H2. A Night in Tokyo, Three Years Ago
It was three years ago. On a work trip to Tokyo, I caught up with an old colleague, Seongmin, someone I hadn't seen in ages. He'd already settled in Tokyo by then, working at an IT company, and like me, he'd been holding Bit coin for years. We sat down at a tiny izakaya in Shinjuku, and the moment he put his beer down, he came straight out with it.
"I sold some coins last year and lost over half of it to tax."
I thought I'd misheard him.
"Over half? Seriously?"
"Yeah. Got classified as miscellaneous income, so it hit as high as 55% once you add income tax and residents' tax together."
That conversation stuck with me for a long time afterwards. And recently, seeing the news that Japan is looking to change this system, I found myself thinking back to that night all over again.
A realistic 8K image, pastel rainbow tones. A wide shot from behind of two people sitting across from each other at a small izakaya in Shinjuku, deep in conversation. Warm lighting blending softly with the Tokyo night skyline outside the window. 'Kim' engraved in the corner.
H2. The Number 55%, and a System Now Changing
H3. Why Was It So High?
Thinking back over what Seongmin told me that night, Japan had long classified crypto gains as "miscellaneous income".
That comes with a progressive tax structure, meaning the more you earn, the steeper the rate climbs. Add residents' tax on top of that, and it could reach as high as 55%.
"If it'd been shares, it would've just been 20%, " Seongmin said that night, with a faintly bitter laugh. "Just because it's crypto, the tax ends up more than double."
That line stuck with me, mostly because it felt strange that the same kind of asset could end up with such wildly different outcomes, purely based on what category it got filed under.
A realistic 8K image, pastel rainbow tones. A close-up of a handwritten note comparing "miscellaneous income, up to 55%" against "shares, 20%", with a pen tip pointing between the two figures. 'Kim' engraved in the corner.
H2. And Now, Things Are Starting to Shift
Lately I've heard that things are gradually changing. Word is the Japanese government is pushing reforms to bring in a flat 20% tax rate for specific crypto assets traded on registered exchanges.
There's also talk of a new provision allowing losses to be carried forward for three years and deducted against future gains.
Full implementation still looks some way off though, and things like NFTs or DeFi assets that sit outside the new rules will apparently keep being taxed the old way for now.
I passed the news on to Seongmin by text.
"Heard your country's changing the tax rules? Dropping to 20%, apparently."
His reply came a while later.
"Yeah, saw that too. It's not fully in effect yet though, so probably worth waiting and seeing. Still, when I think about that 55% I paid, at least it's changing for the better now."
There was still a hint of that old bitterness from three years ago sitting somewhere in his casual reply.
H2. What the Extremes Teach You
Back in Melbourne, flipping open my diary, I went over Japan's case again. In Australia, holding for just twelve months gets you a fifty per cent discount.
In Japan, that same asset, filed under miscellaneous income, could be taxed away at up to 55%. Hearing Seongmin's story again drove home just how extreme the difference can be, purely depending on which country you happen to be living in.
At the same time, it struck me that the most extreme cases often teach you the most.
Fifty-five per cent is a frightening number, but the question buried inside it — why it got classified that way in the first place — turned out to be a useful benchmark for understanding other countries' systems too.
A realistic 8K image, pastel rainbow tones. A close shot of a hand writing notes about the Japan case into a diary, on a Melbourne desk under soft evening light. 'Kim' engraved in the corner.
H2. Thinking of Tokyo Again
One last thing Seongmin said that night at the izakaya came back to me.
"Still, at least I learned something from it. Next time I'll know better before I sell."
That line stuck with me, mostly because he chose to look forward instead of dwelling on resentment towards the tax itself. I couldn't help thinking that attitude is probably what separates the people who actually last in this market from everyone else.
Kim's Rule for Today: "The harshest cases teach you the most."
Next episode: Next time, through a conversation with a traveller I met in Europe, we look at Germany's completely opposite approach — a system built around tax exemption instead.
Disclaimer
This content is a creative narrative based on general tax information confirmed as at July 2026, combined with personal experience. Conversations between characters are reconstructed from memory for storytelling purposes.
Japan's crypto tax system is currently under reform, and both the timing and specific conditions of implementation are subject to change.
Actual applicable rates vary depending on individual income levels and transaction types — please confirm current details through the National Tax Agency of Japan or a local tax professional.
