An investment company that meets the incorporation requirements under the Corporate Tax Act and distributes 90% or more of its distributable income as dividends, thereby being able to deduct the amount of dividends from its taxable income for the fiscal year.
Main Requirements for PFV
- The company must operate its assets in facility investment, social overhead capital (SOC) infrastructure investment, resource development, or other specific projects that require a significant period and capital investment, and must distribute the profits to its shareholders.
- The company must not establish any business offices other than its headquarters, and must not have employees or full-time executives.
- The company must be established temporarily and have a lifespan of at least 2 years.
- It must be established as a stock company through the method of founding establishment under the provisions of the Commercial Act or other relevant laws.
- The company must meet the following requirements regarding capital size, outsourcing of asset management and fund management tasks, and establishment reporting:
- Capital of 5 billion KRW or more.
- Asset management, operation, and disposal tasks must be entrusted to an asset management company (a company invested in by the relevant company or a company jointly established by the relevant company or its investors).
- The company must entrust its fund management tasks to a financial company that operates trust business under the "Capital Markets and Financial Investment Business Act" ("Fund Management Task Trustee").
- At least one shareholder must be a financial institution or the National Pension Service, with a capital contribution of at least 5% of the total capital.
- Within two months from the corporate registration date, the nominal company establishment report, along with documents prescribed by the Ministry of Strategy and Finance, must be submitted to the tax office having jurisdiction over the place of taxation.
- The asset management company and the fund management service trustee company must not be the same entity.
Major Tax Benefits
- If 90% or more of the distributable profits are paid as dividends, the dividend amount can be deducted from the taxable income for the business year.
※ The real estate trust company is a financial institution that meets the establishment requirements of PFV and can selectively perform either asset management company duties or fund management service trustee duties.
※ In accordance with the provisions set forth in the [Corporate Tax Act].
※ [Asset Management Fees, Fund Management Fees, and Investment Commission Criteria] are determined through agreement between the parties to the business contract.