'Won't profit made on an overseas exchange go unnoticed?' As of September 2026, the answer is: 'a system to detect it has been running since January 2026, and the burden if unreported profit is found only grows larger each year.' Based on the Crypto-Asset Reporting Framework (CARF) developed by the OECD, the National Tax Agency (NTA) brought into effect on 1 January 2026 (Reiwa 8) a regime for automatically exchanging crypto-asset transaction information with overseas tax authorities.
Based on the NTA's outline of the regime (June 2025 (Reiwa 7)) and its FAQ, together with the NTA's 'Status of Income Tax and Consumption Tax Audits, FY2024 Operational Year' published in December 2025 (Reiwa 7), this article sets out the routes by which overseas exchange transactions can be detected, the results of crypto-asset tax audits, the penalties for not filing, and what can be prepared now. It does not cover price forecasts or individual tax calculations.
Can profit on overseas exchanges be detected? Three routes
That overseas exchanges do not send transaction data directly to Japan's tax authorities was broadly true up to 2025. However, there are several routes besides direct data provision by which the tax authorities can learn about profit made on overseas exchanges.
| Route | Description | Basis / status |
|---|---|---|
| ① Records at domestic exchanges and banks | Crypto assets sent from a domestic exchange to an overseas exchange, records of converting back to yen through a domestic exchange, and bank-account deposits can all be identified domestically. Domestic crypto-asset exchange operators respond to inquiries from the tax authorities | Investigative powers under the Act on General Rules for National Taxes. Domestic exchanges issue annual transaction reports |
| ② CARF (automatic exchange) | Crypto-asset exchange service providers in reporting jurisdictions report the name, address, country of residence, and total sale/purchase proceeds by type of crypto asset for Japanese residents to their own tax authority, and that information is provided to the NTA | Took effect 1 January 2026 (Reiwa 8). 2026 transactions are the first to be reported, due by 30 April of the following year (NTA regime outline) |
| ③ Information gathering in audits | The NTA states that it 'works to collect and analyse information and conducts audits proactively' for individuals trading crypto assets. Blockchain transaction records are public, and addresses can be linked to individuals | NTA 'Status of Income Tax and Consumption Tax Audits, FY2024 Operational Year' (December 2025 (Reiwa 7)) |
※ ① has been working since before the new regime started: as long as overseas exchange profit is converted to yen and used, records remain at the domestic entry and exit points.
Information exchange under CARF covers information reported by crypto-asset exchange service providers located in 'reporting jurisdictions' — those where the tax authorities have agreed with Japan to exchange information under CARF. The NTA's own material states that reporting jurisdictions will be designated progressively as agreements are reached. As of 16 September 2026, this site cannot confirm when the jurisdictions where MEXC or BingX are located might become reporting jurisdictions. However, routes ① and ③ work regardless of location.
What is CARF (the Crypto-Asset Reporting Framework)? The regime that took effect in January 2026
CARF (Crypto-Asset Reporting Framework) is an international standard approved by the OECD in 2022 for automatically exchanging non-residents' crypto-asset transaction information between countries' tax authorities. It is the crypto-asset equivalent of the Common Reporting Standard (CRS), which covers bank accounts. In Japan it was implemented through an amendment to the 'Act on Special Provisions of the Income Tax Act, the Corporation Tax Act and the Local Tax Act Incidental to the Enforcement of Tax Treaties' and took effect on 1 January 2026 (Reiwa 8).
| Item | Content |
|---|---|
| Effective date | 1 January 2026 (Reiwa 8) |
| Reporting entities | Reporting crypto-asset exchange operators (Japanese crypto-asset exchange operators and similar). Overseas, crypto-asset exchange operators in each country similarly report to their own authorities |
| What users must do | Anyone conducting crypto-asset transactions on or after 1 January 2026 must submit a 'new notification form' stating their country of residence, etc., such as when opening an account. Anyone already trading as of 31 December 2025 is also covered. Penalties apply for failing to submit or for false statements |
| Information reported | Name, address, specified country of residence, foreign taxpayer number, and the total value of that year's sales and purchases of crypto assets, etc. (by type of crypto asset), among other items |
| Reporting deadline | Submitted to the competent tax office by 30 April of the year following the transaction year (via e-Tax, etc.) |
| Effect on residents of Japan | Information on residents of Japan holding accounts at exchanges in reporting jurisdictions is provided to the NTA by that jurisdiction's authority. 2026 transactions are the first to be covered |
※ Reporting jurisdictions are those among Japan's tax-treaty partners where the tax authorities have agreed to carry out automatic exchange under CARF, and are expected to be designated progressively (same source).
Since the start of 2026, users of domestic exchanges have been asked to submit 'information on their tax country of residence'. This is a notification under this regime, and for someone who also uses a domestic exchange alongside an overseas one, the country-of-residence notification and the domestic transaction records now line up on the NTA's side.
Crypto-asset tax audits in practice: 613 cases, ¥15.6bn in unreported income, ¥4.6bn recovered (FY2024 operational year)
The NTA publishes its income-tax audit results every year, and audits of individuals trading crypto assets are tallied as a separate category. The most recent figures, for the FY2024 operational year (July 2024–June 2025), are as follows.
| Item | FY2023 operational year | FY2024 operational year | All income-tax field audits (FY2024 operational year) |
|---|---|---|---|
| Field audits (special/general) | 535 | 613 | 36,404 |
| Total unreported income | ¥12.6bn | ¥15.6bn | ¥541.1bn |
| Unreported income per case | ¥23.56m | ¥25.38m | ¥14.86m |
| Total additional tax assessed | ¥3.5bn | ¥4.6bn | — |
| Additional tax per case | ¥6.62m | ¥7.45m | ¥2.99m |
※ Source: National Tax Agency 'Status of Income Tax and Consumption Tax Audits, FY2024 Operational Year' (December 2025 (Reiwa 7)). Per case, unreported income from crypto-asset audits is about 1.7 times the overall average, and additional tax assessed is about 2.5 times.
The number of cases rose about 15% year on year, and total unreported income rose about 24%. The NTA states in the same publication that for individuals trading crypto assets it 'works to collect and analyse information and conducts audits proactively', which the published material shows is being treated as a priority audit area.
Penalties if unreported profit is discovered
- Penalty for failure to file: in principle 15% of the tax due (20% on the portion above ¥500,000, 30% on the portion above ¥3,000,000). Reduced to 5% if you voluntarily file a late return before receiving advance notice of a tax audit (NTA No. 2024)
- Late-payment tax: added based on the number of days from the day after the statutory filing deadline until payment
- Heavy additional tax: where facts are found to have been concealed or falsified, 40% in place of the penalty for failure to file
- Resident tax, National Health Insurance premiums and similar are also retroactively increased in line with the corrected income
A tax audit can look back five years from the filing deadline (seven years if there has been fraud or other wrongdoing). If several years of overseas exchange profit are pointed out together, the underlying tax plus several years of penalty for failure to file and late-payment tax stack up. The ¥7.45m additional tax per case in crypto-asset audits includes this accumulation.
What overseas exchange users can do now
Using an overseas exchange is not itself an act punished under Japanese law. The problem is not declaring the profit. Given that the detection regime strengthens from 2026 transactions onward, the following order of action is realistic.
- 01Get your transaction history now
Overseas exchanges sometimes end or restrict their service for Japan (Bybit force-liquidated positions in July 2026, Bitget will do the same in December 2026). Download CSV files from any exchange you use and keep them organised by year, since history may become unobtainable after an exchange withdraws.
- 02If you have unreported profit from the past, voluntarily file a late or amended return
Filing voluntarily before receiving advance notice of a tax audit reduces the penalty for failure to file to 5% (No. 2024). Waiting until you are pointed out raises it to 15%–30%, and it can become subject to the 40% heavy additional tax.
- 03Settle your calculation method ahead of your 2026 return
Calculate acquisition cost per type of crypto asset using the total average method (the default if no notification is filed), and convert USDT-denominated gains and losses to yen at the settlement-date exchange rate. Whether you need to file and how the rate works is covered in the column below.
- 04Complete the country-of-residence notification at your domestic exchange
If a domestic exchange asks you to submit 'information on your tax country of residence', submit it by the deadline. Penalties apply for not submitting it.
How much crypto profit is taxed in Japan? The ¥200,000 rule and tax-rate table →
Bybit and Bitget leaving Japan: withdrawal deadlines and what to check before moving assets →
This article organises National Tax Agency publications as of 16 September 2026 and does not predict whether any individual will be audited. If you are unsure about past filings, consult your tax office or a tax accountant familiar with crypto assets as soon as possible.
Frequently asked questions
Q. Will profit on an overseas exchange really be found out?
A. There are several routes by which it can be detected: deposit/withdrawal records with domestic exchanges and banks, information provided under the automatic exchange of crypto-asset information (CARF) that took effect in January 2026 from reporting jurisdictions, and the NTA's own collection and analysis of information. The NTA states it conducts audits proactively for individuals trading crypto assets, and in the FY2024 operational year it recovered ¥4.6bn from 613 field audits.
Q. What is CARF, and when did it start?
A. It is the Crypto-Asset Reporting Framework developed by the OECD, a regime for automatically exchanging non-residents' crypto-asset transaction information between countries' tax authorities. In Japan it took effect on 1 January 2026 (Reiwa 8); 2026 transactions are the first to be reported, due by 30 April of the following year (NTA).
Q. Under CARF, will all of my MEXC or BingX transactions be reported to the NTA?
A. What is exchanged under CARF is information reported by crypto-asset exchange operators located in 'reporting jurisdictions' — those where the tax authorities have agreed with Japan on automatic exchange. Reporting jurisdictions are expected to be designated progressively, and as of 16 September 2026 this site cannot confirm when the jurisdictions where MEXC or BingX are located might be covered. However, domestic exchange and bank records, and information gathered during tax audits, work regardless of location.
Q. How much crypto-asset tax auditing is actually happening?
A. The NTA reports 613 field audits of individuals trading crypto assets in the FY2024 operational year, with total unreported income of ¥15.6bn and total additional tax assessed of ¥4.6bn. Unreported income per case was ¥25.38m, about 1.7 times the average for all income-tax field audits (¥14.86m).
Q. What should I do if I had not declared profit from an overseas exchange?
A. If you voluntarily file a late return before receiving advance notice of a tax audit, the penalty for failure to file is reduced to 5% (NTA No. 2024). Waiting until you are pointed out raises it to 15%–30%, and concealment can bring the 40% heavy additional tax. Gather your transaction history and consult your tax office or a tax accountant promptly.
Q. Is using an overseas exchange itself illegal?
A. There is no rule that penalises a resident of Japan for using an overseas exchange. The problem is not declaring the profit. However, overseas exchanges without FSA registration are outside Japan's investor-protection system, and the FSA has issued warnings against unregistered operation for some of them.
Sources
- National Tax Agency (Japan) | Outline of the reporting regime for automatic exchange of non-residents' crypto-asset transaction information (June 2025, PDF, Japanese) →
- National Tax Agency (Japan) | Automatic exchange of information under the Crypto-Asset Reporting Framework (CARF) (Japanese) →
- National Tax Agency (Japan) | Status of income tax and consumption tax audits, FY2024 operational year (December 2025, PDF, Japanese) →
- National Tax Agency (Japan) | Tax Answer No. 2024: Filing after the deadline (penalty for failure to file, late-payment tax) (Japanese) →
- National Tax Agency (Japan) | Tax treatment of crypto assets, etc.: FAQ, last revised December 2025 (PDF, Japanese) →
FX Textbook is an independent information site, not an exchange or a provider of personal investment advice. Crypto-asset trading involves risk: price volatility, liquidation of leveraged positions, transfer mistakes and the operational risk of exchanges and service providers can cause you to lose some or all of your invested capital. No result is guaranteed.
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