Learn about the taxes required for cryptocurrency trading! Learn the basics and techniques you can use right now —— Kohei Fujimoto, CEO of Kaoria Accounting Office

Currently, the prices of crypto assets, including Bitcoin, are soaring, and the market is booming. When the market is booming, profits are generated, and you will probably want to lock in your profits. However, please be careful. Profits earned from crypto asset trading are subject to taxation, and in some cases you may need to file a tax return.

It is extremely important to have knowledge about taxes when trading crypto assets in the future. So this time, we spoke to Gohei Fujimoto, who is knowledgeable about tax in the crypto asset field, about how to calculate profits from crypto asset trading, as well as asset management and specific methods for calculating profits and losses.

First, please tell us the basics of how profits generated by individuals from cryptocurrency trading are taxed.

Fujimoto: First, profits generated from cryptocurrency trading are classified as miscellaneous income. There are 10 types of income classifications, and the tax calculation method varies depending on each type. Among them, miscellaneous income is the simplest income classification with almost no preferential treatment.

As an exception, if you get cryptocurrency in a lottery-like way, it is considered temporary income, and if you make a profit from cryptocurrency trading as a business, it is considered business income, but in principle, about 80 to 90% of people can be considered as miscellaneous income.

It feels strange that there are preferential treatments for other types of income, but there are no preferential treatments for profits generated from cryptocurrency trading because it is miscellaneous income. Also, I think many people are allergic to the number "55%" when it comes to taxes on cryptocurrency.

Fujimoto: Many people seem to think that cryptocurrency profits are always taxed at 55%, but this is a big misunderstanding. First of all, this 55% is the sum of the maximum income tax rate of 45% in the excess progressive tax rate and the flat 10% local resident tax.

Also, it is not 55% just because it is miscellaneous income, but even if you earn a lot of salary income, you will be taxed at 55% including local resident tax. In other words, cryptocurrencies are not the only ones that are being treated poorly, and the basic rule is that if you make a large profit, you will be taxed, with some exceptions.