There were some arguments whether a Delaware Limited Liability Partnership (LLP) should be treated as a pass-through entity or not. If it is regarded as a pass-through entity, income or loss made through an LLP has to be included in Japanese taxable income.
As of today (May 2018), it is regarded as a pass-through entity.
There have been several contradicting rulings by Japanese courts but recently in 2017, Japanese Supreme Court gave the decisive ruling that sent many in Japanese and US tax community in panic.
Then, after strong criticism and the change in the tax law that limits loss from partnership for passive members, the National Tax Agency announced a memo in “English” saying that
a Delaware limited partnership is fiscally transparent. (It is rare to make its official announcement not in Japanese. Some people think that it is too embarrassing for Supreme Court if NTA denies their ruling in Japanese.)
Now we have the conclusion here. An LLP can be treated as a pass-through entity.
It affects your tax situation if you do business or invest into something through an LLP. If you are an active partner, your loss in the partnership can be offset against your Japanese loss.