Japan's Cryptocurrency Tax Revolution2026
- Mamiko Yamamoto
- 2 days ago
- 16 min read
Updated: 7 hours ago
What Foreign Investors Need to Know
Historic Shift from Aggregate to Separate Taxation - But Only for "Specified Cryptocurrencies"
⚠️ CRITICAL WARNING FOR ALL INVESTORS
The new separate taxation system has a major hidden cost AND significant limitations:
The Hidden Cost: While the tax rate drops from 55% to 20% on profits, crypto losses can NO LONGER offset your salary income.
Current System: Crypto loss of ¥2M reduces your overall taxable income → immediate tax savings
New System: Crypto loss of ¥2M cannot reduce salary taxes → NO immediate benefit, loss only carried forward for future crypto gains
The Major Limitation: The 20% separate taxation ONLY applies to "Specified Cryptocurrencies" (特定暗号資産) - which are limited to cryptocurrencies:
Registered with "Crypto Asset Trading Businesses" (仮称 - tentative name) that are registered as Financial Instruments Business Operators
Meeting investor protection and healthy trading environment requirements
Likely to be major, liquid cryptocurrencies on regulated Japanese exchanges
Unspecified cryptocurrencies will remain subject to aggregate taxation (up to 55% tax rate) and will NOT receive:
Special deductions
1/2 taxation for assets held over 5 years
Loss offset with other income categories
This means active traders with volatile results may actually be worse off under the new system! Additionally, if you trade lesser-known altcoins or use overseas exchanges, you may not benefit from this reform at all.
Read the detailed analysis below to determine if this reform helps or hurts your specific situation.
Executive Summary
Japan is undergoing a fundamental transformation in how cryptocurrency gains are taxed - but with significant limitations that many investors may overlook. The FY2026 (Reiwa 8) tax reform proposal marks a pivotal shift from aggregate taxation to separate taxation for specified crypto assets only, potentially reducing the tax burden for investors trading major cryptocurrencies on regulated exchanges, while simultaneously heightening enforcement scrutiny.
With the National Tax Agency (NTA) recently announcing 追徴課税 (additional tax assessments) totaling 4.6 billion yen from cryptocurrency-related audits, foreign investors in Japan must navigate both opportunities and increased compliance risks - while understanding that this reform has a two-tier structure that may leave many cryptocurrencies in the old, high-tax regime.
Understanding Japan's Taxation Systems: Aggregate vs. Separate
Japan's Dual Tax Structure
Before examining the crypto tax reform, it's essential to understand Japan's two fundamental taxation approaches:
Aggregate Taxation (総合課税)
Multiple income sources combined into one taxable base
Progressive tax rates applied to total income (5% to 45% national tax + 10% resident tax = up to 55%)
Losses can offset other income types (e.g., business losses can reduce salary income)
Includes: salary, business income, real estate income, and currently, crypto gains (雑所得)
Separate Taxation (分離課税)
Specific income types taxed independently from other income
Flat tax rates applied (typically 20% for financial instruments)
Losses isolated within the same category - cannot offset other income types
Includes: stock trading gains, interest income, and under the reform, specified crypto gains
Current System (Until Reform Implementation)
Under the current framework:
Cryptocurrency gains are classified as miscellaneous income (雑所得)
Subject to aggregate (progressive) taxation with rates up to 55% (45% national income tax + 10% resident tax)
Combined with employment income, business income, and other sources
Crypto losses can theoretically offset other miscellaneous income (though limited in practice)
No loss carryforward provisions
Highly burdensome for high-income earners
New System (Proposed FY2026 Reform) - The Two-Tier Structure
Critical Understanding: Not All Cryptocurrencies Are Equal
The tax reform proposal introduces a two-tier system that treats cryptocurrencies differently based on whether they qualify as "Specified Cryptocurrencies" (特定暗号資産):
Tier 1: Specified Cryptocurrencies (特定暗号資産) - Separate Taxation
Eligibility Requirements:
Listed and traded on "Crypto Asset Trading Businesses" (暗号資産取引業 - tentative name)
These businesses must be registered as Financial Instruments Business Operators (金融商品取引業者登録簿に登録)
Subject to investor protection regulations and healthy trading environment requirements
Premise: Amendment of Financial Instruments and Exchange Act
Which cryptocurrencies will qualify?
Currently not specified - details pending regulatory implementation
Likely candidates: Bitcoin (BTC), Ethereum (ETH), and other major cryptocurrencies
Must be listed on regulated Japanese exchanges (e.g., bitFlyer, Coincheck, GMO Coin)
Unlikely to include: lesser-known altcoins, meme coins, or tokens only available on overseas or decentralized exchanges
Benefits for Specified Cryptocurrencies:
1. Separate Taxation at Flat Rate
20% flat tax rate (15% national income tax + 5% resident tax)
Similar treatment to securities transactions
Gains separated from other income sources
2. Loss Carryforward Mechanism
3-year loss carryforward provision
Losses from specified crypto assets can offset future gains from specified crypto assets
Applies to both spot and derivative transactions
3. Scope of Coverage
Spot transactions of specified cryptocurrencies
Derivative transactions of specified cryptocurrencies
Crypto asset ETFs containing specified cryptocurrencies
4. Investment Trust Treatment
Subject to amendments to Investment Trust Act
Investment trusts targeting specified crypto assets included in "general stocks, etc." framework
Treatment aligned with securities
Tier 2: Non-Specified Cryptocurrencies - Remains Aggregate Taxation
The tax reform explicitly excludes non-specified cryptocurrencies from preferential treatment:
Cryptocurrencies that DO NOT meet the "specified cryptocurrency" criteria will:
Continue to be taxed under aggregate taxation (up to 55%)
Be treated as miscellaneous income (雑所得) under comprehensive taxation
Be EXCLUDED from:
Special deductions (特別控除)
1/2 taxation benefit for assets held over 5 years (5年超保有の1/2課税)
Loss offset with other income categories (損益通算)
This means:
Trading obscure altcoins on overseas exchanges: No benefit from reform
Holding cryptocurrencies not listed on major Japanese exchanges: No benefit
DeFi tokens, governance tokens, and other non-mainstream crypto: Likely no benefit
Critical Implication: A Divided Crypto Tax Landscape
Japan's reform creates a bifurcated system where:
Aspect | Specified Crypto | Non-Specified Crypto |
Tax Rate | 20% (separate) | Up to 55% (aggregate) |
Loss Carryforward | 3 years | None |
Loss Offset | Within crypto category only | Within miscellaneous income (limited) |
Special Deductions | Potential benefits | Explicitly excluded |
Long-term Holding Benefit | Potential future benefits | Explicitly excluded |
Likely Examples | BTC, ETH on Japanese exchanges | Obscure altcoins, overseas-only tokens |
Implementation Timeline
According to the tax reform outline:
Implementation scheduled for "the year following amendments to the Financial Instruments and Exchange Act"
Currently anticipated to begin in 2027 (subject to legislative confirmation)
The specific list of "specified cryptocurrencies" will be determined after regulatory framework is established
Consumption Tax Treatment
Transfer of crypto assets (both specified and non-specified) remains non-taxable
For taxable sales ratio calculations, 5% of crypto transfer value counts as taxable sales
Lending of crypto assets also non-taxable
Impact Analysis: Winners, Losers, and Strategic Considerations
Who Actually Benefits from This Reform?
Clear Winners: ✅
High-income investors trading major cryptocurrencies on Japanese exchanges
Consistently profitable Bitcoin/Ethereum traders on bitFlyer, Coincheck, etc.
Long-term holders of BTC/ETH planning to sell with large gains
Those with annual salary >¥15 million trading specified crypto
Japanese exchange users focused on mainstream crypto
Investors who primarily trade top 10-20 cryptocurrencies
Those willing to limit portfolio to "specified" assets
Potential Losers: ❌
Active traders with frequent losses (even on specified crypto)
Volatile traders who need loss offset against salary
Those who value immediate tax benefits from losses
Altcoin and DeFi enthusiasts
Investors in lesser-known cryptocurrencies
DeFi users holding governance tokens
Those trading on Uniswap, PancakeSwap, etc.
Overseas exchange users
Investors primarily using Binance, Coinbase, Kraken
Cryptocurrencies not listed on Japanese exchanges
Likely to remain in aggregate taxation
NFT investors
NFT treatment not explicitly addressed
May remain under aggregate taxation
Tax Burden Reduction Scenarios (Profit Years - Specified Crypto Only)
Example 1: High-Income Salary Earner (Profitable Year with BTC/ETH)
Assumptions: Trading Bitcoin on bitFlyer (likely specified crypto)
Current situation: Annual salary ¥15 million + Bitcoin gains ¥10 million
Under current system: Marginal tax rate 55% → ¥5.5 million tax on crypto gains
Under new system: Flat rate 20% → ¥2 million tax on crypto gains
Savings: ¥3.5 million (64% reduction)
Example 2: Medium-Income Investor (Profitable Year with ETH)
Assumptions: Trading Ethereum on Coincheck (likely specified crypto)
Current situation: Annual salary ¥6 million + Ethereum gains ¥3 million
Under current system: Combined income pushes marginal rate to 33% → approximately ¥990,000 tax
Under new system: 20% → ¥600,000 tax
Savings: ¥390,000 (39% reduction)
Example 3: Altcoin Trader (Profitable Year with Non-Specified Crypto)
Assumptions: Trading obscure altcoins on overseas exchange (non-specified)
Current situation: Annual salary ¥10 million + altcoin gains ¥5 million
Under current system: Marginal tax rate approximately 43% → ¥2.15 million tax
Under new system: STILL 43% → ¥2.15 million tax (no benefit)
Savings: ¥0 - NO BENEFIT FROM REFORM
Loss Year Scenarios: The Hidden Cost of Separate Taxation (Even for Specified Crypto)
Example 4: High-Income Earner (Loss Year with Specified Crypto) - WHERE SEPARATE TAXATION HURTS
Assumptions: Trading Bitcoin on Japanese exchange
Situation: Annual salary ¥15 million + Bitcoin loss ¥5 million
Under Current Aggregate System:
Combined taxable income: ¥15M - ¥5M = ¥10 million
Tax on ¥10M: approximately ¥1.76 million
Tax benefit from loss: approximately ¥2.2 million (compared to salary-only tax of ¥3.96M)
Loss immediately reduces your total tax burden
Under New Separate System:
Salary taxed at standard rates: ¥15M → approximately ¥3.96 million tax
Bitcoin loss: ¥5 million → NO immediate tax benefit
Total tax: ¥3.96 million (no reduction)
Loss carried forward for 3 years, usable only against future Bitcoin gains
You lose ¥2.2 million in immediate tax relief
Example 5: Altcoin Trader (Loss Year with Non-Specified Crypto) - WORST CASE
Assumptions: Trading altcoins not on Japanese exchanges
Situation: Annual salary ¥8 million + altcoin loss ¥3 million
Under Current System:
Loss can offset miscellaneous income (limited benefit)
Some potential tax reduction
Under New System:
STILL aggregate taxation (no change to separate taxation)
Loss still cannot offset salary effectively
NO 3-year carryforward benefit (only for specified crypto)
WORST OF BOTH WORLDS: High tax rate on gains + no loss benefits
Multi-Asset Portfolio Scenarios
Example 6: Diversified Crypto Investor
Portfolio:
Bitcoin (specified): ¥3 million gain
Ethereum (specified): ¥1 million loss
Obscure DeFi token (non-specified): ¥2 million gain
Tax Treatment:
Bitcoin + Ethereum: Net ¥2 million gain taxed at 20% = ¥400,000
DeFi token: ¥2 million gain taxed at aggregate rate (assume 33%) = ¥660,000
Total tax: ¥1,060,000
Cannot offset DeFi gains with Ethereum losses (different categories)
Key Insight: Portfolio diversification across specified/non-specified crypto creates tax complexity and missed offset opportunities.
Understanding Japan's Dual Tax Systems: Aggregate vs. Separate (Detailed)
The Trade-Off: What You Gain and What You Lose
When Separate Taxation Benefits You (for Specified Crypto):
✅ You have profitable trades in specified cryptocurrencies ✅ Your combined income would push you into high tax brackets (33%+)✅ You want predictable tax rates for planning purposes ✅ You trade primarily on major Japanese exchanges ✅ You focus on Bitcoin, Ethereum, and other mainstream crypto
When Separate Taxation Disadvantages You:
❌ You incur crypto losses in a given year (even in specified crypto) ❌ You trade altcoins or tokens not available on Japanese exchanges ❌ You use DeFi platforms or hold governance tokens ❌ You need losses to offset salary income for immediate tax relief ❌ You value flexibility in tax planning across asset classes
Critical Example - Mixed Portfolio Loss Scenario:
Trader Profile: Salary ¥10M, Bitcoin loss ¥2M (specified), Altcoin gain ¥1M (non-specified)
Under Current Aggregate System:
Net crypto result: -¥1 million
Reduces overall taxable income
Some tax benefit from net loss
Under New Separate System:
Bitcoin loss: Carried forward (cannot offset altcoin gain - different categories)
Altcoin gain: Taxed at aggregate rate (33% = ¥330,000 tax)
No benefit from Bitcoin loss against altcoin gain
Worst outcome: Pay high tax on altcoin, carry forward Bitcoin loss separately
The Enforcement Reality: NTA's Aggressive Audit Stance
Recent Enforcement Trends
The NTA's announcement of 4.6 billion yen in additional assessments from cryptocurrency audits signals intensified scrutiny:
Key Enforcement Focus Areas:
Unreported foreign exchange gains from overseas crypto exchanges
Failure to report crypto-to-crypto trades (common misunderstanding)
Mining income classification and proper reporting
NFT transactions and proper valuation
DeFi activities including staking, lending, and liquidity provision
Non-specified cryptocurrency transactions that remain under aggregate taxation
Information Gathering Mechanisms
The NTA has significantly enhanced its crypto monitoring capabilities:
1. Automatic Information Exchange
Implementation of CARF (Crypto-Asset Reporting Framework)
Scheduled to begin in 2027, with reporting on 2026 transactions
Foreign crypto exchanges will report Japanese resident activities
Critical: Overseas trading of non-specified crypto will be fully visible to NTA
2. Domestic Exchange Cooperation
Japanese exchanges required to report user transaction data
Annual trading reports (支払調書) submitted to tax authorities
Clear tracking of specified vs. non-specified crypto transactions
3. Blockchain Analysis
NTA utilizing blockchain analytics tools
Can trace transactions across wallets and exchanges
Ability to identify non-specified crypto transactions
Tax Audit Risks for Foreign Investors
Common Audit Triggers
Foreign investors face heightened scrutiny due to:
1. Cross-Border Transaction Complexity
Multiple jurisdictions create reporting confusion
Foreign exchange gains often overlooked
Tax treaty applications require proper documentation
New risk: Misclassification of specified vs. non-specified crypto
2. Remittance Basis Misunderstanding
Non-permanent residents often misapply remittance taxation rules
Crypto gains typically don't qualify for remittance-based taxation
New complexity: Different treatment for specified vs. non-specified crypto
3. Documentation Deficiencies
Insufficient English-language support during audits
Poor record-keeping of cost basis
Missing transaction history from foreign exchanges
New requirement: Proof of whether crypto qualifies as "specified"
4. Two-Tier System Confusion
Investors may incorrectly apply 20% rate to non-specified crypto
Failure to segregate specified and non-specified crypto transactions
Improper loss offset calculations across categories
Penalties and Additional Taxes
When discrepancies are found:
Additional tax (加算税): 10-40% depending on circumstances
Delay penalties (延滞税): Annual rate of approximately 2.4-8.7%
Criminal prosecution possible for egregious cases (willful tax evasion)
Higher risk for misclassification of non-specified crypto as specified
Strategic Implications of the Two-Tier System
The Critical Question: Profit Pattern AND Asset Selection Analysis
Before celebrating the new system, ask yourself:
1. What cryptocurrencies do I actually trade?
✅ Major crypto on Japanese exchanges: Likely specified → benefit from reform
⚠️ Altcoins, tokens, overseas-only crypto: Likely non-specified → no benefit
⚠️ Mixed portfolio: Complex tax treatment, potential disadvantages
2. How often do I have loss years?
Frequent losses → Aggregate system may be better (even for specified crypto)
Consistent profits → Separate system clearly better (if trading specified crypto)
3. What's my average annual result?
Volatile (big gains some years, big losses others) → Aggregate system provides better risk management
Steady profits → Separate system maximizes savings (for specified crypto only)
4. What's my salary level?
Very high (¥15M+) → Separate system almost always better (for specified crypto profits)
Medium (¥5-10M) → Depends on profit/loss frequency and crypto type
Lower → May prefer aggregate for loss offset flexibility
Portfolio Strategy Considerations
Strategy 1: Pure Specified Crypto Approach
Profile: Focus exclusively on Bitcoin, Ethereum, major altcoins on Japanese exchanges
Advantages:
Clear tax treatment
Full benefit from 20% rate
Loss carryforward available
Simpler compliance
Disadvantages:
Limited investment universe
Cannot offset losses against salary
Miss opportunities in non-specified crypto
Strategy 2: Diversified Crypto Portfolio
Profile: Mix of specified crypto (BTC, ETH) and non-specified (DeFi, altcoins)
Advantages:
Broader investment opportunities
Diversification benefits
Disadvantages:
Complex tax treatment
Cannot offset gains/losses across categories
Specified crypto losses cannot offset non-specified gains (and vice versa)
Higher tax on non-specified crypto gains
More difficult compliance and record-keeping
Strategy 3: Overseas Exchange Focus
Profile: Primarily trade on Binance, Coinbase, Kraken, etc.
Tax Reality:
Most cryptocurrencies likely non-specified
No benefit from tax reform
Remain under aggregate taxation (up to 55%)
No loss carryforward
Full NTA visibility via CARF (2027+)
Recommendation: Consider migrating to Japanese exchanges for major crypto holdings
Real-World Strategic Scenario - Two-Tier System
Trader Profile: High-income salary earner with diversified crypto portfolio
Year 1:
Bitcoin (specified): Profit ¥8M → Tax ¥1.6M (20%)
Altcoin (non-specified): Profit ¥2M → Tax ¥1.1M (55%)
Total tax: ¥2.7M
Year 2:
Bitcoin (specified): Loss ¥3M → Carried forward, no immediate benefit
Altcoin (non-specified): Loss ¥1M → Cannot offset salary
Lose ¥2.2M in potential tax savings (vs. aggregate system)
Year 3:
Bitcoin (specified): Profit ¥5M → Uses Year 2 loss, pays tax on ¥2M only (¥400K)
Altcoin (non-specified): Profit ¥1M → Tax ¥550K (55%)
Total tax: ¥950K
Net result over 3 years:
Benefits exist but are diminished by non-specified crypto taxation
Loss years particularly painful
Portfolio diversification creates tax complexity
Key insight: The two-tier system penalizes diversification and makes specified-crypto-only portfolios more tax-efficient.
Tokyo Advisory's Expertise in Cryptocurrency Tax Compliance
Our Track Record
Tokyo Advisory has extensive experience supporting foreign individual investors in Japan with cryptocurrency tax matters, including:
Tax audit representation for international crypto investors
Voluntary disclosure programs to rectify past non-compliance
Complex DeFi transaction structuring and reporting
Multi-jurisdictional tax planning for global investors
New specialty: Specified vs. non-specified crypto classification and planning
Specialized Services for Foreign Investors
1. Comprehensive Tax Compliance
Annual tax return preparation incorporating crypto transactions
Classification of specified vs. non-specified cryptocurrencies
Cost basis calculations using FIFO, moving average, or other permitted methods
Integration with overseas broker statements and exchange data
Segregated tracking of two-tier tax treatment
2. Tax Audit Defense and Representation
English-language support throughout the audit process
Direct communication with NTA examiners
Technical explanation of complex crypto transactions
Defense of specified crypto classification decisions
Proven track record of successfully resolving crypto tax disputes
3. Proactive Tax Planning
Pre-transaction consultation to optimize tax outcomes
Portfolio restructuring to maximize specified crypto benefits
Structure review for DeFi activities, NFT investments, and token holdings
Preparation for upcoming separate taxation regime
Strategic migration from overseas to Japanese exchanges (where beneficial)
4. Remediation and Voluntary Disclosure
Assessment of past filing obligations
Negotiation of penalty reduction through voluntary disclosure
Reconstruction of historical transaction records
Reclassification projects for two-tier system compliance
Why Foreign Investors Choose Tokyo Advisory
Bilingual Expertise
Native-level English communication
Deep understanding of both Western and Japanese business practices
No language barriers during critical audit proceedings
Crypto-Specific Knowledge
Technical understanding of blockchain technology
Experience with all major CEX and DEX platforms
Current with evolving regulations and NTA guidance
Expert understanding of specified vs. non-specified crypto determination
Proven Results
Successful resolution of numerous crypto tax audits for foreign nationals
Track record of penalty minimization
Strong relationships with tax authorities
Pioneering expertise in two-tier crypto tax system
Action Items for Foreign Crypto Investors in Japan
Immediate Steps
1. Review Your Filing History
Have you reported all crypto gains since you began trading?
Did you report crypto-to-crypto exchanges (not just crypto-to-fiat)?
Have you included mining, staking, or airdrops?
Can you identify which cryptocurrencies you traded?
2. Organize Your Documentation
Download complete transaction histories from all exchanges
Calculate cost basis for all holdings
Preserve wallet addresses and transaction IDs
Create inventory of specified vs. likely non-specified crypto
3. Assess Your Risk Profile
Large unreported gains pose significant risk given enhanced NTA enforcement
Consider voluntary disclosure if you have unfiled obligations
Seek professional advice before the audit comes to you
Evaluate exposure to non-specified crypto taxation
Preparing for the New Tax Regime
1. Strategic Timing Considerations
Evaluate whether to realize gains before or after reform implementation
Consider impact on loss carryforwards
Plan trading activity around the transition period
Assess timing of sales for non-specified crypto (may want to realize before reform)
2. Enhanced Record-Keeping
Separate taxation will require clear segregation of crypto gains/losses
Maintain separate tracking for specified vs. non-specified crypto
Maintain detailed trade logs in both English and Japanese
Implement proper accounting systems now
Document exchange registrations and crypto classifications
3. Portfolio Reassessment
Evaluate shifting portfolio toward specified cryptocurrencies
Consider migrating holdings from overseas to Japanese exchanges
Assess whether altcoin/DeFi exposure is worth continued aggregate taxation
Calculate potential tax savings from portfolio reallocation
4. Exchange Strategy
Open accounts on major Japanese exchanges (bitFlyer, Coincheck, GMO Coin)
Transfer major crypto holdings to Japanese exchanges (if beneficial)
Understand which cryptocurrencies are listed where
Prepare for potential mandatory use of Japanese exchanges for tax benefits
Conclusion: Opportunity and Obligation - But Not for Everyone
The Separate Taxation Paradox - Now with a Two-Tier Twist
The shift to separate taxation represents a major positive development for consistently profitable cryptocurrency investors trading specified cryptocurrencies on regulated Japanese exchanges. For this group, tax burdens may be cut by more than half. However, this reform comes with two critical trade-offs that many investors may overlook:
Trade-Off #1: Loss Offset Elimination (Even for Specified Crypto)
Even when trading "winning" cryptocurrencies that qualify as specified, the inability to offset losses against salary income fundamentally changes the risk-reward profile of crypto investing in Japan.
Trade-Off #2: The Two-Tier Limitation (The Bigger Issue for Many)
The reform creates winners and losers based on what you trade, not just how you trade:
✅ Big Winners:
High-income investors
Trading Bitcoin, Ethereum, major altcoins
On Japanese exchanges (bitFlyer, Coincheck, GMO Coin, etc.)
With consistent profits
⚠️ Partial Winners:
Medium-income investors with specified crypto profits
Those willing to limit portfolio to specified assets
Traders who can migrate from overseas to Japanese exchanges
❌ Non-Winners (No Benefit):
Altcoin enthusiasts trading obscure tokens
DeFi users holding governance tokens
Investors primarily using overseas exchanges
NFT traders (treatment unclear)
Anyone trading cryptocurrencies not designated as "specified"
🔴 Potential Losers (Worse Off):
Active traders with frequent losses (even in specified crypto)
Diversified portfolio holders (specified + non-specified mix)
Those who value loss offset flexibility
Investors in volatile, non-mainstream cryptocurrencies
The Win-Lose Matrix - Updated for Two-Tier System:
Your Profile | Current System | New System | Verdict |
High income + consistent profits in specified crypto | High tax (55%) | Low tax (20%) | ✅ Big Winner |
High income + consistent profits in non-specified crypto | High tax (55%) | High tax (55%) | ❌ No Benefit |
Medium income + specified crypto profits | Medium-high tax (33-43%) | Low tax (20%) | ✅ Clear Winner |
Any income + frequent losses in specified crypto | Losses offset salary | NO offset | ❌ Potential Loser |
Any income + non-specified crypto gains | High tax (33-55%) | High tax (33-55%) | ❌ No Benefit |
Diversified portfolio (specified + non-specified) | Complex aggregate | Two-tier complexity | ⚠️ Mixed Results |
Key Takeaway:
Before assuming the new system benefits you, carefully analyze:
What cryptocurrencies do you trade? (Will they be "specified"?)
Where do you trade them? (Japanese exchanges vs. overseas?)
Your profit/loss pattern (Consistent gains vs. volatile results?)
Your income level (High earners benefit more from 20% rate)
Many crypto investors may find that this reform doesn't apply to their portfolio at all - and for some, the combination of loss offset elimination plus non-specified crypto taxation could make them worse off.
The Enforcement Reality
This reform arrives during a period of intensified tax enforcement, with the NTA demonstrating both capability and willingness to pursue unreported crypto income aggressively. The 4.6 billion yen in recent 追徴課税 demonstrates that tax authorities are actively pursuing crypto non-compliance.
New enforcement complexity:
NTA will scrutinize specified vs. non-specified crypto classifications
Overseas exchange transactions fully visible via CARF (2027+)
Higher audit risk for investors claiming specified crypto benefits incorrectly
Two-tier system creates new compliance pitfalls
Foreign investors face unique challenges—language barriers, unfamiliarity with Japanese tax procedures, complex cross-border issues, and now the specified vs. non-specified crypto distinction—that make professional guidance essential.
Tokyo Advisory: Your Partner in the Two-Tier Crypto Tax Era
Tokyo Advisory's proven expertise in defending foreign investors during cryptocurrency tax audits, combined with comprehensive planning services for the new two-tier regime, provides the support international investors need to:
✅ Navigate which cryptocurrencies qualify as "specified" ✅ Optimize portfolio structure for tax efficiency ✅ Manage the transition from aggregate to separate taxation ✅ Defend audit positions on crypto classification ✅ Maximize benefits while ensuring compliance
Contact Tokyo Advisory
Don't wait for a tax audit notice or the implementation of the two-tier system. Whether you need:
Current year tax return preparation
Multi-year compliance catch-up
Tax audit representation
Strategic planning for the new two-tier tax regime
Portfolio assessment for specified vs. non-specified crypto
Exchange migration planning
Our English-speaking team is ready to help.
With cryptocurrency tax reform creating a divided landscape between specified and non-specified crypto, and enforcement intensifying, now is the time to ensure your compliance and optimize your tax position.
Tokyo Advisory: Your trusted partner for international tax compliance in Japan, with specialized expertise in cryptocurrency taxation, proven experience representing foreign investors during tax audits, and pioneering knowledge of the new two-tier crypto tax system.
Disclaimer
This blog post provides general information and should not be construed as tax advice for your specific situation. Tax laws are subject to change, and the proposed reforms discussed here are pending final legislative approval. The designation of which cryptocurrencies will be classified as "specified cryptocurrencies" (特定暗号資産) is not yet determined and will be established through regulatory implementation. The information regarding "Crypto Asset Trading Businesses" and registration requirements is based on the tentative naming (仮称) in the tax reform proposal and subject to change.
Consult with qualified tax professionals regarding your individual circumstances.
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