From April 1, 2024, Japanese companies will no longer have to pay taxes on unrealized profits from their cryptocurrency holdings. This change follows the approval by the Council of Ministers of a revision of the national budgetary framework for digital assets.
Good time
The government announced this new tax reform on December 22, after a cabinet meeting. The adjustments are expected to take effect on April 1, 2024, the start of Japan’s fiscal year and, more importantly, just before Bitcoin’s halving.
Previously, companies had to report cryptocurrencies they received from third parties and disclose the difference between their market value and their book value, regardless of whether the company sold the cryptocurrency.
Under the revised rules, companies will now only be taxed on the profits made from the actual sale of cryptocurrencies. This aligns your tax process with the obligations imposed on retail investors under Japanese tax law.
The timing is very good because Japanese companies can buy Bitcoin and wait a long time after the halving to sell it again. In the meantime, they do not have to pay tax on the fictitious proceeds.
The Japanese government released details of its 2024 budget reform plan on December 14, after the plan was first presented by the country’s financial services company on August 31.
What are unrealized gains?
Unrealized profits are profits that have not yet been recognized or actually received. For cryptocurrencies, the unrealized gain is the profit made from the difference between the purchase price and the current market value of the cryptocurrency.
In the Netherlands, unrealized profits from cryptocurrencies are generally not taxed. This means that you do not have to pay taxes on the profits made on the difference between the purchase price and the current market value of your cryptocurrency. However, crypto is part of your assets in the Netherlands and if the value of your assets exceeds a certain threshold, you have to pay tax.
Moreover, the tax on unrealized gains in Japan is comparable to what we call fictitious returns. If you would like to know more about this, we would like to refer you to our friends at the Tax Authorities.
Source: BTC Direct
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Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
