Japan: Delaware limited partnership, treated as corporation

US limited partnership, treated as corporation in Japan

A decision of the Japanese Supreme Court concludes that a limited partnership formed under the laws of the U.S. state of Delaware is to be treated as a corporation for Japanese tax purposes. The long-awaited Supreme Court decision resolves a split among the district courts and high courts in Tokyo, Osaka, and Nagoya.


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The Supreme Court set forth the following criteria for determining whether a foreign entity is to be treated as a corporation for Japanese tax purposes:

  • Determine whether it is clear beyond doubt, that the legal status equivalent to that of a Japanese corporation is granted to the foreign entity under the laws of the country where it was established, considering the provisions of such laws and the legal framework
  • In situations when this cannot be demonstrated beyond doubt, then determine whether the foreign entity is an entity that assumes rights and obligations on its own account (i.e., whether the foreign entity itself can be a party to legal actions and whether the legal effects of the actions are attributable to such foreign entity)

Based on these criteria, the Supreme Court concluded that a Delaware limited partnership is to be treated as a corporation for Japanese tax purposes.


Read an August 2015 report [PDF 126 KB] prepared by the KPMG member firm in Japan: US (Delaware) LPS – Japanese Supreme Court Decision 

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