Are different vehicles for carrying on business, such as companies, partnerships, trusts, etc, recognised as taxable entities?


Cyprus Small Flag Cyprus

While Cyprus recognises a wide range of business structures, including all the above, only natural and legal persons (individuals, companies and their branches and permanent establishments, and foundations) are treated as taxable entities. Partnerships and trusts are treated as transparent for tax purposes and the income is assessed on the partners and the beneficiary respectively.

Greece Small Flag Greece

Pursuant to Greek Income Tax Code (Article 2 and 45 of Law 4172/2013), the following are considered as taxable entities:

a. Capital companies which are established in Greece or abroad,

b. Partnerships which are established in Greece or abroad,

c. Non-profit legal entities of public or private law Referred established in Greece or abroad and including all kinds of associations and foundations,

d. Cooperatives and their associations,

e. Civil societies, profit or non-profit civil law companies,

f. Participatory or obscure companies,

g. Joint ventures,

h. Offshore companies and

i. Trusts or any arrangement of similar nature.

Turkey Small Flag Turkey

Yes, there are several ways to conduct business in Turkey such as through companies, partnerships, funds.

United Kingdom Small Flag United Kingdom

Companies, partnerships and trusts are treated as different taxable entities. In contrast to a company, a conventional partnership is not a legal entity and does not exist separately from its members. Tax on partnership profits is not a joint liability of the partnership. Rather, each partner is taxed on their individual share of profits. The profits of a Limited Liability Partnership (‘LLP’) are taxed in an almost identical manner.

Trusts can attract income tax, capital gains tax or inheritance tax. The tax payable and the person responsible for ensuring the tax is paid largely depends upon the type of trust. For example, in the case of an accumulation or discretionary trust, the trustees are responsible for paying tax on income received. In the case of a bare trust, the beneficiary is responsible for declaring and paying tax on the trust’s income.

Mexico Small Flag Mexico

According to article 7 of the Mexican Income Tax Law, the concept of legal entity comprises, amongst other, business corporations or companies, decentralised agencies whenever they primarily carry out business activities, financial institutions, partnerships and joint ventures.

Nevertheless, different tax treatments could be applicable depending on the nature of the relevant legal entity. For instance, certain trusts could be deemed as tax transparent and consequently the corresponding income tax would be due on a pass-through basis. That is, the corresponding tax consequences would arise at the beneficiaries’ level.

Gibraltar Small Flag Gibraltar


Japan Small Flag Japan

Yes. Japanese corporate law makes available several options of corporate forms; among these, the most commonly used one is a kabushiki kaisha (stock corporation; commonly referred to as a “KK”). A godo kaisha, which is modeled after a U.S. limited liability company (LLC), is also common for small businesses or as subsidiaries of foreign companies (commonly referred to as a “GK”). As Japanese corporations, a KK or a GK is taxed as a corporation, and cannot be taxed as a transparent or passthrough entity.

Only non-corporate business forms are eligible for transparent or passthrough taxation for Japanese tax purposes. These business forms take the form of a partnership (kumiai), which is an aggregate of partners based upon a contractual relationship, but not being an entity separate and distinct from the partners.
A partnership (kumiai) is taxed as transparent or passthrough; that is, they will not be treated as an independent taxpayer, but rather their partners are taxed as taxpayers with respect to the income derived from the business of the partnership. In general, the profits and losses derived from the business of the partnership are allocated to each of the partners based upon the percentage agreed upon in the relevant partnership agreement (most commonly, the ratio of capital contributions). There are rules for limitation of allocation of losses to certain passive partners (e.g., limited partners) to prevent tax avoidance using these partnership structures.

Trusts are also recognized. Generally, plain-vanilla common-law type of trusts are disregarded, i.e., it is treated for tax purposes as if the beneficiary of the trust owned the entrusted assets directly and derived the income and gains from the entrusted property directly. However, some special types of trusts are treated as a corporation by itself (i.e., as a standalone taxpayer apart from beneficiaries), and some investment trusts used as a collective investment vehicle are treated as somewhat an opaque entity, i.e., the trust itself is not a taxable entity and the beneficiaries or the investors are taxed only when they received actual distributions.

United States Small Flag United States

Yes. Corporations, partnerships, estates and certain trusts generally are treated as separate entities for federal tax purposes. Partnerships and certain trusts are not subject to tax at the entity level.

Certain entities (generally LLCs) may “check the box” to elect how they are classified for federal tax purposes. Except for entities that are per se corporations (such as state law corporations or similar foreign entities), an entity with at least two members can choose to be taxable as a corporation or a partnership, and a business entity with a single member can choose to be taxable as a corporation or disregarded as an entity separate from its owner.

Hong Kong Small Flag Hong Kong

Yes, Hong Kong will recognise any form of entities (including companies, partnerships, trustees, other bodies corporate, etc.) carrying on a trade, a profession or a business in Hong Kong as taxable entities. Any entity established in Hong Kong or carrying on business in Hong Kong through an establishment is required to obtain a business registration certificate. The registration is administered by the tax authorities and becomes the linchpin to integrate the entity within the tax system. Once registered, in due course, a return will be issued to the entity to test whether its income is subject to tax in Hong Kong.

Spain Small Flag Spain

Spain recognises certain types of entities with and without legal personality as taxpayers. As a matter of example, investment funds do not have legal personality as they are not companies but are Corporate Income taxpayers. Partnerships and trusts are not recognised under Spanish Law.

Austria Small Flag Austria

Partnerships are not taxable, since they are transparent and taxed on the level of the partners. Trusts are not recognised in Austria. However, Austria Private foundations, which are conceptually similar to trusts, are taxed in a special regime. They are subject to corporate income tax but on the basis of the principle of the taxation of individuals (since they are not allowed to carry out any business).

Germany Small Flag Germany

Yes, German tax law recognises differences in entity structures. A partnership is fiscally transparent for income tax purposes, so that the business profits generated by a partnership are allocated to its partners and taxed in the hands of the partners. In contrast, corporations qualify as taxpayers separate and distinct from their shareholders. With view to trade tax, both trading partnerships and corporations are generally liable to trade tax.

Belgium Small Flag Belgium

Belgian corporate income tax applies to entities that meet the following tests: the entity is a separate legal person, it is engaged in a business or a profit-making activity (legal entities not engaged in such an activity are subject to the income tax on legal entities) and it is a Belgian resident (see infra for the notion of ‘tax resident’).

Limited partnerships, economic interest groupings (EIGs) and European economic interest groupings (‘EEIGs’) are not recognised as separate taxpayers and, generally, their profits are taxed in the hands of the partners.

Under Belgian international private law, legal entities validly constituted in a foreign country are considered as such in Belgium. A foreign entity that has its place of effective management in Belgium is subject to Belgian Company law and will be considered as a resident for corporate tax purposes.

Italy Small Flag Italy

Yes, Italian tax legislation recognises as taxpayers various types of entities irrespective of their legal form. For example, companies are considered autonomous taxpayers and are themselves subject to the tax payment obligations. Conversely, partnerships are deemed as transparent entities for income tax purposes and their income are automatically passed-on and taxed in the hands of partners. Also trusts and investment funds are considered as taxable persons, generally subject to corporate income tax.

Malaysia Small Flag Malaysia


Ireland Small Flag Ireland

Yes, Ireland recognises other taxable entities, such as partnerships, charities, trusts and branches of foreign companies. Irish company law has a range of corporate entities for business purposes, including private limited and unlimited companies, designated activity companies, public limited companies and companies limited by guarantee. Ireland has a common law system of trusts including bare trusts and discretionary trusts. Both general and limited partnership structures exist in Ireland. In addition, investment funds can take the form of variable capital companies, investment limited partnerships and unit trusts. The tax treatment of entity will vary depending on its corporate form (i.e. whether it is taxable in its own right or is viewed as a pass-through).

France Small Flag France

All entities carrying on a profit-making activity are taxable entities. Hence, partnerships are taxable entities, but income tax is paid by partners.

As a general rule, France tax law does not acknowledge transparent entities.

Australia Small Flag Australia

Yes, companies, trusts and partnerships are all recognised commercial vehicles for carrying on business. It should be noted that partnerships will be transparent from a tax perspective unless they are 'corporate limited partnerships'. With some exceptions, a corporate limited partnership is a partnership where the liability of at least one partner is limited (i.e. a limited partnership). In those circumstances, the partnership will be taxed in a manner similar to that of a company.

Switzerland Small Flag Switzerland

Only corporations (the most common type being the Swiss Aktiengesellschaft/Société Anonyme) are treated as taxable entities for carrying on a business.

Swiss partnerships (carrying out a business or not) are treated as tax transparent for Swiss tax purposes. Profit and capital of Swiss partnerships is directly attributed to the partners of the partnership and taxed at level of the partners.

Swiss civil/commercial law does not provide for the possibility to establish a trust under Swiss law. As a consequence, Swiss tax law only recognizes trusts as independent entities in limited circumstances. As a general rule, assets (and income derived from these assets) contributed to a trust by a Swiss resident are still be attributed to such Swiss resident for Swiss tax purposes.

Updated: March 10, 2017