This article is part of Zagdim’s wiki series on tax matters for people moving to or living in Japan. It lays out three things in plain terms: how Japan taxes gains from cryptocurrency, how to keep a record of your cost basis, and what risks to watch for. It is written for anyone who holds cryptocurrency and is considering a move to Japan, or who is already a Japanese tax resident.
**Example (illustrative, used throughout this article):** Kobayashi is already a Japanese tax resident. Kobayashi bought Bitcoin on a Japanese domestic exchange, and also swapped Bitcoin for Ethereum on an overseas exchange. Each section below applies the rules to Kobayashi’s situation.
Is Cryptocurrency Trading Income Taxed in Japan?
Yes. Japan’s National Tax Agency (NTA) states that income earned from buying and selling cryptocurrency is subject to Japanese income tax.
This kind of income is, in principle, treated as “miscellaneous income” (zatsu shotoku). Japan divides income into several categories, and miscellaneous income is one of them.
There is one exception: if the trading is incidental to a business activity that itself generates income, it can instead be treated as “business income.”
When do you need to calculate income?
- Selling for yen: the income amount is calculated based on the “sale price” — the amount you received when you sold.
- Swapping one cryptocurrency for another: if you swap cryptocurrency A for cryptocurrency B, Japan treats this as “using A to buy B.” So the swap itself requires you to calculate the sale income on A.
In other words, it is not only converting back to yen that triggers a calculation. Crypto-to-crypto swaps that never touch yen still need to be recorded.
**Applied to Kobayashi’s case:** when Kobayashi swapped Bitcoin for Ethereum, even though no yen changed hands, the sale income on the Bitcoin side still has to be calculated.
Whether you need to file in Japan at all depends on whether you are a Japanese resident for tax purposes. See *Tax Implications for Investors Moving to Japan: Capital Gains, Property Sales, and Overseas Investments* for more on that question.
How Is Acquisition Cost and Fees Determined?
Fees paid when selling cryptocurrency can be deducted from income. How the purchase cost is determined depends on how you acquired the coins.
| Item | In Plain Terms | Rule |
|---|---|---|
| Sale fee | The fee paid to the exchange when you sell | Can be treated as a “necessary expense” — a cost that can be deducted when calculating income |
| Acquisition cost | The cost of acquiring the cryptocurrency | Determined separately depending on how it was acquired |
| Cost of goods sold | The cost attributable to the portion of cryptocurrency sold | If an individual has not filed a “valuation method notification,” the default is the “total average method” (sōheikin-hō) |
The valuation method notification is the document used to tell the tax authority which cost-calculation method you have chosen. If it is not filed, the total average method applies by default.
**Applied to Kobayashi’s case:** the fee Kobayashi paid when selling can be treated as a necessary expense. Kobayashi did not file a valuation method notification, so the total average method is used to calculate the cost of goods sold.
How Do You Reconstruct Records for Overseas Exchanges or Private Trades?
You need to work out the purchase and sale price transaction by transaction, yourself.
For trades on overseas exchanges, or private sales between individuals, you have to confirm the acquisition price and sale price for each transaction. You can cross-check this using:
- Bank deposit and withdrawal records
- Trading history
- Market price data at the time of the trade
Do not assume an overseas exchange will provide you with a Japanese-style annual trading report.
What if you genuinely cannot find the acquisition cost?
The NTA allows you to use “5% of the sale price” as a stand-in for the acquisition cost of that coin. This is an optional alternative, not a requirement. If you can find the actual cost, compare the two figures.
**Applied to Kobayashi’s case:** for trades on the overseas exchange, Kobayashi has to cross-check using bank records, trading history, and market price data, transaction by transaction. Where the cost of a particular coin still cannot be found, Kobayashi may choose to use 5% of the sale price as the cost. Where the actual cost can be found, both figures should be calculated and compared.
What If You Never Received an Annual Trading Report?
You can ask the exchange to reissue one.
This only applies to the annual trading report issued by a cryptocurrency exchange licensed in Japan. For trades on overseas exchanges, you need to reconstruct the figures yourself using the method described above.
Can Losses Offset Other Income?
No.
If your cryptocurrency trading is classified as miscellaneous income, a loss calculated within that miscellaneous income cannot be used to offset other income such as salary.
**Applied to Kobayashi’s case:** if Kobayashi’s cryptocurrency trading is treated as miscellaneous income and the result is a loss, that loss cannot be used to reduce Kobayashi’s salary income.
Every person’s trading history and tax residency status are different, and how to file in Japan requires a case-by-case judgment.
FAQ
Is a cryptocurrency-to-cryptocurrency swap also taxable?
Yes. When you swap cryptocurrency A for cryptocurrency B, that swap itself requires you to calculate the sale income on A.
What if I cannot find my acquisition cost?
First try to confirm it using bank deposit and withdrawal records, trading history, and market price data, transaction by transaction. If it still cannot be found, the NTA allows you to use 5% of the sale price as the acquisition cost. This is an optional alternative, not a requirement.
What if I never received an annual trading report from a domestic exchange?
You can ask the Japan-licensed cryptocurrency exchange to reissue it.
Can a loss offset my salary income?
No. A loss from cryptocurrency trading classified as miscellaneous income cannot be used to reduce salary or other income.
Glossary
- Cryptocurrency (angō shisan): the term used in National Tax Agency documents; this article uses “cryptocurrency” throughout.
- Miscellaneous income (zatsu shotoku): one of the categories Japanese income tax divides income into.
- Acquisition cost (shutoku kagaku): the cost of acquiring the cryptocurrency.
- Sale price (baikyaku kagaku): the amount received when the cryptocurrency is sold.
- Necessary expenses (hitsuyō keihi): costs that can be deducted when calculating income.
- Total average method (sōheikin-hō): the default method for calculating the cost of goods sold for cryptocurrency, used when an individual has not filed a valuation method notification.
Methodology Note
Information verified as of October 21, 2026. The facts in this article are drawn from the National Tax Agency’s official guidance on the tax treatment of cryptocurrency. Points such as trading gains generally being treated as miscellaneous income, and 5% of the sale price being an allowed substitute for acquisition cost, are explicitly stated or permitted in NTA documents.
The following is not covered in this article and should be confirmed against the full official text: how to value the “A” side of a crypto-to-crypto swap, whether purchase fees can be included in acquisition cost, how income category is determined once trading income passes a certain threshold, and the specific filing forms, deadlines, and applicable tax rates.
“Kobayashi” is a fictional example used for illustration only, applying the rules already set out in this article.
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Sources
- National Tax Agency – Tax Treatment of Cryptocurrency (Information)
- National Tax Agency – Tax Treatment of Cryptocurrency, etc. (FAQ)
Disclaimer
This article is general information and does not constitute tax or legal advice for any individual case. Information verified as of October 21, 2026. Rules in Japan, and in your own jurisdiction, may be updated over time; please confirm current requirements with the relevant authorities and consult a qualified professional for your specific situation.
