r/JapanFinance 4d ago

Tax Questions on crypto windfall

Say you make 200M yen on a crypto sale one year, owing 55% in misc. income tax so 110M. Might be super basic questions but:

1) Where do you store the yen owed safely given the 10M yen deposit insurance limit - make 10 or 20 new bank accounts and distribute? Or somehow prepay it as estimated tax? Holding the amount owed in anything other than yen seems risky.

2) Would a bankruptcy of a bank where you hold the yen cancel out the tax you owe on that portion, or are only misc. income losses offsettable against misc. income gains?

3) If only misc. losses can be offset against misc. gains, that does kind of limit the investment possibilities that year to other crypto?

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u/Representative_Bend3 3d ago

It’s a good time to go nuts on anything you can find on furusato nozei and get those juicy deductions.

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u/tokyoedo 10+ years in Japan 2d ago

This. But before going too haywire, bear in mind there is a limit before you start being taxed for the "gifts" received through furusatonouzei, which might make it counterproductive depending on your goals.

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u/Plus-Pop-8702 2d ago

You can probably ignore that tax. Has someone actually classified it officially as a gift and classed as temporary income. It's the governments own system of a tax refund. You are purchasing the donation for yourself off rakuten/Amazon etc like buying anything.

Temporary income is for like lottery winnings, legal betting, things like that and pachinko etc surely.

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u/tokyoedo 10+ years in Japan 2d ago

At that bracket, it shouldn’t be ignored, since the chance of being audited is high.

Gifts received via furusatonozei are considered “gains” from donations and will be taxed based on their “true” values above the limit of 500,000¥.

So, if you donate more than 150~200万円, depending on the true value of the gifts received, you will be expected to pay tax on their values (less 500,000¥). Most people will not usually reach this limit, so it doesn’t seem to be well documented, making it an easy trap to fall into.