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April 22, 2021
 Updated May 13, 2021
Financial Services Agency

  Tax Treatment of Carried Interest

 The Financial Services Agency has summarized the tax treatment in this Notice[PDFPDF(465KB)], where so called Carried Interest partnership profit distributions received by individual fund managers in relation to a partnership agreement that stipulates the distribution of partnership profits in excess of their interest holding ratio from the partnership business managed by the fund managers as its partners, will be taxed on a pass-through basis and treated as the income of the fund managers in accordance with the distribution ratio as stated in the partnership agreement (Pass-through treatment).

 In addition, when fund managers receiving Carried Interest file their individual income tax returns, the following sheets should be enclosed:
1) Check sheets to ensure that the conditions for Carried Interest (described in the Notice) are satisfied[PDFPDF(178KB)/Word(151KB)]
2) Calculation sheets to describe the breakdown of income for Carried Interest (e.g., categories of income, and amounts of gross revenue/cost)[PDFPDF(218KB)/Word(90KB)]

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