In Japan, when you deal with cryptocurrency, you're dealing with taxes too. The National Tax Agency (NTA) has clear rules on how crypto gets taxed. This guide will clear all your doubts regarding crypto taxes in Japan and how you can report them correctly to steer clear of penalties.
Is Crypto Taxed in Japan?
Absolutely, in Japan, they do tax cryptocurrency.
Cryptocurrency is considered like owning property and falls under the tax category of Miscellaneous Income according to the Payment Services Act (PSA) and the Financial Instruments and Exchange Act (FIEA).
When you purchase, hold, or transfer cryptocurrency between wallets, you won't be taxed. Also, the National Tax Agency (NTA) doesn't differentiate yet between individuals and businesses regarding cryptocurrency taxes.
If you've bought or sold cryptocurrency in the past financial year and your gains were over 200,000 JPY, you'll need to report those amounts on your Income Tax return.
Will the tax authorities (NTA) know about your cryptocurrency holdings?
Yes, they likely will if you're using a Japan-based Crypto-asset Exchange Service Provider (CAESP).
Here's why:
Crypto exchanges in Japan have to be registered with the Financial Services Agency (FSA) before they can operate. This registration process, which can take up to six months, includes strict rules about cybersecurity and sharing user data.
Japan is a founding member of the Financial Action Task Force (FATF) and part of the Asia-Pacific Group on Money Laundering (APG). The APG helps countries implement FATF guidelines and assesses their efforts.
In 2021, a man got convicted for avoiding crypto taxes, marking the first such case. He got a one-year sentence and a hefty fine of over 22 million JPY for breaking Income Tax laws. This shows that Japanese authorities are serious about crypto tax evasion!
Crypto is treated like other types of income
In Japan, any gains you make from cryptocurrency are taxed as Miscellaneous Income. This means they're subject to the same tax rate as your regular income.
Miscellaneous Income covers earnings that don't fit into categories like interest, dividends, real estate, business profits, salary, retirement funds, forestry income, capital gains, or temporary income.
How much do you owe in taxes?
In Japan, the amount of tax you owe on your cryptocurrency gains depends on your Personal Income Tax bracket. Profits from stocks fall into a different tax category and are taxed at a fixed rate of 20%.
Here's the breakdown:
Crypto profits are taxed at rates ranging from 5% to a maximum of 45%. But when you add municipal tax, which is 10%, the total tax can go up to a maximum of 55%.
If you make over 200,000 JPY from crypto, you have to pay Income Tax. Even if you earn less than that but plan to claim deductions for medical expenses or hometown taxes, you still need to report your crypto profits.
If you earn less than 200,000 JPY from investments like crypto and aren't claiming deductions, you don't have to report your crypto gains on your annual Income Tax return.
Unfortunately, losses from crypto investments can't be deducted from your income or other assets. Only losses from real estate, business, asset transfers, and forestry income are eligible for deductions. Cryptocurrency losses don't fall into any of these categories yet.
Here are situations where you might pay taxes under Miscellaneous Income for using cryptocurrency in Japan
Selling cryptocurrency for any traditional currency, like Japanese Yen (JPY).
Swapping one type of cryptocurrency for another, even stablecoins.
Purchasing goods or services with cryptocurrency.
Giving cryptocurrency as a gift.
Receiving payment in cryptocurrency.
Earning rewards from staking or liquidity pools.
Receiving new coins from a blockchain fork.
Mining cryptocurrency.
Receiving airdrops of new tokens.
Earning interest through decentralized finance (DeFi) platforms.
Getting referral bonuses for introducing others to cryptocurrency.
Types of accounting methods used
In Japan, there are two ways to calculate the cost basis of your cryptocurrency: the total average method and the moving average method. Right now, Kryptos only supports the moving average method, also known as ACB.
Share your report with your accountant, or use the figures from your Kryptos report to file your taxes with the National Tax Agency (NTA) yourself.
FAQs
1. What are the tax implications of dealing with cryptocurrency in Japan?
In Japan, cryptocurrency transactions are subject to taxation as Miscellaneous Income. This includes activities like purchasing, selling, transferring between wallets, and even receiving rewards from staking or participating in liquidity pools. It's essential to understand these tax implications to ensure compliance with Japanese tax laws.
2. How does Japan regulate cryptocurrency exchanges and user data for tax purposes?
Cryptocurrency exchanges in Japan must be registered with the Financial Services Agency (FSA) and adhere to strict cybersecurity measures. This registration process involves sharing user data, which means tax authorities like the National Tax Agency (NTA) can access information about cryptocurrency holdings. Compliance with international guidelines, such as those set by the Financial Action Task Force (FATF), further strengthens tax oversight.
3. What tax rates apply to cryptocurrency gains in Japan?
Cryptocurrency profits in Japan are taxed at rates ranging from 5% to 45%, depending on your Personal Income Tax bracket. With the municipal tax, the total tax can reach a maximum of 55%. It's crucial to report gains accurately and be aware of the corresponding tax obligations to avoid penalties.
4. Are there specific situations where cryptocurrency usage in Japan incurs taxes under Miscellaneous Income?
Yes, various scenarios trigger taxation under Miscellaneous Income in Japan, including selling cryptocurrency for fiat currency, purchasing goods or services, receiving payments, earning rewards through staking or DeFi platforms, mining, receiving airdrops, and more. Understanding these taxable events is essential for proper tax reporting.
5. What methods are available for calculating the cost basis of cryptocurrency in Japan?
In Japan, two primary accounting methods are used for calculating the cost basis of cryptocurrency: the total average method and the moving average method (also known as ACB). Currently, the moving average method is supported by Kryptos, simplifying tax reporting for cryptocurrency investors and traders.
All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position / stance, you should always consider seeking independent legal, financial, taxation or other advice from the professionals. Kryptos is not liable for any loss caused from the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!
Country
Issue
Kryptos Use Case
India
Cryptocurrency transactions are taxed as capital gains, with evolving legislation creating uncertainty.
Kryptos.io streamlines the process by automatically tracking transactions and computing capital gains, adjusting to new regulations for precise reporting.
Brazil
Cryptocurrencies are subject to capital gains tax and must be reported, posing challenges with complex requirements.
Kryptos.io simplifies compliance by offering real-time transaction tracking and detailed tax calculations, making it easier to meet Brazil’s tax obligations.
Nigeria
Regulatory framework for cryptocurrencies is evolving, with uncertainty around taxation and restrictions from the Central Bank.
Kryptos.io provides an adaptable solution by maintaining detailed records and generating flexible reports, helping users stay compliant despite regulatory changes.
USA
Cryptocurrency transactions are subject to capital gains tax, with detailed IRS reporting requirements.
Kryptos.io enhances compliance by automating the tracking of transactions and generating comprehensive tax reports, facilitating adherence to IRS requirements.
UK
Cryptocurrencies are taxed under both capital gains tax and income tax, requiring careful tracking and reporting.
Kryptos.io aids UK users by monitoring both capital gains and income from crypto transactions, ensuring accurate and straightforward tax reporting.
Australia
Cryptocurrencies are subject to capital gains tax, and users must report their gains and losses to the ATO.
Kryptos.io assists Australian users by providing seamless transaction tracking and precise capital gains calculations, ensuring efficient compliance with ATO reporting requirements.
Germany
Cryptocurrencies are taxed as private assets with gains subject to tax if held for less than a year.
Kryptos.io supports German users by tracking holding periods and computing taxes on cryptocurrency transactions, ensuring adherence to German tax regulations.
Japan
Cryptocurrency gains are treated as miscellaneous income and are subject to high tax rates.
Kryptos.io helps Japanese users by offering a detailed tracking system and calculating taxes on miscellaneous income, efficiently managing high tax obligations.
Scenario
Description
Kryptos Features that can be of aid
Multiple Exchanges and Wallets
Consolidating records from various exchanges and wallets to maintain a comprehensive overview of crypto activities.
Seamless integration with numerous exchanges and wallets, automatic import, and consolidation of records.
International Transactions
Managing records for cross-border transactions, including currency conversions and compliance with international tax laws.
Support for multiple currencies, efficient management of cross-border activities, accurate currency conversion for reporting.
Complex Transactions
Handling trades, swaps, staking, lending, and other sophisticated crypto activities.
Advanced tracking, reporting, and documentation for various transaction types. Kryptos' DeFi and NFT modules offer specialized tools for managing decentralized finance and NFT activities, ensuring precise records and comprehensive oversight.
How we reviewed this article
Written by
Ajith Chandan
Content Creator - Kryptos, A Web2 Marketer transitioned to Web3 with 3 years of expertise in Content (Writing. Marketing. Strategizing) and Social media marketing.
Reviewed by
Deepak Pareek
Head of Tax & Accounting - Kryptos, Crypto Tax and Accounting Expert, having experience in working with Big 4 accounting firms as well as top tier law firms of India.
As Web3 evolves, managing a diverse portfolio has become complex. Kryptos simplifies this with advanced tools for real-time tracking, NFT management, and DeFi analytics. Discover how Kryptos turns challenges into strategic advantages for modern investors.
Struggling with crypto tax in Australia? Kryptos.io simplifies the process, ensuring accurate and compliant filings with the ATO. Track transactions and value assets effortlessly—make tax season stress-free.
Mastering Crypto Taxation: Navigate the Complex World of Digital Assets with Kryptos, the Ultimate Solution for Accurate, Efficient, and Future-Proof Tax Reporting.
See More
How to Report Crypto Tax in Japan
By
Ajith Chandan
On
In Japan, when you deal with cryptocurrency, you're dealing with taxes too. The National Tax Agency (NTA) has clear rules on how crypto gets taxed. This guide will clear all your doubts regarding crypto taxes in Japan and how you can report them correctly to steer clear of penalties.
Is Crypto Taxed in Japan?
Absolutely, in Japan, they do tax cryptocurrency.
Cryptocurrency is considered like owning property and falls under the tax category of Miscellaneous Income according to the Payment Services Act (PSA) and the Financial Instruments and Exchange Act (FIEA).
When you purchase, hold, or transfer cryptocurrency between wallets, you won't be taxed. Also, the National Tax Agency (NTA) doesn't differentiate yet between individuals and businesses regarding cryptocurrency taxes.
If you've bought or sold cryptocurrency in the past financial year and your gains were over 200,000 JPY, you'll need to report those amounts on your Income Tax return.
Will the tax authorities (NTA) know about your cryptocurrency holdings?
Yes, they likely will if you're using a Japan-based Crypto-asset Exchange Service Provider (CAESP).
Here's why:
Crypto exchanges in Japan have to be registered with the Financial Services Agency (FSA) before they can operate. This registration process, which can take up to six months, includes strict rules about cybersecurity and sharing user data.
Japan is a founding member of the Financial Action Task Force (FATF) and part of the Asia-Pacific Group on Money Laundering (APG). The APG helps countries implement FATF guidelines and assesses their efforts.
In 2021, a man got convicted for avoiding crypto taxes, marking the first such case. He got a one-year sentence and a hefty fine of over 22 million JPY for breaking Income Tax laws. This shows that Japanese authorities are serious about crypto tax evasion!
Crypto is treated like other types of income
In Japan, any gains you make from cryptocurrency are taxed as Miscellaneous Income. This means they're subject to the same tax rate as your regular income.
Miscellaneous Income covers earnings that don't fit into categories like interest, dividends, real estate, business profits, salary, retirement funds, forestry income, capital gains, or temporary income.
How much do you owe in taxes?
In Japan, the amount of tax you owe on your cryptocurrency gains depends on your Personal Income Tax bracket. Profits from stocks fall into a different tax category and are taxed at a fixed rate of 20%.
Here's the breakdown:
Crypto profits are taxed at rates ranging from 5% to a maximum of 45%. But when you add municipal tax, which is 10%, the total tax can go up to a maximum of 55%.
If you make over 200,000 JPY from crypto, you have to pay Income Tax. Even if you earn less than that but plan to claim deductions for medical expenses or hometown taxes, you still need to report your crypto profits.
If you earn less than 200,000 JPY from investments like crypto and aren't claiming deductions, you don't have to report your crypto gains on your annual Income Tax return.
Unfortunately, losses from crypto investments can't be deducted from your income or other assets. Only losses from real estate, business, asset transfers, and forestry income are eligible for deductions. Cryptocurrency losses don't fall into any of these categories yet.
Here are situations where you might pay taxes under Miscellaneous Income for using cryptocurrency in Japan
Selling cryptocurrency for any traditional currency, like Japanese Yen (JPY).
Swapping one type of cryptocurrency for another, even stablecoins.
Purchasing goods or services with cryptocurrency.
Giving cryptocurrency as a gift.
Receiving payment in cryptocurrency.
Earning rewards from staking or liquidity pools.
Receiving new coins from a blockchain fork.
Mining cryptocurrency.
Receiving airdrops of new tokens.
Earning interest through decentralized finance (DeFi) platforms.
Getting referral bonuses for introducing others to cryptocurrency.
Types of accounting methods used
In Japan, there are two ways to calculate the cost basis of your cryptocurrency: the total average method and the moving average method. Right now, Kryptos only supports the moving average method, also known as ACB.
Share your report with your accountant, or use the figures from your Kryptos report to file your taxes with the National Tax Agency (NTA) yourself.
FAQs
1. What are the tax implications of dealing with cryptocurrency in Japan?
In Japan, cryptocurrency transactions are subject to taxation as Miscellaneous Income. This includes activities like purchasing, selling, transferring between wallets, and even receiving rewards from staking or participating in liquidity pools. It's essential to understand these tax implications to ensure compliance with Japanese tax laws.
2. How does Japan regulate cryptocurrency exchanges and user data for tax purposes?
Cryptocurrency exchanges in Japan must be registered with the Financial Services Agency (FSA) and adhere to strict cybersecurity measures. This registration process involves sharing user data, which means tax authorities like the National Tax Agency (NTA) can access information about cryptocurrency holdings. Compliance with international guidelines, such as those set by the Financial Action Task Force (FATF), further strengthens tax oversight.
3. What tax rates apply to cryptocurrency gains in Japan?
Cryptocurrency profits in Japan are taxed at rates ranging from 5% to 45%, depending on your Personal Income Tax bracket. With the municipal tax, the total tax can reach a maximum of 55%. It's crucial to report gains accurately and be aware of the corresponding tax obligations to avoid penalties.
4. Are there specific situations where cryptocurrency usage in Japan incurs taxes under Miscellaneous Income?
Yes, various scenarios trigger taxation under Miscellaneous Income in Japan, including selling cryptocurrency for fiat currency, purchasing goods or services, receiving payments, earning rewards through staking or DeFi platforms, mining, receiving airdrops, and more. Understanding these taxable events is essential for proper tax reporting.
5. What methods are available for calculating the cost basis of cryptocurrency in Japan?
In Japan, two primary accounting methods are used for calculating the cost basis of cryptocurrency: the total average method and the moving average method (also known as ACB). Currently, the moving average method is supported by Kryptos, simplifying tax reporting for cryptocurrency investors and traders.
All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position / stance, you should always consider seeking independent legal, financial, taxation or other advice from the professionals. Kryptos is not liable for any loss caused from the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!
As Web3 evolves, managing a diverse portfolio has become complex. Kryptos simplifies this with advanced tools for real-time tracking, NFT management, and DeFi analytics. Discover how Kryptos turns challenges into strategic advantages for modern investors.
Struggling with crypto tax in Australia? Kryptos.io simplifies the process, ensuring accurate and compliant filings with the ATO. Track transactions and value assets effortlessly—make tax season stress-free.
Mastering Crypto Taxation: Navigate the Complex World of Digital Assets with Kryptos, the Ultimate Solution for Accurate, Efficient, and Future-Proof Tax Reporting.