①With regard to domestic source income prescribed in Article 161, paragraph (1) of the Income Tax Act (limited, for a nonresident, to the domestic source income listed in items (i) and (iv) of that paragraph (excluding that which falls under the domestic source income listed in items (ii), (iii), (v) through (xi) and (xiii) through (xvii) of that paragraph) and, for a foreign corporation, to the domestic source income listed in item (iv) of that paragraph) held by a nonresident or foreign corporation that is a partner who has concluded an investment partnership contract, that conducts business through a permanent establishment under that investment partnership contract and that satisfies the following requirements, which is attributable to that permanent establishment, no income tax is imposed:

②If a nonresident has received the application of the provisions of the preceding paragraph with respect to covered domestic source income (meaning domestic source income listed in Article 161, paragraph (1), items (i) and (iv) of the Income Tax Act (excluding that which falls under the domestic source income listed in items (ii), (iii), (v) through (xi) and (xiii) through (xvii) of that paragraph) that is attributable to a permanent establishment pertaining to the business conducted under an investment partnership contract concluded by the nonresident; hereinafter the same applies in this paragraph), the amount specified by Cabinet Order as the amount of loss pertaining to covered domestic source income arising from the business conducted through a permanent establishment under the investment partnership contract concluded by the nonresident to which that application pertains (referred to as a "special application partnership business" in the following paragraph) is deemed not to exist for the purpose of applying the provisions of that Act and other laws and regulations concerning income tax.

③If the provisions of paragraph (1) apply, the domestic source income listed in Article 161, paragraph (1), item (i) of the Income Tax Act (limited to that which falls under the domestic source income listed in items (ii), (iii), (v) through (xi) and (xiii) through (xvii) of that paragraph) held by a nonresident that is attributable to a permanent establishment pertaining to a special application partnership business is deemed not to fall under the domestic source income listed in item (i) of that paragraph, and the provisions of that Act and other laws and regulations concerning income tax apply accordingly.

④In this Article, the meanings of the terms set forth in the following items are as prescribed in those items:

⑤The provisions of paragraph (1) apply, for the period on and after the date of submission, only if a nonresident or foreign corporation has submitted a document stating that it seeks the application of the provisions of that paragraph, its name, its address (or, for a nonresident who has a residence in Japan, its residence; hereinafter the same applies in this Article), its share ratio in investment partnership property and other matters specified by Order of the Ministry of Finance (hereinafter referred to as a "special application return" in this Article), with the document specified by Order of the Ministry of Finance as a document certifying that it satisfies the requirements listed in items (i) through (iii) of that paragraph attached, to the district director having jurisdiction over the place for tax payment under the provisions of Article 17 of the Income Tax Act (or, if a designation has been made under the provisions of Article 18, paragraph (2) of that Act, the designated place for tax payment) for the income tax on the domestic source income listed in Article 161, paragraph (1), item (iv) of that Act, via the general partner with unlimited liability of the investment partnership pertaining to the investment partnership contract who handles the distribution, prescribed in that item, of that domestic source income (hereinafter referred to as the "person handling the distribution" in this Article), and has continuously satisfied the requirements listed in the items of paragraph (1) from the date of conclusion of that investment partnership contract to the date of that submission.

⑥If a person who has submitted a special application return ceases to satisfy any of the requirements listed in the items of paragraph (1), the provisions of that paragraph do not apply on or after the date on which the person ceased to satisfy it, until the date on which the dissolution of the investment partnership pertaining to that special application return or any other event specified by Cabinet Order occurs.

⑦In the case referred to in paragraph (5), when a special application return has been submitted to the district director prescribed in that paragraph, it is deemed to have been submitted on the date on which it was received by the person handling the distribution pertaining to that special application return.

⑧A person who submits a special application return must, at the time of its submission, present to the person handling the distribution through whom it is submitted the document specified by Order of the Ministry of Finance as a document certifying that the person falls under a nonresident or foreign corporation, and that person handling the distribution must confirm the name and address stated in that special application return by means of that document.

⑨If a person who has submitted a special application return comes to fall under any of the cases listed in the following items, the person must submit the return specified in each of those items, with the attached documents (meaning, for the return specified in item (i), where the change prescribed in that item is a change in the content of the investment partnership contract pertaining to that special application return or a change in the share ratio in investment partnership property (limited to a change that, where the content of the investment partnership contract has been changed to provide that the council specified by Cabinet Order prescribed in paragraph (1), item (iii) is to be established, first makes the share ratio in investment partnership property 25 percent or more after that change), the document specified by Order of the Ministry of Finance as a document certifying that the person satisfies the requirements listed in paragraph (1), items (i) through (iii) even after that change in the content of the investment partnership contract or change in the share ratio in investment partnership property, and, for the return specified in item (ii), the document specified by Order of the Ministry of Finance prescribed in paragraph (5)) attached, to the district director prescribed in paragraph (5) via the person handling the distribution pertaining to that special application return, by the day before the date on which the domestic source income listed in Article 161, paragraph (1), item (iv) of the Income Tax Act that the person first receives under the investment partnership contract pertaining to that special application return on or after the date on which the person came to fall under that case is deemed to have been paid under the provisions of Article 212, paragraph (5) of that Act (or, if the person is a nonresident, by that day before or by March 15 of the year following the year that includes the date on which the person first comes to have domestic source income prescribed in Article 161, paragraph (1) of that Act on or after the date on which the person came to fall under that case, whichever is earlier):

⑩The provisions of paragraph (6) apply mutatis mutandis to the case where a person who has submitted a special application return fails to submit the return specified in each item of the preceding paragraph that the person is required to submit under the provisions of that paragraph (including the case where the person fails to attach the attached documents prescribed in that paragraph that are required to be attached to the return specified in each of those items under the provisions of that paragraph), and the provisions of paragraphs (7) and (8) apply mutatis mutandis to the submission of the return specified in each item of the preceding paragraph. In this case, the phrase "ceases to satisfy any of the requirements listed in the items of paragraph (1)" in paragraph (6) is deemed to be replaced with "fails to submit the return specified in each item of paragraph (9) that the person is required to submit under the provisions of that paragraph (including the case where the person fails to attach the attached documents prescribed in that paragraph that are required to be attached to the return specified in each of those items under the provisions of that paragraph)", the phrase "ceased to satisfy it" is deemed to be replaced with "came to fall under the case listed in each of those items", the phrase "that paragraph" is deemed to be replaced with "paragraph (1)", the phrase "paragraph (5)" in paragraph (7) is deemed to be replaced with "paragraph (9)", the phrase "a special application return has been submitted to the district director prescribed in that paragraph" is deemed to be replaced with "the return specified in each item of that paragraph has been submitted to the district director prescribed in paragraph (5)", the phrase "that special application return" is deemed to be replaced with "the return specified in each of those items", the phrase "submits a special application return" in paragraph (8) is deemed to be replaced with "submits the return specified in each item of the following paragraph", and the phrase "that special application return" is deemed to be replaced with "the return specified in each of those items".

⑪A nonresident or foreign corporation referred to in paragraph (5) or a person who has submitted a special application return referred to in paragraph (9) (hereinafter referred to as a "nonresident, etc." in this paragraph and paragraph (13)) may, in lieu of submitting a special application return under the provisions of paragraph (5) or submitting the return specified in each item of paragraph (9) under the provisions of that paragraph, provide the person handling the distribution referred to in those provisions with the matters to be stated in that special application return or in the return specified in each of those items by electronic or magnetic means (meaning the method of using an electronic data processing system or any other method using information and communications technology that is specified by Order of the Ministry of Finance; the same applies in paragraph (13)). In this case, that nonresident, etc. is deemed to have submitted that special application return or the return specified in each of those items to that person handling the distribution.

⑫With regard to the application of the provisions of paragraphs (7) and (10) in the case where the provisions of the preceding paragraph apply, the phrase "when a special application return" in paragraph (7) is deemed to be replaced with "when the matters to be stated in a special application return", the phrase "the date on which it was received" is deemed to be replaced with "the date on which they were provided", the phrase "a special application return has" in paragraph (10) is deemed to be replaced with "the matters to be stated in a special application return have", and the phrase "the return specified in each item of that paragraph has" is deemed to be replaced with "the matters to be stated in the return specified in each item of that paragraph have".

⑬When a nonresident, etc. provides, by electronic or magnetic means, the matters to be stated in a special application return or in the return specified in each item of paragraph (9) pursuant to the provisions of paragraph (11), the nonresident, etc. may, in lieu of submitting the document specified by Order of the Ministry of Finance prescribed in paragraph (5) under the provisions of that paragraph or submitting the attached documents prescribed in paragraph (9) under the provisions of that paragraph, provide the person handling the distribution referred to in paragraph (5) or (9) with the matters to be stated in that document specified by Order of the Ministry of Finance or those attached documents by electronic or magnetic means. In this case, that nonresident, etc. is deemed to have submitted that special application return or the return specified in each of those items with that document specified by Order of the Ministry of Finance or those attached documents attached, under the provisions of paragraph (5) or (9).

⑭Where the provisions of paragraph (1) apply, the following applies:

⑮The person handling the distribution pertaining to an investment partnership contract concluded by a nonresident or foreign corporation that receives the application of the provisions of paragraph (1) must state, in the statement of partners' income pertaining to an investment limited partnership referred to in Article 227-2 of the Income Tax Act that the person submits with respect to that nonresident or foreign corporation pursuant to the provisions of that Article, the fact that the nonresident or foreign corporation has submitted a special application return pursuant to the provisions of paragraph (5) and other matters specified by Order of the Ministry of Finance.

⑯Beyond what is provided for in paragraph (5) through the preceding paragraph, necessary matters concerning the application of the provisions of paragraph (1) and the application of other provisions of laws and regulations concerning income tax with respect to nonresidents who have concluded investment partnership contracts are specified by Cabinet Order.