Profit generated through engaging in crypto asset transactions has to be reported for tax purposes. However, for many people, the rules and calculation methods related to crypto asset taxes are complex, making it unclear what needs to be done. This page provides an explanation of the basic rules, calculation methods, and how to handle transactions across multiple exchanges.
Basic Rules for Crypto Asset Taxes
Profits generated from trading crypto assets, such as Bitcoin, are generally categorized as "miscellaneous income," requiring the filing of an income tax return. For example, if a company employee engages in crypto asset trading as a side business and earns more than JPY 200,000 in profit, they must file a tax return themselves.
Note: For detailed information about the tax system related to crypto asset transactions, please refer to the Cryptact website (external site):
What Are Crypto Asset Taxes? Basics, Calculation Methods, and Tips (only available in Japanese)
Calculation Methods for Crypto Asset Taxes
Profit and loss calculations for crypto asset transactions are essential for filing income tax returns. Understanding the proper calculation method is crucial for accurately reporting amounts to the tax office. Taxable events include selling crypto assets, exchanging one crypto asset for another, and using crypto assets to purchase goods or services.
Note: For further information on tax-related matters, please refer to the announcement from the National Tax Agency published on December 20, 2024 (external site):
Tax Treatment of Crypto Assets (only available in Japanese)
Determining Realized Gain or Loss through Calculating Acquisition Costs with the Total Average Method or Moving Average Method
To calculate the acquisition cost of crypto assets, either the Total Average Method or the Moving Average Method is used. The Total Average Method calculates the average by dividing the total purchase amount by the total quantity purchased during a given period. The Moving Average Method recalculates the acquisition cost after each purchase. Once a calculation method is chosen, it cannot be changed for three years. For individuals, the Total Average Method is applied by default unless otherwise specified.
Trade Reports Provided by bitFlyer
To simplify income calculations for users, we provide a "Trade Report" based on the transaction history of our various services (e.g., Buy/Sell, Exchange, bitFlyer Crypto CFD). This report includes detailed data on crypto asset transactions, deposits, and withdrawals, which can be used for income calculations.
Additionally, users can refer to the Closing Prices and SQ section for a comprehensive list of transaction prices and easily view the necessary information.
If Multiple Exchanges or Platforms Are Used for Trading
If you trade crypto assets on multiple exchanges, you need to gather transaction histories from all platforms and calculate profits and losses for each asset type. The more transactions you make, the more complex the profit-and-loss calculation becomes, especially when dealing with multiple trading types.
To assist with this, we support the use of Cryptact, a profit-and-loss calculation service tailored for crypto asset investors. Cryptact supports over 130 exchanges and platforms, as well as more than 22,000 types of crypto assets.
Note: For more details on Cryptact, refer to the following external links:
Crypto Asset Profit and Loss Calculation Tool: Cryptact
Cryptact Features
Frequently Asked Questions
Q: Where can I find the documents required for filing a tax return?
A: Use the data from the "Trade Report" to calculate your income and create a tax return. If you trade on multiple platforms, you can use tools like Cryptact to calculate realized profits and losses.
If filing through e-Tax, you can prepare the tax return at the National Tax Agency's "Tax Return Preparation Corner” (確定申告書等作成コーナー; only available in Japanese).
Note: For detailed instructions on filing crypto asset income using e-Tax, refer to the following guide on Cryptact (external site):
How to file cryptocurrency tax return in Japan ~A Guide to the process and required documents
Disclaimer
The information on this page reflects the current views of Japanese tax authorities and may be subject to future amendments. For detailed inquiries, please consult your local tax office or a tax counselor. bitFlyer bears no responsibility for any tax filing, tax burden, or damages incurred by customers or third parties.
While bitFlyer ensures the adequacy of the information provided in the "Annual Trade Report" based on advice from tax professionals, accuracy cannot be guaranteed. Filing your tax returns is your own responsibility.
For inquiries about Cryptact's services and calculation results, please contact pafin Inc., the service provider of Cryptact, directly.