Japan taxes crypto gains as miscellaneous income, not as capital gains, and the calculation is a running total rather than a per-trade event. Every sale, swap, or crypto-to-crypto trade gets converted to yen at the moment it happens, then your total yearly profit is stacked on top of your salary and taxed at progressive rates. That single design choice explains almost every confusing thing about Japanese crypto tax.
The Core Formula: Proceeds Minus Cost Basis, All in Yen
The calculation itself is short. What makes it painful is the record-keeping behind it. For each disposal, you take the yen value of what you received and subtract the yen cost of the coins you gave up. The result is your gain or loss for that transaction. Add every transaction across the year to get your total miscellaneous income from crypto.
What counts as a disposal
Selling for yen is the obvious one. Trading BTC for ETH counts too, and so does spending crypto on goods or services. Paying for a coffee with Bitcoin is a taxable event in Japan, even if the coffee cost ¥500. The taxable amount is the difference between what those sats cost you and what they were worth when you handed them over.
What doesn't
Buying and holding isn't taxable. Moving coins between your own wallets isn't taxable. Receiving a transfer from your own exchange account to a hardware wallet is just a shuffle, not a disposal.
Cost Basis Averaging Is Where Most People Go Wrong
Japan uses a moving average method for cost basis. You don't pick which coins you sold. You don't use FIFO. Every purchase updates your average cost per coin, and every sale uses that running average.
Here's how that plays out. You buy 0.1 BTC at ¥8,000,000 per coin, so ¥800,000. Later you buy another 0.1 BTC at ¥12,000,000 per coin, so ¥1,200,000. Your total holding is 0.2 BTC at a combined ¥2,000,000, giving an average cost of ¥10,000,000 per coin. If you then sell 0.05 BTC at ¥15,000,000 per coin, your proceeds are ¥750,000 and your cost basis is ¥500,000. Gain: ¥250,000.
Notice you never chose "the cheap coins" or "the expensive coins." The average decided for you. This trips up people who bought during a dip and assume they can cherry-pick that low basis later. You can't.
Stacking Crypto Gains on Top of Your Salary
This is the part that surprises salaried workers in Tokyo. Crypto profit isn't taxed in isolation. It's added to your other income, and the combined total runs through Japan's progressive brackets.
A concrete scenario
Say you earn ¥6,000,000 from your job and made ¥1,500,000 trading crypto during the year. Your taxable income after the standard deductions lands around ¥6,850,000. That pushes you into a higher marginal bracket than your salary alone would. The crypto profit isn't taxed at a flat rate, and it can bump part of your salary income into a steeper band. Residents also pay local inhabitant tax on top, which adds roughly 10% at the margin in most municipalities.
Why losses are awkward
Crypto losses can offset crypto gains within the same year. They generally can't offset salary income. If you lost ¥400,000 trading and made ¥300,000 elsewhere in crypto, you can't use that net ¥100,000 loss to reduce your employment income. Carryforward rules for crypto are narrow compared to stock losses, so don't assume a bad year will soften your tax bill elsewhere.
Record-Keeping and Exchange Reports
You need a yen value for every acquisition and every disposal. Exchange transaction history helps, but it's not a complete tax calculation on its own.
- bitFlyer provides trade history and annual transaction reports you can export, which covers activity on that platform.
- Coins bought elsewhere, moved in, or earned through staking need separate records.
- Overseas exchange activity still counts if you're a Japanese tax resident.
- Wallet-to-wallet transfers need timestamps and values so you can prove they weren't disposals.
Most people underestimate this step. Reconstructing two years of trades from screenshots in February is miserable. Export monthly.
Frequently asked questions
Do I calculate tax per trade or on my yearly total?
You calculate a gain or loss on each disposal, then sum everything for the year to get your total crypto income. That yearly total is what gets reported and taxed. Individual trades matter because they feed the total, but the tax itself applies to the annual figure.
Is crypto taxed at a flat 20% like stocks in Japan?
No. Crypto gains are treated as miscellaneous income and taxed at progressive rates that depend on your total income, including salary. Stock gains through a designated account can qualify for separate taxation at a lower flat rate, but crypto doesn't get that treatment under current rules.
What if I only traded crypto for other crypto?
That's still a taxable disposal. You're treated as having sold the first coin at its yen value and bought the second with the proceeds. The gain is the difference between your average cost for the first coin and its market value at the swap. Plenty of people assume swaps are tax-free and get an unpleasant surprise.
Do I need to report if I made a small profit?
Japan has a filing threshold for miscellaneous income, so very small gains may not require a return, but the rules around whether you must file depend on your total income and other factors. Crypto isn't automatically exempt just because the amount feels minor. Check your situation or ask a tax professional before skipping the filing.
Pull your full trade history from bitFlyer this week and build a simple spreadsheet with columns for date, coin, amount, yen value, and average cost. Doing it now beats doing it in March.