Short answer
Yes. If you own a share of a business as a partner or investor, you pay zakat on your share of its zakatable assets: cash, stock for sale and money owed to it, less its debts due now. Buildings, machines and equipment are not counted. If you cannot get the figures, the cautious course is to pay on the value of your share.
Each partner owes zakat on his share of the business's zakatable assets, added to his other wealth to reach the nisab. Fixed assets used to run the business carry no zakat. Profit paid out to you joins your other wealth.
The four schools agree on this.
Explanation
A business you part-own is your wealth held in a different form. Zakat follows what the business holds, not the label on your investment. This applies whether you are a working partner, a silent partner, or an investor in a mudaraba, where you supply the money and someone else runs the business.
Count your share of:
- Cash in the business's accounts.
- Stock, goods and raw materials held for sale, at their market value.
- Money owed to the business that it expects to collect.
Subtract your share of debts the business must pay now, such as suppliers' bills and wages due. Leave out premises, vehicles, machinery, furniture and other things the business uses rather than sells.
An example: you own a quarter of a shop. On your zakat date it holds 20,000 in cash and stock and owes 4,000 to suppliers. Your share is a quarter of 16,000, which is 4,000. Add that to your own savings and pay 2.5 percent if the total reaches the nisab.
Some practical points:
- If the business pays zakat on behalf of its owners with their agreement, you do not pay it twice.
- If a friend's business cannot give you figures, pay on the value of your share as a cautious estimate.
- Money you lent a business for a fixed return is a loan, not an investment, and the fixed return is interest. The loan itself is zakatable as money owed to you.
- Listed shares follow the rules on zakat on stocks.
The four schools agree on this outline. The zakat on business calculator helps with the figures.
The evidence
Quran, Surah Al-Baqara 2:267
يَٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُوٓا۟ أَنفِقُوا۟ مِن طَيِّبَٰتِ مَا كَسَبْتُمْ وَمِمَّآ أَخْرَجْنَا لَكُم مِّنَ ٱلْأَرْضِ ۖ وَلَا تَيَمَّمُوا۟ ٱلْخَبِيثَ مِنْهُ تُنفِقُونَ وَلَسْتُم بِـَٔاخِذِيهِ إِلَّآ أَن تُغْمِضُوا۟ فِيهِ ۚ وَٱعْلَمُوٓا۟ أَنَّ ٱللَّهَ غَنِىٌّ حَمِيدٌ ﴿٢٦٧﴾
O you who have believed, spend from the good things which you have earned and from that which We have produced for you from the earth. And do not aim toward the defective therefrom, spending [from that] while you would not take it [yourself] except with closed eyes. And know that Allah is Free of need and Praiseworthy.
Wealth earned through trade and investment carries zakat.
Sahih al-Bukhari 1403
Sahih... من آتاه الله مالا فلم يؤد زكاته ...
"Whoever is given wealth by Allah and does not pay its zakat, his wealth will be made into a serpent for him on the Day of Resurrection."
All zakatable wealth you own carries its zakat, including what you have invested.
Where the ruling is recorded
- al-Hidaya, Kitab al-Zakat, section on trade goods. Trade goods are zakatable at their value; tools of the trade are not.
- Fiqhi Maqalat (Mufti Muhammad Taqi Usmani), Article on zakat on company shares. A shareholder pays on his share of the company's zakatable assets, not its fixed assets.
Checked by our team. For a more accurate answer to your own situation, consult a scholar. Quran translation by Sahih International. Hadith Arabic from the standard editions of the six books and the Muwatta, with gradings as recorded there; the English is our own rendering. Spotted a mistake? Tell us.