual income.

Q. What happens if the RSU stock price used during the application crashes later, lowering my actual annual income?

A. The HSP visa points calculation is based on the “projected annual income at the time of application” (calculated using the stock price and exchange rate at that moment). Therefore, your visa will not be immediately revoked if the stock price drops after acquisition. However, during your next period of stay renewal, if your actual income drops and your points fall below 70, you will not be able to renew the HSP visa and must downgrade to another work visa.

Q. Does the discount amount from an ESPP (Employee Stock Purchase Plan) count towards annual income?

A. Generally, no. An ESPP is a system where employees purchase stock by deducting their own salary (personal funds). Because its nature differs from “remuneration granted for free by the company in exchange for labor,” the safest approach is to exclude it from the remuneration amount declared under immigration law.

Conclusion: Complex Compensation Requires “Legal and Tax Consistency”

The HSP visa points calculation is not simple addition. Especially when equity compensation is involved, an objective logic integrating Immigration law, Japanese tax law, and corporate law is indispensable. Before your income is unfairly undervalued and you lose your chance at Permanent Residency, establish strict legal procedures to translate your company’s compensation structure into “objective data” that Immigration can evaluate.