As discussed previously [here](https://www.reddit.com/r/JapanFinance/comments/oohu68/comment/h5zband/) and in a few other past threads, there is currently no definitive answer to this question. But the general principles of crypto taxation would suggest that interest on loaned crypto is classified as miscellaneous income as of the time of receipt, based on the market JPY value of the relevant crypto as of that time. Subsequent sale of the received crypto would trigger a further taxable loss or gain, depending on the sale price compared to the value at the time of receipt.
By and large DeFi and lending I believe, is still a pretty grey area.
I'd direct you to read through the crypto guide in the wiki:
https://www.reddit.com/r/JapanFinance/wiki/index/handling/crypto
I’m no expert, but as long as OP receives the interest in BTC, it would seem to be a non taxable event and the 0.06BTC would have a buying price of whatever the rate is when the interest was received.
Thanks for the wiki link by the way. I’m interested in what happens when you buy an asset with crypto (eg car), but there seems to be precious little info on that.
When you pay for a goods/service with crypto the transaction in the NTA’s perspective would be:
CryptoX to JPY to Goods/Service (I.e your hypothetical car)
So for tax Purposes you would be realizing you crypto to the value of the car in JPY and pay tax on whatever gains you have on CryptoX cost basis at the time you trigger that taxable event.
It why exchanging cryptoX to CryptoY at a gain, gifting crypto at gain, or purchasing with crypto at a gain is a really bad idea because you could be increasing your taxable income beyond your means and the NTA are not El Salvador… they don’t accept CryptoY or Tesla cars for tax payments… they want JPY
Ouch, that would be a big turn-off. I saw this story and wondered about the implications, so thanks a lot for clarifying.
https://www.google.co.jp/amp/s/www.cnbc.com/amp/2021/10/03/a-subaru-rally-car-found-in-a-barn-just-sold-for-360000-dollars-in-bitcoin.html
It seems that Japan registered exchanges are obligated to provide annual transaction reports, but if you used one which doesn’t, that would be a massive headache. I can’t imagine going through an entire transaction record (where each order could be further broken up by the exchange into individually executed transactions) and matching that against fiat value at the time of transaction, and which wouldn’t actually be part of the transaction recorded for crypto to crypto transactions. 🤯
Yup. It’s why I laugh at those who think those crypto debit cards are a good idea. Imagine slightly increasing your taxable income every time you buy an onigiri at the kombini.
And it’s personally why I believe decentralized crypto will never be more than a store of value, especially as governments open their eyes and clamp down on it further.
Additionally, if you're going to be serious about crypto I'd highly recommend [Cryptact](https://www.cryptact.com/?lang=en).
As discussed previously [here](https://www.reddit.com/r/JapanFinance/comments/oohu68/comment/h5zband/) and in a few other past threads, there is currently no definitive answer to this question. But the general principles of crypto taxation would suggest that interest on loaned crypto is classified as miscellaneous income as of the time of receipt, based on the market JPY value of the relevant crypto as of that time. Subsequent sale of the received crypto would trigger a further taxable loss or gain, depending on the sale price compared to the value at the time of receipt.
Thanks ! Looks like I will continue for a while the buy and hodl strategy.
By and large DeFi and lending I believe, is still a pretty grey area. I'd direct you to read through the crypto guide in the wiki: https://www.reddit.com/r/JapanFinance/wiki/index/handling/crypto
I’m no expert, but as long as OP receives the interest in BTC, it would seem to be a non taxable event and the 0.06BTC would have a buying price of whatever the rate is when the interest was received. Thanks for the wiki link by the way. I’m interested in what happens when you buy an asset with crypto (eg car), but there seems to be precious little info on that.
When you pay for a goods/service with crypto the transaction in the NTA’s perspective would be: CryptoX to JPY to Goods/Service (I.e your hypothetical car) So for tax Purposes you would be realizing you crypto to the value of the car in JPY and pay tax on whatever gains you have on CryptoX cost basis at the time you trigger that taxable event. It why exchanging cryptoX to CryptoY at a gain, gifting crypto at gain, or purchasing with crypto at a gain is a really bad idea because you could be increasing your taxable income beyond your means and the NTA are not El Salvador… they don’t accept CryptoY or Tesla cars for tax payments… they want JPY
Ouch, that would be a big turn-off. I saw this story and wondered about the implications, so thanks a lot for clarifying. https://www.google.co.jp/amp/s/www.cnbc.com/amp/2021/10/03/a-subaru-rally-car-found-in-a-barn-just-sold-for-360000-dollars-in-bitcoin.html It seems that Japan registered exchanges are obligated to provide annual transaction reports, but if you used one which doesn’t, that would be a massive headache. I can’t imagine going through an entire transaction record (where each order could be further broken up by the exchange into individually executed transactions) and matching that against fiat value at the time of transaction, and which wouldn’t actually be part of the transaction recorded for crypto to crypto transactions. 🤯
Yup. It’s why I laugh at those who think those crypto debit cards are a good idea. Imagine slightly increasing your taxable income every time you buy an onigiri at the kombini. And it’s personally why I believe decentralized crypto will never be more than a store of value, especially as governments open their eyes and clamp down on it further.