Registering an LLP in the state of Japan requires concluding a limited partnership agreement (must be concluded in written form) with no less than one limited partner. The time required for the establishment of a PEF in the state of Japan depends on how fast the funds are raised & registration documentation is reviewed. Once the agreement is concluded, its signatories must register a partnership in Japan & open a local office. They must also pay a registration fee of thirty thousand yens (or two hundred fifty euros). Please note that opening a business in Japan normally takes up to seven days (counting from the date a registration application is filed).
Within 14 days of the entry into force of an LP agreement, partners must register this information:
- an LLP’s commercial goal;
- an LLP’s name;
- date of signing an LP agreement;
- duration of LP;
- partners’ IDs & addresses;
- address of an LP’s office;
- any conditions for dissolution of an LLP that aren’t provided for in the law.
Any changes in the above information require registering them within 14 days. Failure to do so may entail a fine of up to one million yen. Accessing the information (and getting a certified copy of it) is possible via an LP’s official website; however, any info on investors’ IDs or their capital obligations isn’t available to members of the general public.
Applying for a financial market operator license in the state of Japan requires meeting the following criteria:
- obtaining permission for transactions with financial instruments in the state of Japan;
- providing proof of non-violation of FIEA or non-payment of fines within the previous 60 months;
- non-involvement in business activities contradicting public interests;
- having sufficient personnel to do business with financial instruments;
- having fifty million yen (or four hundred thousand euros) in declared or total capital;
- being a Japan-registered corporation with a BoD;
- having net assets of no less than fifty million yens (or four hundred thousand euros).
If it’s a Japan-registered corporation, none of its majority stakeholders will fall under any of the FIEA categories; if it isn’t, none of its majority stakeholders will have a right to meddle with transactions involving its financial instruments.
LLPs are exempt from paying taxes; any revenue generated from investments via an LP will be distributed to its partners without being taxed. Any distributions made by LLPs between foreign investors (if they permanently reside in Japan) are normally taxed at a rate of twenty percent. LLPs or general partners are prohibited from withholding taxes on payments to partners.
Japan: Taxation of Non-Resident Companies
Investment activities carried out by general partners on behalf of LLPs are deemed to be carried out jointly by all LLPs’ partners. For a foreign investor to enter into partnership with an LLP, they must have a permanent representative office in Japan. All income earned from an LLP’s activities is taxable if at least one partner of an LLP resides in Japan. All distributions made by LLPs between foreign investors are normally subject to taxation. However, if a foreign investor is an LLP’s limited partner & has no permanent representative office in Japan, they won’t be required to pay income tax in Japan or file a tax return in Japan. Qualifying for this exemption requires submitting an application to the Japanese tax authorities. In the application, a foreign investor must state that
- they’re an LLP partner;
- they aren’t involved in any commercial activities or management of an LLP
- they own no more than a twenty five percent stake in an LLP;
- they have no financial relationships with an LLP’s general partners;
- they don’t do any other business in Japan except through investment in an LLP
Considering registering an LP fund in Japan? Need advice on LLP regulation in Japan? Why not reach out to IQ Decision UK?