Bitcoin is taxed up to 110% in Japan

[JiiBs]

I couldn't believe what I read but it's true. In Japan, if you sell a crypto, you have to pay 55% any gain you make from it but that's not the end of nightmare, that's the start and a true nightmare starts when you receive a crypto inheritance. An inheritance tax is maxed out at 55%, so, if we combine inheritance tax, income tax and local resident tax, the person who got crypto as an inheritance will pay up to 110% taxes, which means that you pay 10% more than what you got.

Is that even possible?
From your earlier statement, this focused on interest on the commodity for which you’ve got. Obviously, you can’t have to pay 110% which is an addition of interest on the inherited commodity because, you haven’t got any interest at the point of inheriting. That would only count after you’ve held it for a good number of months or whatever period that is used in taxation. It would be a calculation error that you’re having to not only remit what you inherited but, paying 10% increase on them. It’s as good as not having to inherit it anyway.

[Ale88]

I couldn't believe what I read but it's true. In Japan, if you sell a crypto, you have to pay 55% any gain you make from it but that's not the end of nightmare, that's the start and a true nightmare starts when you receive a crypto inheritance. An inheritance tax is maxed out at 55%, so, if we combine inheritance tax, income tax and local resident tax, the person who got crypto as an inheritance will pay up to 110% taxes, which means that you pay 10% more than what you got.

Recently, Italy increased tax on crypto from 26% to 42%, Denmark also has up to 52% tax on crypto gains as far as I know. The world is going crazy, especially the government which thinks that we don't have a right to make profit, they want us to be enslaved to monthly salaries.

Here is the source: https://www.mitrade.com/insights/news/live-news/article-3-529523-20241218

Regarding Italy, some politicians were trying to get approved a 42% capital gain tax but it didn't go through, instead during 2025 will remain the same, in 2026 will increase to 28% and then the idea is to increase it again in a few years at 33% but will see about that. They did remove the 2k euro limit, before any capital gain under that number didn't have to be declared, next year yes, even the smallest capital gain will (theoretically) have to be declared. And will see about that...

[Helena Yu]

Many users think they need to pay 110% of their total wealth to the tax authority, the reality isn't like that.

Technically it's income tax (5%-45%) + local income tax (10%) + inheritance tax (10%-55%).

Let's say you make a lot money like $1 Million, then you die, and the money will be inherited to your kids, it doesn't mean you will need to pay 110% x $1 Million = $1.1 Million to the tax authority.

But, it starts from:

$12,410 x 5%
$8,596 x 10%
$xxx x 20%
...
$xxx x 45%

So, in the end you still receive money, instead of ended up minus.

[Oshosondy]

Many users think they need to pay 110% of their total wealth to the tax authority, the reality isn't like that.

Technically it's income tax (5%-45%) + local income tax (10%) + inheritance tax (10%-55%).

Let's say you make a lot money like $1 Million, then you die, and the money will be inherited to your kids, it doesn't mean you will need to pay 110% x $1 Million = $1.1 Million to the tax authority.

But, it starts from:

$12,410 x 5%
$8,596 x 10%
$xxx x 20%
...
$xxx x 45%

So, in the end you still receive money, instead of ended up minus.

If yu are losing, the government will not give you any money for compensation. I prefer the country that collect no tax on crypto. Or at least the tax should not be too much. Even you have to pay for inheritance tax which is rubbish. It means if you do not spend the money, you will pay tax for it as long as you inherit it. I do not care about how it is calculated, according to the calculation, I think the tax is still too much except the local income tax. Even if you receive money from abroad, there is another tax for it and which can be up to 45%.

[Luzin]

This doesn't make sense, even it exceeds what you get. I read that the crypto tax there is 15%-55%. There is indeed a 10% resident tax and additional rules regarding inheritance. It is very bad that if it is implemented, there will probably be many people who choose not to report their assets as inheritance. But in some of the sources I've read, this tax could be a matter of slowing adoption. For the new news, Japan has planned to reduce taxes to only 20%. It will be implemented in 2025. They will revise this fiscal policy has been planned since September.

[SquirrelJulietGarden]

This doesn't make sense, even it exceeds what you get. I read that the crypto tax there is 15%-55%. There is indeed a 10% resident tax and additional rules regarding inheritance. It is very bad that if it is implemented, there will probably be many people who choose not to report their assets as inheritance.

The point is not reporting their assets as inheritance or not. Because if they did not buy it by themselves, they have nothing to prove that they bought it, but did not steal it from someone else. Inheritance, if it is truly the source of their assets, will need to be reported exactly it is with source information and documents.

But in some of the sources I've read, this tax could be a matter of slowing adoption. For the new news, Japan has planned to reduce taxes to only 20%. It will be implemented in 2025. They will revise this fiscal policy has been planned since September.

It won't.

If I have interest in Bitcoin, believe in its future, I use my money to buy it and if I want to give it to my children, I can cash it out and give my cash as children inheritance. If the tax on Bitcoin inheritance is unfair, but I don't know how this tax policy will be applied in Japan.

If you can not go straightly, you can find other ways that sometimes can be cheaper in cost, but with only some extra, but not considerable inconvenience.

[LoyceV]

The explanation doesn't make sense:

   Someone buys 100 BTC in December 2014 (worth 4.6 million JPY).
    They die in December 2024, leaving the BTC (now valued at 1.437 billion JPY) to their child.
    The child must pay an inheritance tax maxed out at 55%.
    The heir then sells the BTC upon inheriting it, and must pay taxes on gains, with the acquisition price still being the original 4.6 million yen.
    Combine the two 55% taxes and others (inheritance tax, income tax, and local resident tax) and the child is now taxed at a rate higher than the value of the asset itself, or 110%.

It would make much more sense to first pay the tax on capital gains, and only after that pay the inheritance tax on the amount left. The person inheriting the money has nothing to do with the gains before his ownership.
If this applies to Bitcoin inheritances, it probably also applies to other inheritances, and if that's true, it sounds like a flaw in the tax system.

[Ziskinberg]

The good thing, is that they 've realised they can't control bitcoin.

They know that, which is why they’re trying to push policies that seem unfriendly to Bitcoin. In the end, they still can’t completely suppress people who seek full freedom, but they can influence the majority to comply with the rules they implement.

It’s easy for them, actually, because they can set global standards. What’s enforced in a leading country like the USA is likely to be adopted by others (or even exceeded )because no one’s going to lower the bar. Ultimately, their goal is control, ensuring they get a cut from early investors' profits. It’s frustrating because it feels like the government just wants to milk money from us while we take all the risks. (What a corrupt system, right?)

[Kelward]

It's either that there's a miscalculation somewhere or Japan, is not a crypto friendly country, with that ratio of tax, their citizens will be discouraged to hold cryptocurrency. I hope that their government will change the unfavorable tax laws on crypto so that their citizens will not miss out on the potentials of a cryptocurrency like Bitcoin to give them massive returns in the future. We've seen proactive leaders that are recognizing the potentials of Bitcoin in their economy, like the incoming president of America, that leveraged on the popularity of Bitcoin during his campaigns. Countries, cities, institutions and individuals are holding Bitcoin so hopefully Japan, wouldn't be left behind in the future.

[kryptqnick]

Unfortunately, I can't access the link the op provided, but my first thought upon reading about 55% was that it's probably a progressive tax, with 55% as a maximum. First, very small income isn't taxed at all (but it's less than $1300 in a year for total income, so not very practical). Then there'd a progressive income tax plus 10% fixed inhabitant tax, which meaning that crypto tax is 15-55%.
But the 110% thing is, of course, ridiculous if enforced in practice, as I think people should pay either income or inheritance tax, not both.
Also, it's true that when taxes are too high, people tend to engage in tax evasion.

[Hamza2424]

I couldn't believe what I read but it's true. In Japan, if you sell a crypto, you have to pay 55% any gain you make from it but that's not the end of nightmare, that's the start and a true nightmare starts when you receive a crypto inheritance. An inheritance tax is maxed out at 55%, so, if we combine inheritance tax, income tax and local resident tax, the person who got crypto as an inheritance will pay up to 110% taxes, which means that you pay 10% more than what you got.

Recently, Italy increased tax on crypto from 26% to 42%, Denmark also has up to 52% tax on crypto gains as far as I know. The world is going crazy, especially the government which thinks that we don't have a right to make profit, they want us to be enslaved to monthly salaries.

Here is the source: https://www.mitrade.com/insights/news/live-news/article-3-529523-20241218

This can't be like that I'm sure there must be some condition as no can be this dumb that they impose the x amount tax on y income where x > y, Honestly according to my general perception it can be like if you inherit you need to pay inheritance tax and if you are involved by your self you need to pay income tax, or it can be like that you need to pay both taxes and the income tax will be on the profit amount you've made.

In any mean it shows that government wants to discourage the risk investment market (Crypto).

[jcojci]

That is big wow for me. It seems the government really suffer to their financial so they apply a high tax for their citizens. We don't know what is their reason to apply that high tax but that can make their citizens in difficult if they can not pay the tax.

It seems the government needs to revise their tax regulation so that will not makes their citizens difficult to pay the tax.

If that is really 110% taxes, how their citizens can survive especially when the situation becomes bad?

It just a matter of time we will see a big demonstration from their citizens because I guess when they are suffer because of the hard situation, they will against their government.

[DaveF]

It's clickbait at best.
And wrong at worst.

Things like this have come up before and been shown to be wrong.
And it is not taking into account the fact that your cost of acquisition is NOT the cost in 2014 as the article states, but the cost in 2014 + the inheritance tax.

And yes, been there done that had to help a someone in Japan got through this in 2021.

-Dave

[Lucius]

Bitcoin taxes in Japan is 15% to 55% depending on your tax bracket. 55% applies only to the highest tax bracket.
So the average Japanese would be paying more like 20 to 30%. In Italy they are still paying 26% because the 42% proposal did not pass.

Exactly as you wrote, and it's nothing new - it's been around in Japan for years and there's been a lot of discussion about it on the forum in the past. Therefore, I don't see it as a problem for ordinary people, but for those who have the most money - although that 55% really doesn't seem fair at all, no matter who it applies to.

[Ale88]

The explanation doesn't make sense:

   Someone buys 100 BTC in December 2014 (worth 4.6 million JPY).
    They die in December 2024, leaving the BTC (now valued at 1.437 billion JPY) to their child.
    The child must pay an inheritance tax maxed out at 55%.
    The heir then sells the BTC upon inheriting it, and must pay taxes on gains, with the acquisition price still being the original 4.6 million yen.
    Combine the two 55% taxes and others (inheritance tax, income tax, and local resident tax) and the child is now taxed at a rate higher than the value of the asset itself, or 110%.

It would make much more sense to first pay the tax on capital gains, and only after that pay the inheritance tax on the amount left. The person inheriting the money has nothing to do with the gains before his ownership.
If this applies to Bitcoin inheritances, it probably also applies to other inheritances, and if that's true, it sounds like a flaw in the tax system.

But the tax on capital gains is paid only at the moment you decide to sell, if you inherit bitcoins and choose not to sell them immediately then you're going to pay the tax in the future. And even selling immediately, pay the capital gain (which would be based on an average cost of $0 since you didn't buy them) and then pay the inheritance tax and buy them again would expose you to another capital gain tax in the future. And I'm not even sure you can actually pay the capital gain tax before the inheritance one because technically you receive those bitcoins after the inheritance, not before, so you're selling something that is not yours yet.

[Samlucky O]

I couldn't believe what I read but it's true. In Japan, if you sell a crypto, you have to pay 55% any gain you make from it but that's not the end of nightmare, that's the start and a true nightmare starts when you receive a crypto inheritance. An inheritance tax is maxed out at 55%, so, if we combine inheritance tax, income tax and local resident tax, the person who got crypto as an inheritance will pay up to 110% taxes, which means that you pay 10% more than what you got.

Recently, Italy increased tax on crypto from 26% to 42%, Denmark also has up to 52% tax on crypto gains as far as I know. The world is going crazy, especially the government which thinks that we don't have a right to make profit, they want us to be enslaved to monthly salaries.

Here is the source: https://www.mitrade.com/insights/news/live-news/article-3-529523-20241218

This is obviously a sign clearly stating that the government is not in support of bitcoin or anything cryptocurrency. Or could be that the tax is needed to facilitate the growth of their economy. But thought bitcoin has been a threat to the government for so many years and They have tried many times to silence it but it keeps increasing and proving there efforts void. So I think this is another strategy to silent it, or make a hell of profit but guess what? bitcoin has come to stay, no matter what they do or the amount of tax that is imposed on citizens to pay. It can only be effective in some countries and not all.

With this level of tax in Japan, it will drastically reduce bitcoin adoption is such place or those areas associated with sux taxation. This is really a taxation theft.

[seoincorporation]

When governments set such huge tax percentages, they lead citizens to tax evasion.

That's true, don't forget people can buy/sell BTC with cash or other payment methods that don't involve a traceable transaction, what would users do? buy bitcoin on a legal way paying that 110% or find a P2P deal with only 50% on some black market?

It will be a complex situation for the Japanese. They can just go to any other country and buy bitcoin there without those taxes, for sure some of them will do it.

[Gallar]

~Snip

In my opinion, such a tax is excessive. Because basically this will definitely be very burdensome for bitcoin investors or those who like to transact altcoins. But even so, I believe it will be very difficult for the Japanese government to be able to apply this tax system perfectly to bitcoin or crypto. Because Japanese people who own bitcoin definitely have many ways to avoid this tax. So in essence it will be very difficult to apply a tax system to bitcoin or crypto. Because basically most people involved in bitcoin investment like anonymity. So with this, the government will definitely find it very difficult to find out who has assets in bitcoin. Therefore, I don't think we need to worry about things like this. So let the government in each country create regulations, so that it can make things difficult for bitcoin investors. Because basically I believe this effort will be very difficult to succeed and will be a useless rule.

[hero_the_bossman]

When governments set such huge tax percentages, they lead citizens to tax evasion.

That's true, don't forget people can buy/sell BTC with cash or other payment methods that don't involve a traceable transaction, what would users do? buy bitcoin on a legal way paying that 110% or find a P2P deal with only 50% on some black market?

It will be a complex situation for the Japanese. They can just go to any other country and buy bitcoin there without those taxes, for sure some of them will do it.

Hopefully, the situation would change for the better.
It would be very inconvenient for anybody to make these moves in order to just proceed with their affairs - and yeah, I agree about the bit with P2P 100%.

[apogio]

It will be a complex situation for the Japanese. They can just go to any other country and buy bitcoin there without those taxes, for sure some of them will do it.

For every country, to be honest. Japan set the taxes very high, but there are countries that still lack a transparent tax system for crypto. You never know what stupid ideas these countries will have for their bitcoin taxation.