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For income tax purposes, profits generated by selling or using virtual currency are generally classified as miscellaneous income.[1] Miscellaneous income is a part of gross income.[2] The income tax rate ranges from 5 to 45%,[3] and the local tax rate is 10%.[4] Compared to the taxation on gains on the transfer of corporate shares, the tax rate for which is about 20%,[5] cryptocurrency gains are highly taxed. On the other hand, for a corporation that earns profits from the sale of virtual currency, the corporate tax rate is 19% to 23.4%.[6] A local (resident and business) tax of 10.3% is also imposed.[7]

The National Tax Agency has stated that when virtual currency is acquired by mining, its market value at the time of acquisition is included in the total income amount in the calculation of the amount of income (or in case of a corporation, in the amount of profit for purposes of the corporate tax).  The expenses incurred in mining will be included in the necessary costs for calculating the amount of income (or in the amount of a corporation’s deduction for purposes of the corporate tax).[8]

The National Tax Agency has also explained that when a person acquires a virtual currency from a fork, the person will not be deemed to receive taxable income at that time. The new virtual currency is considered to have no value because the trading market does not exist at the time of the fork. The acquisition price of the new virtual currency is zero yen. Income will be generated at the time of selling or using the virtual currency. Similarly, with regard to corporate tax, the acquisition price of the new virtual currency will be zero yen, and no income is to be included in the amount of profit for the fiscal year.[9]

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Prepared by Sayuri Umeda
Senior Foreign Legal Specialist
January 2021


[1] 仮想通貨に関する税務上の取扱い及び計算書について (Regarding Tax Treatment and Accounting Statements of VirtualCurrencies), National Tax Agency (Dec. 2019), https://perma.cc/D6B3-D8WW

[2] Income Tax Act, Act No. 33 of March 31, 1965, amended by Act No. 8 of 2020, art. 22, para. 2, https://perma.cc/8N3G-XWEE (partial unofficial translation, as amended by Act No. 13 of 2009).

[3] Id. art. 89.

[4] Local Tax Act, Act No. 226 of 1950, amended by Act No. 2 of 2019 (Heisei), arts. 35 and 314-3.

[5] Act on Special Measures Concerning Taxation, Act No. 26 of 1957, amended by Act No. 8 of 2020, art. 37-11. Local Tax Act arts 23, 24 and 71-48.

[6] Corporation Tax Act, Act No. 34 of 1965, amended by Act No. 8 of 2020, art. 66; and Act on Special Measures Concerning Taxation art. 42-3-2.

[7] 地方法人税の税率の改正のお知らせ (Notification of Change of Local Corporation Tax Rate), National Tax Agency, https://perma.cc/S9WL-C4GU.

[8] 仮想通貨に関する税務上の取扱いについて(情報)(Regarding Tax Treatment of Virtual Currency (Information)), National Tax Agency, at 10 (Dec. 2019), https://perma.cc/9JRD-9UZA.  

[9] Id. at 9.

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Last Updated: 02/05/2021