Japan and the US have different approaches to taxing cryptocurrencies. This article highlights key differences in rates, events, and asset classification.
Differences in Cryptocurrency Classification
Japan's National Tax Authority classifies cryptocurrencies as 'miscellaneous income', while the US Internal Revenue Service classifies them as 'property'. This fundamental difference leads to variations in how cryptocurrency-related activities are taxed.
Tax Rates and Events
These classifications lead to different tax rates and events. In Japan, crypto earnings are subject to progressive income tax with rates ranging from 5% to 45%. An additional 10% inhabitant tax applies, bringing the total tax rate to 55%. In the US, cryptocurrency is taxed as property, applying capital gains tax rates based on the holding period.
Exceptions and Exemptions
Both countries tax crypto transactions but exempt certain activities like holding and gifting from taxation.
The differences in cryptocurrency taxation in Japan and the US are driven by their classification, affecting tax rates and taxable events. Both countries have exemptions that allow for certain tax-free activities.
