Profits made on an overseas exchange are taxable in Japan for residents of Japan. Using an exchange located abroad does not remove the filing obligation, and you must calculate gains and losses yourself.
This guide covers the income category, taxable events, when a return is required and the records to keep. Consult a tax accountant or the tax office for your own calculation.
Income category and tax rates
According to the National Tax Agency, profit from crypto-asset trading by an individual is in principle miscellaneous income, taxed on an aggregate basis together with other income such as salary. The flat separate taxation (20.315%) that applies to listed shares and domestic FX does not apply.
- Income tax at progressive rates of 5% to 45% (plus about 10% resident tax)
- Losses cannot be offset against other income categories or carried forward
- Gains and losses can be netted within miscellaneous income in the same year
Taxable events
| Event | Treatment |
|---|---|
| Selling crypto for yen or USDT | Sale proceeds minus acquisition cost is income |
| Exchanging one crypto asset for another | Treated as a sale at the market value at the time |
| Closing a futures position | The realised P&L is income |
| Receiving an airdrop or campaign bonus | The market value at receipt may be income |
Unrealised gains on assets you simply hold are not taxed. Exchanging into a stablecoin such as USDT is a taxable event.
When to file, and what to record
Salaried employees must file an income-tax return when non-salary income exceeds JPY 200,000 in a year. Below that threshold a separate resident-tax return is still required.
- Download and keep trade history (time, asset, quantity, price, fee) from the exchange
- Keep deposit, withdrawal and transfer records (TxIDs)
- Use one acquisition-cost method (total average or moving average) across exchanges
- Consider a P&L calculation tool or a tax accountant
Overseas exchanges can withdraw from Japan without notice. If history becomes unavailable, calculating gains becomes difficult, so export it regularly.
Frequently asked questions
Q. Will the tax office notice if I use an overseas exchange?
A. Residents of Japan are obliged to file regardless. Transfers to domestic exchanges and information exchange between tax authorities can reveal activity, and unreported income attracts penalty and delinquent tax.
Q. What happens in a loss-making year?
A. Losses in miscellaneous income cannot be offset against other categories or carried forward. They can only be netted within miscellaneous income in the same year.
Q. How is futures P&L calculated?
A. Sum the realised P&L per closed position, including fees and funding. USDT-denominated results are generally converted to yen at the rate on the settlement date. Confirm the method with a tax accountant.
Sources and conditions
FX Textbook is an independent information site, not an exchange or a provider of personal investment advice. Crypto-asset trading involves risk: price moves, liquidation of leveraged positions, transfer errors and exchange operating risk can result in the loss of some or all invested capital.
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