(2021) What is partial exemption?

For public investment funds, certain domestic income is subject to additional corporate tax at the fund level. To offset this pre-taxation at the fund level, fund distributions, advance lump sums, and capital gains from the sale of fund units are partially exempt from tax. This is referred to as a "partial exemption".

The rate of the fund-specific partial exemption depends on the type of fund (as of 10.2018):

• 30% for equity funds (at least 51% equity according to the investment conditions)
• 15% for mixed funds (at least 25% equity according to the investment conditions)
• 60% for real estate funds (at least 51% in real estate or real estate companies according to the investment conditions)
• 80% for real estate funds with a foreign focus (at least 51% in foreign real estate or foreign real estate companies according to the investment conditions)

The classification of a fund into a fund category is based on the investment policy by the fund company (investment company). They provide the qualification of the fund (e.g. equity or mixed fund).