Alp liquidating trust
Tax When the offshore acquisition entity or investor receives income from the property or real estate beneficial interest (for example, rental income (except when the lessee is an individual and the property is used by the lessee or his/her relatives)), the income will be subject to withholding tax on payments determined in accordance with the applicable tax treaty between the offshore acquirer’s home jurisdiction and Japan.
Of such schemes, the GK/TK scheme is subject to the regulations under the Joint Enterprise Act if the subject asset of the scheme is a fee simple estate ("GK/TK (real asset)").Due to the regulatory constraint applied before the amendment was enacted, a scheme with ownership in the form of a trust beneficial interest is generally used in the case of the GK/TK scheme ("GK/TK (trust beneficial interest)").Under the Joint Enterprise Law, prior to the amendment, the person operating the enterprise was required to be licensed by the competent minister or prefectural governor, and various conditions of the license apply, such as the JPY 100 million minimum capital requirement, which is not realistic for most overseas investors. Now, if certain requirements are met, an SPC (e.g., a GK with a small capital) can be a TK operator.However, the fiduciary must follow the provisions of the Revised Act if the will or trust is silent as to the treatment of income and principal.If neither the Revised Act nor the will or trust contains a rule as to how a receipt or disbursement is to be charged, then the receipt or charge must be allocated to principal.Application of the Revised Act to my Estate or Trust As with prior law, the Revised Act does not apply if there is a contrary provision in the trust or Will.
A fiduciary may choose to follow the provisions of the Revised Act if the trust or Will grants the fiduciary such discretion.
An amendment to the Joint Enterprise Act, which was enacted on June 17, 2013, has taken effect as from December 20, 2013.
Under the amendment, if a special purpose company ("SPC") meets certain conditions as a business operator, it may readily conduct business by giving notification to the Ministry of Land, Infrastructure, Transport, and Tourism ("MLITT").
This article briefly outlines the most common investment structures considered by foreign investors wishing to acquire Japanese real estate.
Each structure has different tax consequences for the investor so it is important to consult a tax specialist on each specific transaction.
One of the most important requirements to utilize the new scheme under the amendment is that the investors must be "Special Investors" (explained in detail below).