Zeitschrift für Japanisches Recht
Heft Nr.13 / 7. Jahrgang 2002

Silent Partnership in Japan and Germany

Martin Arnold

 

I.Historical Background and Importance of Silent Partnership in Modern Japanese Business

II.Commercial Code Regulations

1.Japan
2.Germany

III.Taxation Issues of the Silent Partnership in Japan

1.Taxation at the Level of the Proprietor
2.Taxation at the Level of the Silent Partner

IV.Taxation Issues of the Silent Partnership in Germany

1.The Typical Silent Partnership
2.The Atypical Silent Partnership

V.Summary

 

I.     Historical Background and Importance of Silent Partnership
in Modern Japanese Business

The concept of Japanese silent partnership (tokumei kumiai) dates back to the Italian trading business in the 10th century[1]and was first provided for in the 1890 draft of the Japanese Commercial Code (Shôhô [2]). In modern Japanese business, silent partnerships still play an important role as an investment tool due to the versatility of the arrangement and various tax benefits. These benefits have also attracted the attention of foreign investors, especially in the leveraged lease market. As a result of the increasing use of silent partnership arrangements, the Japanese national tax administration (NTA) have recently focused their attention on arrangements where favourable tax treaties have been used by foreign investors to minimize or indeed totally avoid Japanese taxation.[3] Nonetheless, silent partnership arrangements remain an important alternative in the financing of businesses.


[1]      Concept of “commendator” and “tractator”.

[2]      Law No. 48/1899, as amended by Law No. 79/2001. First draft by the German Rösler in the year 1890.

[3]      See Yomiuri Shinbun February 10, 2001.