Japan

In Japan, cryptocurrencies are legally classified as property under the Payment Services Act and the Financial Instruments and Exchange Act. The country has a regulated environment for crypto, meaning there is a specific legal framework in place, and crypto exchanges are licensed and overseen by the Financial Services Agency. The National Tax Agency (NTA) is the primary authority governing cryptocurrency taxation in Japan. They administer the tax rules under the general income tax framework. Currently, any gains from cryptocurrency transactions for individuals are treated as "miscellaneous income." This income is aggregated with your other income and taxed at progressive rates ranging from 15% to 55%, which includes national income tax, local inhabitant tax, and surcharges. There is no distinction or benefit for holding crypto for a longer period, all gains are taxed identically regardless of how long the asset was held. If your annual crypto profits exceed 200,000 JPY, you are generally required to file a tax return. For corporations, the standard corporate tax rate of approximately 30% applies to crypto income. Importantly, converting crypto to fiat currency, or swapping one cryptocurrency for another, are both considered taxable events where gains or losses are realized based on fair market value. Since 2017, crypto-to-crypto and crypto-to-fiat transactions have been exempt from consumption tax, which is Japan's equivalent of VAT. Specific crypto activities are also subject to the progressive miscellaneous income tax rates. This includes income from staking rewards, mining, and profits derived from decentralized finance (DeFi) activities like lending or liquidity pools. Each such event is considered taxable at the time of receipt or realization. Gains from the sale of Non-Fungible Tokens (NFTs) are also taxed as miscellaneous income. Expenses incurred in mining may be deductible if the activity is deemed a business. Significant reforms are proposed for Japan's crypto tax landscape, set to begin in 2026. Under the "2026 Tax Reform Outline," certain "specified crypto assets," such as Bitcoin and Ethereum, when traded on registered exchanges, will be reclassified as financial products. These specified assets will then be subject to a flat 20% tax rate (comprising 15% national income tax and 5% local inhabitant tax), treated separately from other income. This reform will also introduce a 3-year loss carryforward benefit for these specified assets. However, activities like staking, DeFi yields, and NFTs are currently excluded from these 2026 reforms and are expected to continue being taxed as miscellaneous income at the higher progressive rates.