In Japan, profit from offshore forex is generally classified as miscellaneous income and taxed under aggregate (progressive) taxation, meaning it is added to salary and other income. Income tax is a progressive 5% to 45% depending on taxable income, and 10% resident tax is added on top, so the effective burden varies widely with the size of your income.
Domestic forex (over-the-counter trading with a Japan-registered financial instruments business operator) is taxed under separate self-assessment taxation at a flat 20.315%, and losses can be carried forward for three years. Offshore forex, by contrast, allows neither loss offsetting against other income nor a loss carryforward. Based on National Tax Agency (NTA) Tax Answers (verified on 10 October 2026), this article sets out the rate table, the comparison with domestic FX, how loss offsetting and carryforward work, and worked examples. For your own situation, confirm with your tax office or a tax accountant.
What tax applies to offshore forex? Why it is aggregate taxation on miscellaneous income
Offshore forex profit is generally classified as miscellaneous income and is subject to aggregate taxation, where tax is calculated after adding it to employment income, business income and so on. Miscellaneous income is the total revenue minus necessary expenses, and the NTA states that a loss arising in calculating miscellaneous income cannot be offset against other income (Tax Answer No. 1500).
Domestic FX is subject to separate self-assessment taxation when it falls under the exchange-traded derivatives transactions or over-the-counter derivatives transactions with a Type I financial instruments business operator or registered financial institution defined in Tax Answer No. 1521. The same page states that transactions outside these categories are generally miscellaneous income subject to aggregate taxation. Offshore forex, where the counterparty is not a Japan-registered operator, is generally considered to fall under this other category. However, No. 1521 does not name overseas brokers specifically, so confirm individual transactions with your tax office or a tax accountant.
Tax applies to the portion where a position has been closed and the profit realised. Floating gains on open positions are not income; the profit or loss at the time of closing is included in income for that year (1 January to 31 December). What matters is whether profit or loss was realised by closing, not whether you withdrew the money.
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Offshore forex tax rates: 5-45% income tax plus 10% resident tax (rate table)
Under aggregate taxation, income tax is calculated by applying the quick-calculation table below to taxable income including your forex profit. A special reconstruction income tax of 2.1% of the base income tax amount (for tax years 2013 to 2037) is added, and resident (inhabitant) tax is generally charged at a 10% income-based rate.
| Taxable income | Income tax rate | Deduction | Approximate marginal rate including 10% resident tax and reconstruction tax |
|---|---|---|---|
| Under JPY 1.95 million | 5% | JPY 0 | about 15.1% |
| JPY 1.95 million to under JPY 3.3 million | 10% | JPY 97,500 | about 20.2% |
| JPY 3.3 million to under JPY 6.95 million | 20% | JPY 427,500 | about 30.4% |
| JPY 6.95 million to under JPY 9 million | 23% | JPY 636,000 | about 33.5% |
| JPY 9 million to under JPY 18 million | 33% | JPY 1,536,000 | about 43.7% |
| JPY 18 million to under JPY 40 million | 40% | JPY 2,796,000 | about 50.8% |
| JPY 40 million or more | 45% | JPY 4,796,000 | about 55.9% |
※ Tax is calculated as taxable income x rate - deduction. The right-hand column is this site's estimate, adding 2.1% special reconstruction income tax to the income tax rate and simply adding 10% resident tax; it excludes tax credits, income deductions and the per capita portion of resident tax. Taxable income is the amount after subtracting income deductions such as social insurance premium deduction and the basic deduction from the total of salary, pension and other income.
The commonly quoted figure of up to 55% is the top bracket (taxable income of JPY 40 million or more), simply adding 45% income tax and 10% resident tax; adding 2.1% special reconstruction income tax brings it to about 55.9%. Most individuals fall in the 10% to 23% income tax range, so in practice the marginal rate is mostly around 20% to 33%.
According to NTA Tax Answer No. 2260, for income arising on or after 1 January 2027 (Reiwa 9), the special reconstruction income tax rate falls to 1.1%, and a special defence income tax (equal to 1% of the income tax amount to be withheld) is withheld alongside it. The tax return for tax year 2026 (filed in March 2027) is still calculated at the existing 2.1%, but the system changes from the following year, so check the NTA's latest pages for each tax year.
Offshore forex vs domestic FX tax: comparison table
Domestic and offshore forex differ in taxation method, rate, loss offsetting and loss carryforward. NTA Tax Answer No. 1521 describes domestic FX as miscellaneous income from futures transactions and similar, subject to separate self-assessment taxation (15% income tax + 5% resident tax + special reconstruction income tax).
| Item | Offshore FX (aggregate taxation, miscellaneous income) | Domestic FX (separate self-assessment, futures-related miscellaneous income) |
|---|---|---|
| Taxation method | Aggregate taxation (added to other income) | Separate self-assessment taxation (calculated apart from other income) |
| Tax rate | 5-45% progressive income tax + 2.1% special reconstruction income tax + 10% resident tax | 15% income tax + 2.1% special reconstruction income tax + 5% resident tax (20.315% in total) |
| Burden as profit grows | Rate rises as income grows | Flat regardless of profit |
| Loss offsetting | Within miscellaneous income only. Not against salary and similar income. Cannot be offset against domestic FX results | Within futures-related miscellaneous income only. Not against other income |
| Loss carryforward | Not available (cannot be carried to the next year) | Can be carried forward for three following years if requirements are met (tax return required) |
| Necessary expenses | Can be claimed (expenses of miscellaneous income) | Can be claimed (expenses of futures-related miscellaneous income) |
| Guideline for when a return is required | For salaried employees, when income other than salary exceeds JPY 200,000 a year (No. 1900) | Same |
※ The 20.315% breaks down as 15% income tax, 0.315% special reconstruction income tax (15% x 2.1%) and 5% resident tax. For income arising on or after 1 January 2027, treatment changes with the special reconstruction income tax rate revision and other changes (No. 1521). Actual tax varies with your own income and deductions, so confirm with your tax office or a tax accountant.
On rates alone, someone with taxable income under JPY 3.3 million (marginal rate of about 15% to 20%) pays little differently on offshore FX than on domestic FX, but once taxable income exceeds JPY 6.95 million the marginal rate reaches about 33% or more and the gap with domestic FX's 20.315% widens. It is important to compare the whole picture, including how losses are treated.
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Can offshore forex losses be offset or carried forward? Why they cannot
Loss offsetting works only within miscellaneous income
NTA Tax Answer No. 1500 states that a loss arising in calculating miscellaneous income cannot be offset against other income. A loss on offshore forex therefore cannot be set against salary or business income in the same year; it can only be deducted within the scope of offshore forex profit and other miscellaneous income (for example, manuscript fees or profit from crypto asset trading). It also cannot be offset against domestic FX results (No. 1521 states that losses on transactions outside the listed categories cannot be offset against futures-related miscellaneous income).
Loss carryforward is for domestic FX only
Losses on futures transactions such as domestic FX can be carried forward for three following years, on condition that you keep filing tax returns (No. 1523). Offshore forex is treated as miscellaneous income and is not eligible for this carryforward, so a loss in a given year ends with that year.
| Offshore FX | Domestic FX (separate self-assessment) | |
|---|---|---|
| Loss year | The JPY 1 million loss cannot be offset against other income | Cannot be offset against other income, but if the loss is reported it can be carried forward for three years |
| Next year with JPY 1 million profit | The JPY 1 million profit is fully taxable (the previous year's loss cannot be deducted) | The JPY 1 million carried-forward loss can be deducted, leaving JPY 0 taxable |
※ The figures are hypothetical examples to show the mechanism. To claim the domestic FX carryforward, you must file tax returns continuously from the year of the loss (No. 1523).
With offshore forex, if profitable and loss-making years alternate, the loss years cannot be used, so the tax burden can end up heavier than the net profit across the years would suggest. Whether to rush to close a floating loss at year end must be decided by weighing market view, tax and money management together, and this site does not recommend any particular trade.
When does offshore forex tax start? Worked example and tax basics
Guideline for when a tax return is required
A salaried employee who receives salary from one employer must file a tax return if the total of income other than employment and retirement income exceeds JPY 200,000 a year, even when all of the salary has been withheld at source (NTA Tax Answer No. 1900). This JPY 200,000 is judged on income after deducting necessary expenses, not on revenue. For people without salary (sole proprietors, unemployed people and so on), whether to file depends on whether taxable income arises after income deductions. Even when no return is required, a separate resident tax declaration may be needed, so check with your local municipality.
Worked example: adding JPY 1 million of forex profit to taxable income
| Taxable income excluding FX | After adding FX profit | Increase in income tax | Increase in income tax with reconstruction tax plus resident tax | Burden rate |
|---|---|---|---|---|
| JPY 5 million | JPY 6 million | JPY 200,000 (income tax rises from JPY 572,500 to JPY 772,500) | about JPY 304,000 | about 30.4% |
| JPY 10 million | JPY 11 million | JPY 330,000 (income tax rises from JPY 1,764,000 to JPY 2,094,000) | about JPY 437,000 | about 43.7% |
※ A rough calculation that applies the quick-calculation table (NTA Tax Answer No. 2260) at each level of taxable income, adds 2.1% special reconstruction income tax to the increase and simply adds 10% resident tax. It excludes income deductions, tax credits and adjustments to resident tax. Under domestic FX's separate self-assessment taxation, the tax on the same JPY 1 million profit would be about JPY 203,000 (20.315%).
Items that may qualify as necessary expenses
Because miscellaneous income is revenue minus necessary expenses, costs incurred directly to earn offshore forex profit can generally be considered as expenses. Whether something qualifies, and how far it can be apportioned, depends on your circumstances, so keep receipts and statements and confirm with your tax office or a tax accountant.
- Trading commissions and the spread-equivalent portion (where it can be confirmed from the broker's trade history)
- Remittance fees directly incurred on deposits and withdrawals (banks, e-wallets and so on)
- Books, seminar fees and paid information directly necessary for earning the profit (apportionment may be required)
- A PC, communications costs and VPS used for trading (the portion used only for FX must be apportioned)
- The portion of accounting software and tax accountant fees needed for the forex return
This site has not been able to confirm the tax treatment of offshore forex broker bonuses (credit) on any published NTA page. Bonus mechanisms differ by broker and type, so keep your trade history and, if you are unsure whether a bonus counts as income, confirm with your tax office or a tax accountant.
Points to watch on offshore forex tax: what you should know in advance
- Yen conversion: broker trade histories are often in US dollars and similar, so annual profit and loss must be converted to yen and totalled. This site has not been able to confirm the exchange rate to use on any published NTA page, so confirm with your tax office or a tax accountant and record the method you adopt.
- Period covered: profit and loss on trades closed between 1 January and 31 December of the year counts. Positions held across year end are included in the year they are closed.
- Resident tax: the second page of the tax return has a field for the resident tax collection method. If an employee does not choose to pay resident tax on side income themselves (ordinary collection), the resident tax notice may reach the employer. How the choice is handled varies by municipality, so check with your local municipality before filing.
- Risk of not filing: if you do not file, a penalty tax for failure to file and delinquent tax may be charged. Confirm the details with the NTA guidance or your tax office.
- Tax office inquiries: how account information is handled and the scope of any examination depend on individual circumstances, and this site cannot state them definitively.
Setting up a corporate account to receive offshore forex income in a company, or putting it in a family member's name, involves tax restrictions and broker terms, and may cause problems if the arrangement does not reflect reality. For practical matters, consulting a tax accountant is the realistic course.
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This article is a general explanation based on NTA Tax Answers as of 10 October 2026 and does not guarantee individual tax amounts or whether a return is required. Tax rules change every year, and results differ by personal income, deductions and place of residence. For a final decision, confirm with your local tax office or a tax accountant.
Frequently asked questions
Q. What is the tax rate on offshore forex?
A. Because it is aggregate taxation, you pay a progressive 5% to 45% income tax + 2.1% special reconstruction income tax + 10% resident tax, depending on taxable income combined with your other income (NTA Tax Answer No. 2260). With taxable income of JPY 3.3 million to under JPY 6.95 million, income tax of 20% plus resident tax of 10% gives a marginal rate of about 30%. In the top bracket (taxable income of JPY 40 million or more), it is about 55.9%.
Q. How does the tax on offshore forex differ from domestic FX?
A. The taxation method, rate and treatment of losses differ. Domestic FX is under separate self-assessment taxation at a flat 20.315%, with losses carried forward for three years. Offshore forex is miscellaneous income under aggregate taxation, with rates of about 15% to 56% depending on income, loss offsetting limited to within miscellaneous income, and no loss carryforward (NTA Tax Answers No. 1521, 1500 and 1523).
Q. Can offshore forex losses be offset or carried forward?
A. Offshore forex losses cannot be offset against other income such as salary, and cannot be carried forward to the next year (NTA Tax Answers No. 1500 and 1521). They can only be deducted within the scope of the same year's offshore forex profit and other miscellaneous income. Unlike domestic FX, losses are not carried forward for three years.
Q. Is there no tax if offshore forex profit is JPY 200,000 or less?
A. A salaried employee who receives salary from one employer, with all of it withheld at source, does not need to file an income tax return if the total of income other than salary and retirement income is JPY 200,000 or less a year (NTA Tax Answer No. 1900). This is a criterion for whether a return is needed, not an exemption of the income itself, and a resident tax declaration may still be required. People without salary are judged on a different basis.
Q. Is tax charged on unrealised gains in offshore forex?
A. No. Only the portion where the position has been closed and the profit realised is taxable; floating gains on open positions are not included in income. The calculation totals profit and loss on trades closed between 1 January and 31 December of that year.
Q. Will offshore forex tax change from 2027?
A. According to NTA Tax Answers No. 2260 and No. 1521, for income arising on or after 1 January 2027 (Reiwa 9), the special reconstruction income tax rate falls to 1.1% and a special defence income tax is withheld alongside it. The tax return for tax year 2026 is calculated at the existing 2.1%. Check the NTA's latest pages for each tax year.
Sources and conditions
- National Tax Agency Tax Answer No. 1521: Taxation of foreign exchange margin trading (FX) (verified on 10 October 2026) →
- National Tax Agency Tax Answer No. 1523: Carryforward deduction for losses on settlement of futures transactions (verified on 10 October 2026) →
- National Tax Agency Tax Answer No. 1500: Miscellaneous income (verified on 10 October 2026) →
- National Tax Agency Tax Answer No. 2260: Income tax rates (verified on 10 October 2026) →
- National Tax Agency Tax Answer No. 1900: Salaried employees who must file a tax return (verified on 10 October 2026) →
- How to file a tax return on offshore forex (column) →
- Is offshore forex illegal? What the FSA warning means (column) →
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