The Tokyo Regional Taxation Bureau assessed corporate income tax on receipt of distribution of profits from a Japanese company (business operator) by a Dutch company (tokumei-kumiai investor) under a tokumei-kumiai contract, alleging that the partnership constituted a permanent establishment of the off-shore investor. The courts, in both the first and second instance, reversed the tax assessment on the distribution of Tokumei-kumiai profits. The courts held that the contract between the two companies was a valid tokumei-kumiai contract, that tokumei-kumiai profits fell within the scope of Article 23 of the Japan-Netherlands Tax Convention and that there was no legal basis for imposing corporate income tax on the investor's receipt of distribution of tokumei-kumiai profits. The tax authority further appealed to the Supreme Court, but the Supreme Court did not accept the appeal and the taxpayer's overall victory became final and binding on 5 June, 2008. To our knowledge, this is the first judicial case in which the court reversed tax assessment concerning a tokumei-kumiai transaction. Our partners, Mitsuo Sasaki, Kenichi Nakano, Koji Fujita and our associates, Shinji Nakamura, Yoshinori Aoyagi and Mariko Onishi represented the investor in this matter.