Is a construction business license required for construction projects worth over 500 million yen? Explaining the differences and requirements for projects worth less than XNUMX million yen

Updated: July 2026, 1

When operating a construction business, it is legally required to obtain a construction business license when undertaking construction work above a certain scale.
The important criterion is the "contract amount of 500 million yen" line.
If you do not correctly understand this amount, you run the risk of unintentionally violating the law.

In this article, we will explain in detail the specific amount of money required for a construction business license, points to note when calculating, and the penalties for carrying out construction work without a license.

The "contract amount of 500 million yen" is the standard for determining whether or not a construction business license is granted

The Construction Business Act stipulates that, in principle, businesses undertaking construction work must obtain a construction business license.
However, as an exception, if you only undertake "minor construction work," you can operate without a license.

The main criterion for determining whether a work falls under this "minor construction work" category is the contract amount, and for most specialized construction work other than general building work, a construction business license is required if the contract amount is 500 million yen or more.

Two cases of "minor construction work" that do not require permission

"Minor construction work" that can be undertaken without a construction business license has different monetary standards depending on the type of work.
Specifically, there is a big difference in the maximum amount that does not require permission between "general construction work," which is the integration of multiple specialized works, and other individual "specialized works."
Accurately understanding this classification and knowing which category the construction work your company receives falls under is the first step in operating your business in compliance with laws and regulations.

[Complete construction work] Construction work with a contract amount of less than 1,500 million yen

A general construction project refers to the construction of a building under the comprehensive planning, guidance, and coordination of a general contractor, and is distinguished from individual specialized construction work.
"Minor construction work" that does not require permission for this complete building project is work with a contract amount of less than 1,500 million yen (including consumption tax) or construction of a wooden house with a total floor area of ​​less than 150 square meters.
Therefore, in order to undertake large-scale new construction or extension/renovation work that exceeds these standards as a prime contractor, a construction business license for general construction work is required.
However, simply combining multiple specialized works is not considered a complete construction project, so judgment must be made based on the actual situation of the work.

[Other than general construction work] Construction work with a contract amount of less than 500 million yen

For 27 types of specialized construction work other than general construction work, such as carpentry work, interior finishing work, and painting work, the standard for "minor construction work" that does not require a license is that the contract amount is less than 500 million yen (including consumption tax).
In other words, if the contract amount is less than 500 million yen including tax, you can receive the order even if you do not have a construction business license.
Many specialist contractors operate within this scope, but it is important to note that intentionally splitting up contracts in order to circumvent this standard is not permitted.
If it is determined that the construction work is actually one project, the divided contract amounts will be calculated together, so it is important to understand the exact amount.

Three important points to consider when calculating the contract amount

When calculating the contract amount to determine whether or not a construction business license is required, there are several important points to consider beyond just the nominal contract amount.
In particular, if you do not correctly understand the rules regarding consumption tax, accounting for material costs, and contract division, you may unknowingly exceed the standard amount and be in violation of the law.
It is essential to accurately understand these calculation points for proper business operations.

Point 1: Make your decision based on the price including consumption tax

When determining whether a construction business license is required, the contract amount must be considered as the amount including consumption tax.

For example, even if the contract amount excluding tax is 480 million yen, adding 10% consumption tax makes the total amount 528 million yen, which exceeds the 500 million yen threshold and requires a construction business license.
If estimates and contracts are created with tax-excluded amounts, there are many cases where something is overlooked, so it is important to always make decisions based on the total payment amount.
When signing a contract, it is important to clearly state the amount excluding tax, the amount of consumption tax, and the total amount including tax, and to make it a habit to check whether permission is required.

Point 2: Include material costs in the total amount

The contract price includes not only the labor costs of the workers but also the cost of the materials used in the construction.

Particular care is required when materials are provided by the client (owner).
In this case, even if the amount stated in the contract is less than 500 million yen, the market price of the materials provided and transportation costs must be added to the contract amount to make a judgment.
For example, if the contract amount is 450 million yen and the client provides materials worth 100 million yen, the scale of the work will effectively be considered 550 million yen and a construction business license will be required.

It is not permitted to separate material costs to make the contract amount appear lower, so it is important to understand that the actual value of the entire construction work will be used to make the judgment.

Point 3: Even if the contract is divided, the contract amount will be added together

The Construction Business Act prohibits the intentional division of what is essentially a single project into multiple contracts and adjusting the contract amount for each to less than 500 million yen in order to avoid obtaining a construction business license.

If the construction work is deemed to be essentially one project based on factors such as preparation, construction timing, and locational relationships, the total amount of all divided contracts will be added up to determine whether or not permission is required.
For example, even if you have separate contracts for the foundation work and the upper structure work of a building, or separate contracts for the interior work on the first and second floors, as long as these are part of a single construction project, you may be considered to be operating without a license if the total amount exceeds 1 million yen.
Please be careful as such illegal activities will be dealt with severely.

Even if the amount is less than 500 million yen, separate registration for specialized construction may be required.

Even if the contract amount is less than 500 million yen and a construction business license is not required, depending on the type of construction work, registration and notification under other laws may be required.
Typical examples include demolition work, electrical work, and septic tank construction.

These construction works, even minor ones, cannot be carried out unless registration under the respective Specialized Construction Business Act is completed, regardless of whether the contractor is the prime contractor or a subcontractor.
Construction business licenses are separate procedures with different jurisdictions and requirements, so it is important to check in advance whether there are any legal systems that relate to the work your company will be carrying out.

Penalty for undertaking construction work worth more than 500 million yen without permission

Undertaking construction work worth more than 500 million yen without obtaining a construction business license, even though such a license is required, is a violation of the Construction Business Act.
If this violation is discovered, you will be subject to severe administrative sanctions and penalties.
Excuses such as "I didn't know" or "I was careless" will not be accepted, and this could have a serious impact on the survival of your business.
It is essential for sound business operations to not underestimate the risks of operating without a license and to accurately understand the specific details.

Imprisonment or fines for breaking the law

Unlicensed businesses that undertake construction work worth more than 500 million yen without a construction business license are subject to penalties under the Construction Business Act.
Specifically, you may be subject to imprisonment for up to three years or a fine of up to 3 million yen.
This penalty may apply not only to corporate representatives and sole proprietors, but also to employees who were directly responsible for the violation.

In addition, if a prime contractor orders work above the standard amount while knowing that the subcontractor is unlicensed, it may be subject to supervisory sanctions.
It is important to recognize that operating without a license is not merely a procedural flaw, but a serious compliance violation that can lead to criminal penalties.

The license will be disqualified and will not be available for five years.

If you are sentenced to a fine or more for violating the Construction Business Act, such as operating without a license, you will be subject to the ``disqualification requirements'' for a construction business license for five years after completing the sentence.
This means that even if you try to obtain a permit to expand your business in the future, your application will not be accepted for five years.
During this period, we will not be able to take on construction projects worth more than 500 million yen, which will place significant restrictions on our business expansion.

In addition to the direct penalty of a fine, a single violation can deprive a company of long-term growth opportunities and result in significant damage to its external credibility.

Summary

In the construction industry, a contract amount of 500 million yen (1,500 million yen for general construction work) is an extremely important criterion that determines whether or not a construction business license is required.
This amount must be calculated including consumption tax and must also include the cost of materials provided by the client.
Furthermore, it is not permitted to unfairly divide a single construction contract in order to avoid obtaining permission.

If a company undertakes construction work above the standard amount without a license, not only will it be subject to severe penalties such as imprisonment or fines, but it will also be unable to obtain a license for the next five years, which will have a serious impact on the continuation of its business.

It is essential to correctly understand the laws and regulations, accurately grasp the scale of the construction work your company undertakes, and strive to operate your business honestly.

Leave the construction company procedures and management to us!

At Support Administrative Scrivener Corporation, we are acting on behalf of those who are newly acquiring construction business licenses.
We also check and prepare the requirements for obtaining permission, and provide consulting services up to the point of obtaining permission, and have handled over 800 cases to date.
In addition to handling new projects, we also provide comprehensive support for many other procedures that construction companies need to complete.

Would you like to outsource your company's complicated internal operations to us and focus on your core business?

Service details