Capital gains tax in Japan

Japan operates a dual-track capital gains regime under the Shotokuzeihō (Income Tax Act, Act 33 of 1965) administered by the National Tax Agency (国税庁, NTA). Two separate rate structures apply depending on the asset class: a flat 20.315% rate governs listed-securities disposals, while a holding-period-dependent schedule governs real-estate disposals. Crucially, profits from cryptocurrency and other virtual assets sit outside both tracks -- they are classified as miscellaneous income subject to progressive rates, not as capital gains. Understanding these distinctions before filing is essential.

What rate applies to listed-share and securities capital gains?

Gains from the disposal of listed shares, ETFs, and other designated securities are taxed separately from employment and business income at a flat combined rate of 20.315%, comprising three components: 15% national income tax, plus 0.315% special reconstruction surtax (fukkō tokubetsu shotokuzei -- the 2.1% surtax applied to the 15% national rate equals 0.315%), plus 5% local inhabitant tax (jūminzei). This flat rate has applied since the 2014 reform and is scheduled to continue through 2037 when the reconstruction surtax expires, at which point the rate would revert to 20% if no further legislation intervenes [NTA official guidance, nta.go.jp]. Gains on unlisted shares and most non-securities assets are aggregated with other income and taxed progressively.

How does holding period affect real-estate capital gains?

Japanese real-estate disposals face a holding-period cliff measured on 1 January of the year in which the property is sold -- not the actual sale date. A property purchased on 15 February 2020 and sold on 30 November 2025 is evaluated against 1 January 2025, at which point the holding period is under five years; that disposal qualifies as short-term. The property would need to be held past 1 January 2026 to attract the long-term rate [NTA, nta.go.jp/publication/pamph/koho/kurashi/html/05_2.htm].

A primary-residence exemption of up to JPY 30 million applies to gains from selling a home that was the seller's principal dwelling at the time of sale or within three years before. This deduction is capped at once per three-year period and cannot combine with certain other relief provisions. For properties held more than 10 years, a reduced rate of 14.21% applies to gains up to JPY 60 million; the portion above that ceiling reverts to the standard long-term rate of 20.315% [PwC Japan Worldwide Tax Summaries, taxsummaries.pwc.com/japan/individual/income-determination].

How are cryptocurrency profits taxed -- and why is this not a capital gain?

Cryptocurrency and virtual asset profits in Japan are classified as miscellaneous income (zatsu shotoku) under the Payment Services Act framework, not as securities capital gains. This classification is significant: miscellaneous income stacks on top of all other income (salary, business, rental) and is taxed at progressive national rates from 5% to 45%, plus a flat 10% local inhabitant tax, producing a possible combined ceiling of 55% for high earners -- roughly three times the flat securities rate [NTA guidance; PwC Japan Tax Summaries].

Proposed legislation discussed in Japan's 2026 tax reform cycle would reclassify qualifying crypto assets traded on registered domestic exchanges as a financial product subject to a flat 20% rate, but this reform had not been enacted into law as of June 2026, with implementation projected no earlier than 1 January 2028 [EY Japan Tax Alert, March 2026]. Filers should rely on the miscellaneous-income classification for 2025 and 2026 tax-year filings.

What is the NISA tax-free account and who qualifies?

The revised NISA (Nippon Individual Savings Account) programme, effective 1 January 2024, provides permanent tax exemption on capital gains and dividends earned inside designated accounts. All Japanese tax residents (including qualifying non-Japanese nationals) may hold one NISA account per person at a registered brokerage. The 2024 reform structure comprises two sub-quotas that may be used simultaneously [Japan Securities Dealers Association, jsda.or.jp/en/activities/research-studies/html/2024nisa.html]:

• Tsumitate (accumulation) quota: JPY 1.2 million per year, limited to FSA-approved low-cost index and balanced funds
• Growth quota: JPY 2.4 million per year, eligible for listed stocks, ETFs, REITs, and approved mutual funds
• Combined annual cap: JPY 3.6 million per year
• Lifetime tax-free balance: JPY 18 million total (no more than JPY 12 million from the Growth quota)

The lifetime limit is measured at acquisition cost, not market value -- meaning growth above the cost basis does not consume additional allowance. When holdings are sold, the freed acquisition-cost space becomes available to re-use the following year. Income from investments held within a NISA account is permanently excluded from the 20.315% securities rate that would otherwise apply. See the Japan country overview for broader context on Japan's individual tax residency rules.

How does self-assessment and the tokutei koza account work?

Japan's annual self-assessment return (kakutei shinkoku) is generally due by 15 March following the close of the tax year (which runs 1 January to 31 December). However, investors using a specific account (tokutei koza, 特定口座) with withholding-at-source election may not need to file at all for their securities income: the brokerage automatically calculates and withholds the 20.315% combined rate on each realised gain, and that withholding operates as a final tax. Investors with multiple accounts, realised losses to carry forward, or foreign-broker accounts must still file the annual return regardless of tokutei koza status [NTA, nta.go.jp/english/taxes/individual/incometax_2025.htm]. Real-estate disposals always require separate disclosure through the annual return or a dedicated real-property transfer return filed by March 15.

For cross-border situations -- Japanese residents with foreign brokerage accounts, non-residents disposing of Japanese real estate, or dual-filers subject to both Japanese and a treaty-partner's capital gains rules -- the rules become materially more complex. Japan's tax treaty network covers over 80 countries and typically assigns gains on real-estate-rich entity shares to Japan as the situs state. A qualified tax professional registered with the Japan Federation of Certified Public Tax Accountants' Associations (Nippon Zeirishi Renmei) can assess the interaction of Japanese rules with a specific taxpayer's facts before filing.