Cryptocurrency and borderline of 200,000 yen
In the case you trade Cryptocurrency and make profit, according to amount of profit, you need to submit tax filing.
In the case you are employee of company (you have salaried income), if amount of profit emerged from Cryptocurrency is more than 200,000 yen per a year, you need to submit tax filing by yourself.
In the case you are Not an employee of company, if amount of income (profit made by Cryptocurrency Trading and other income) is more than 480,000 yen (Kiso Kojo) per a year, you need to submit tax filing by yourself.
If you do not file tax return by due date, you will be charged additional tax on non-payment.
If you needed to pay 500,000 yen, rate of additional tax is 15%.
So you need to pay 575,000 yen.
If you needed to pay 1,000,000 yen, rate of additional tax is 20%.
So you need to pay 1.2 yen.
How to calculate amount of tax ?
As for profit produced by Cryptocurrency Trading, it is included into Miscellaneous income tax (Zatsu Shotoku = 雑所得).
Assumed that you have salary of 5 million yen and profit from Cryptocurrency Trading of 1 million yen and Income deduction (Social Insurance tax etc.) of 500,000 yen.
Amount of salaried income : 5 million yen – (5 million yen * 20% – 440,000 yen=きゅうよしょとくこうじょ）= 3.56 million yen.
3.56 million yen + 1 million yen (Miscellaneous income tax) = 4.56 Million yen.
4.56 Million yen – 500,000 yen = 4.06 Million yen
4.06 Million yen * 20% – 427,500 yen = 384,500 yen.
(income tax rate differs depending on amount of taxable income)
So you need to pay income tax of 384,500 yen.
(By the way, in the case of profit produced by FX trading, stock, you can not consolidate it with salaried income)
Necessary expenses for Cryptocurrency Trading
If you pay some money for Cryptocurrency Trading, you may be able to allocate necessary expenses (Hitsuyo Keihi) and reduce amount of Cryptocurrency Trading income.
You might purchase a computer only for Cryptocurrency Trading trading or a book (ex. 10000 yen).
In that case you can deduct 10000 yen from 1 million yen.
Generation of profit
Even if you do not sell the Cryptocurrency, if you purchase something using Cryptocurrency or convert the Cryptocurrency to another Cryptocurrency, such action should be included in receipt of profit.
Assumed that you purchased 1 BTC at 600,000 yen and price increased to 1 million yen.
Then you purchased another Cryptocurrency named 1 XRP (price is 1 million yen) using 1 BTC.
In this case, you need to pay income tax for 400,000 yen.
Profit and Loss Offset (Son eki tsusan)
Even if you make loss by Cryptocurrency Trading, you can not offset the loss with salaried income.
Other example of calculation of income tax for cryptocurrency traders in Japan
Assumed that amount of your monthly salary is 230,000 yen.
230,000 yen * 12 month = 2.76 million yen.
2.76 million yen * 30% + 80000 yen = 908,000 yen.
This is salaried income deduction (給与所得控除)
2.76 million yen – 908,000 yen = 1,852,000 yen.
This is taxable salaried income.
In the case you make profit of 20,000 yen per month by cryptocurrency trading.
20,000 yen * 12 months = 240,000 yen.
1852,000 yen + 240,000 yen = 2,092,000 yen.
2,092,000 yen – 480000 yen(basic deduction) = 1612000 yen.
1,612,000 yen * 10%(income tax rate) – 97500 yen(deduction) = 63,700 yen.
You need to pay 63,700 yen for your income tax.
(if you have other deduction, like dependent deduction, this amount can be reduced)