Profits from domestic FX (foreign-exchange margin trading) are subject to separate self-assessment taxation at a flat 20.315% and are not combined with your salary. No matter how much you earn, the rate stays the same, and in a year when you make a loss you can also use the three-year loss carryover. On the other hand, there are important differences: you cannot offset gains and losses against stocks or crypto assets, and overseas FX brokers are subject to aggregate taxation (up to 55%). This article organizes the rules on FX taxes and the key points of filing a tax return, with sources from the National Tax Agency.
① Profits from domestic FX (exchange gains + swap points) are treated as "miscellaneous income, etc. related to futures trading" and are subject to separate self-assessment taxation at a flat 20.315% (income tax 15% + special reconstruction income tax 0.315% + residence tax 5%)[National Tax Agency No.1521].
② Gains and losses can be offset against CFDs, futures, and options, but not against stocks, investment trusts, or crypto assets.
③ Losses can be carried forward for the following three years (on condition that you file a return continuously every year)[National Tax Agency No.1523].
④ Overseas FX brokers are not covered = miscellaneous income under aggregate taxation (progressive, up to 55%), and no carryover is allowed either.
⑤ An employee must file a tax return if their income other than salary exceeds ¥200,000 (even at ¥200,000 or less, a residence tax declaration is still required).
Tax rate and income category
| Domestic FX | Overseas FX broker | |
|---|---|---|
| Income category | Miscellaneous income, etc. related to futures trading (separate self-assessment)[National Tax Agency No.1522] | Miscellaneous income (aggregate taxation) |
| Tax rate | Flat 20.315% | Progressive, about 15–55% (including residence tax) |
| Loss carryover | 3 years allowed | Not allowed |
| Offset against others | Allowed with CFDs, commodity futures, Nikkei 225 options, etc. | Only within aggregate-taxation miscellaneous income |
What is taxed is the exchange gains settled and confirmed plus the swap points received (unrealized gains on open positions are in principle not covered; the treatment of swaps varies by broker specification, so confirm it on your annual profit-and-loss report). The larger the profit, the more favorable this tax regime is compared with crypto assets (up to 55%) under aggregate taxation.
How to use offsetting and the "3-year carryover"
- Offsetting within the same group: FX losses can be offset against the profits of "miscellaneous income, etc. related to futures trading," such as CFDs, commodity futures, and stock-index futures/options. They cannot be offset against stocks and investment trusts (a different separate taxation) or crypto assets (aggregate taxation).
- Loss carryover "only works if you file": By declaring the loss on your tax return in the year you incur it and then filing continuously every year thereafter, you can deduct it from profits over the following three years[National Tax Agency No.1523]. "Not filing because I made a loss" throws away the right to carry it forward.
- Example: last year −¥1 million (filed) → this year +¥1.5 million → the taxable amount is ¥500,000, and the tax is about ¥102,000.
Who must file a tax return, and how
- Employees: If your income other than salary, including FX, exceeds ¥200,000 a year, file a tax return (details of the ¥200,000 rule; even at ¥200,000 or less, a residence tax declaration is required).
- Sole proprietors / full-time traders: File a tax return as usual, combined with your other income.
- Required documents: The annual profit-and-loss report (period profit-and-loss report) issued by your FX company. On the return, you use the "miscellaneous income, etc. related to futures trading" section plus the calculation statement. With e-Tax, you can enter it following the on-screen guidance.
- What can be treated as expenses: In addition to trading fees, "expenditures directly necessary for trading," such as FX-related books, seminars, VPS usage fees, and the apportioned share of communication costs.
- In the year you file, the 5% residence tax portion is reflected in the residence tax determination notice in June.
Caution on overseas FX brokers (the tax rules are completely different)
Trading with an overseas FX broker not registered with the Financial Services Agency is outside the scope of separate self-assessment taxation and becomes miscellaneous income under aggregate taxation. A progressive tax rate combined with your salary (up to 55% including residence tax) applies, and losses cannot be carried forward. On top of the structure where "even if you can earn with high leverage, the tax takes it away," problems with withdrawals and solicitation damage from unregistered brokers occur frequently. On the tax side alone, domestic brokers are far more advantageous.
FAQ
What percentage of tax is charged on FX profits?
Regardless of the size of the profit, domestic FX is subject to separate self-assessment taxation at a flat 20.315% (income tax 15% + special reconstruction income tax 0.315% + residence tax 5%). With an overseas FX broker, it becomes aggregate taxation, and depending on income, up to about 55% is charged.
Can FX losses be offset against stock profits?
No. FX is "miscellaneous income, etc. related to futures trading" and stocks are "capital gains, etc. on shares," which are separate-taxation groups, so their gains and losses cannot be offset against each other. What FX can be offset against are same-group transactions such as CFDs, commodity futures, and stock-index options.
Should I file a tax return even in a year I made a loss?
Yes, you should. If you declare the loss and then file continuously every year thereafter, you can deduct the loss from profits over the following three years. If you do not file, you lose the right to the carryover deduction.
From what amount of profit does an employee need to file?
If your income other than salary, including FX, exceeds ¥200,000 a year, an income tax return is required. Note that even in cases where filing is unnecessary at ¥200,000 or less, a separate residence tax declaration is still required.
Data sources
- Taxation of FX (separate self-assessment, 20.315%): National Tax Agency No.1521 Taxation of foreign-exchange margin trading (FX) (in Japanese)
- Special provision for taxation of miscellaneous income, etc. related to futures trading (scope of offsetting): National Tax Agency No.1522 (in Japanese)
- Loss carryover deduction (3 years, continuous filing): National Tax Agency No.1523 (in Japanese)
* This article is general information, not investment solicitation or tax advice. Details such as the timing of taxation of swap points depend on the broker's specifications and individual circumstances, so please confirm with a tax office or a tax accountant.