Cryptocurrency and Corporation or Individual Tax of Japan

Cryptocurrency and Corporation or Individual Tax of Japan

Difference between Corporation and Individual

In the case you (corporation or person) invest in Cryptocurrency, according to Company or Individual, there are a big difference in tax aspect.

As for tax rate and crypto trade

In the case of Individual

In the case you (Individual, human being) invest in Cryptocurrency and make a profit (more than 200,000 yen per a year), you need to pay income tax and resident tax.

The larger amount of taxable income, the higher rate of income tax.
(as for Resident tax, it is always 10%)

If you have also salaried income, you need to totalize amount of profit of crypto trade and salaried income.

According to amount of taxable income, total rate of income tax and resident tax is from 15% to 55%.
(In the case amount of taxable income is 6.95 million yen, total rate of income tax and resident tax is about 33%)

By the way, in the case of stock investment, rate of income tax is about 20% and it is separated from salaried income.

Offset and carry forward

In the case you (Individual) invest in Cryptocurrency, you can not consolidate amount of loss of Cryptocurrency investment with salaried income.

Cryptocurrency trade and Foreign exchange trade are classified into Miscellaneous income.
However you can not consolidate loss of Cryptocurrency investment with Foreign exchange trade.

And in the case of Cryptocurrency investment, you (Individual) can not carry forward the amount of loss to following years.
(In the case of Stock investment, you can carry forward loss for three years).

Maybe, government of Japan can not follow new system of crypto trade.

Company and rate of tax

Conversely, in the case Company invests in Cryptocurrency, total rate of corporation tax etc.( including corporate resident tax, business tax), is about 30%.

So if you anticipate you can get large amount of profit by Cryptocurrency investment, you will invest as Individual.

If you do not anticipate you can get large amount of profit by Cryptocurrency investment, you will invest as Company.

In the case you (Company) invest in Cryptocurrency, amount of profit is business income.

So your company can consolidate it with other income and carry forward amount of loss for ten years.

And if your company joins 小規模共済基金, amount paid by your company can be deductible expense.

On the other hand, in the case of Company, even if it does not make profit, it still needs to pay corporate resident tax of 70,000 yen per a year.

Unrealized profit

Even if you (Individual) have unrealized profit at the end of year, such amount is not included in taxable income.

However if you (Company) have unrealized profit at the end of fiscal year, such amount is included in taxable income.

You (Company) need to reevaluate the market price of Cryptocurrency and calculate amount of taxable income.