The National Tax Agency’s official stance on Bitcoin taxes! As expected...

Hello everyone, miscellaneous income! I’m struggling with Bitcoin taxes.@xi10jun1is.

A official stance regarding Bitcoin taxes has been released by the National Tax Agency. Profits are considered miscellaneous income. Accordingly, the ending corner has also been updated.

This time, I would like to share my own view on this official stance.

※As in the previous post, there is an important notice for those who are reading for a fee, so please read down below as well.

※This column is designed so that half of it can be read for free, a conscience-filled design. Of course, if you read up to the paid portion (weekly updates at 400 yen per month, so about 80–100 yen per column), it would be a great encouragement!

This Week’s Performance (September 1–September 7, 2017)

First, as usual, here are performance figures. I’ll publish the gains/losses first.

Last week (through August 31, 2017) assets: 117,717 yen
This week (through September 9, 2017) assets: 118,485 yen
Change: +768 yen

This week also ended with a small gain.

There are still many trades with losses followed by losses and then big gains, and given recent price movements, I couldn’t take on large positions.

Regarding ICOs, Tech Bureau’s COMSA is likely to become a precursor for ICO platforms in Japan, so it would be nice if Bitcoin recovers due to expectations there.

Now, for this week’s column, I will write in a column-like manner about the National Tax Agency’s view.

BTCFX Taxation Should Be the Same as Currency FX

The latest legal view regarding Bitcoin has been updated on the National Tax Agency’s site.

Here it is →No.1524 Taxation on profits arising from using Bitcoin｜Income Tax｜National Tax Agency

In short, it goes like this:

“Bitcoin profits are miscellaneous income! Also, when you buy goods or services with Bitcoin and if the Bitcoin value at the time of purchase is higher than the Bitcoin purchase price, that profit is also taxable.”

In other words, if you bought 1 BTC for 100,000 yen and later it became 500,000 yen and you used it for shopping, the difference of 400,000 yen is recognized as profit.

These taxes were broadly as experts expected, but I personally would have preferred BTCFX to be taxed like conventional FX for currencies.

Under the current system, the top tax rate remains 55%, which makes it difficult for people with large transfers to avoid big taxes… not so bad for small traders like me, though.

In any case, BTCFX is, in terms of mechanics, almost FX. Since it’s not a currency, the idea that you can’t offset gains and losses is becoming harder to justify.

I believe rates will eventually be corrected…

Free Summary: Tax System for Margin Trades Must Allow Offsetting Gains and Losses, ASAP!

I hope so. Whether Japan can lead in cryptocurrency taxation depends on how quickly this tax framework can be built.

There are holders overseas as well, and if it can be used in Japan, demand will rise and prices may go up.

Now for this paid column, I will continue to focus on future market analysis this week as well.

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Ending Corner 1: Latest Tax News!

The National Tax Agency’s site has updated the latest legal view on Bitcoin.

Here it is →No.1524 Taxation on profits arising from using Bitcoin｜Income Tax｜National Tax Agency

According to this, profits obtained by using Bitcoin are regarded as “miscellaneous income.”

So, for me, profits from margin trading are, in principle, miscellaneous income. As I have previously noted in the ending corner (→Bitcoin Margin Trading (BTCFX) and Tax Filing! Comprehensive Taxation of Miscellaneous Income? Separate Taxation? | Retiree Investor Jun), it seems that offsetting gains and losses is not allowed. It would have been nicer if there were some workaround…

Also, according to NewsPicks comments by Yuzo Kano, President of bitFlyer (No.1524 Taxation on profits arising from using Bitcoin - NewsPicks), if you bought Bitcoin for 100,000 yen and used it to buy something at 500,000 yen, the 400,000 yen difference would be recognized as profit.

When you spend Bitcoin on goods or services, if the payment Bitcoin price at the time of purchase exceeds the price at Bitcoin purchase, that profit is recognized as profit. Therefore, the same applies when shopping with Bitcoin at FANCY, so be aware.

※Please note that laws and tax interpretations may change, affecting how you file and pay taxes. Before filing, be sure to confirm with your local tax office or a tax professional.

Ending Corner 2: Let’s Try Shopping with Bitcoin!

In fact, the overseas EC site “FANCY” allows you to purchase products with Bitcoin! It’s a bit costly for shipping, but there are stylish items not found in Japan!

I have summarized how to use FANCY on this blog, so please refer to it.

→A Guide to Creating, Registering, Setting Up a FANCY Account and Purchasing Items | Retiree Investor Jun
→How to Buy with Bitcoin (BTC) on FANCY | Retiree Investor Jun

※Free content ends here. The rest is detailed analysis and future outlook, so it is paid. If you want to read more, of course, or if you can support with a tip subscription, I would be very encouraged! Thank you for your continued support!