Where This Edition Fits

On December 20, 2024, the National Tax Agency published Tax Treatment of Crypto Assets (Information). This was the ninth crypto asset FAQ edition, revised almost one year after the December 25, 2023 edition.

There are 47 questions, two more than the previous 45. The additions are 1-4, Donations in Crypto Assets, in Chapter 1, Matters Common to Income Tax and Corporation Tax, and 3-1-11, Crypto Assets Qualifying as Specified Transfer-Restricted Crypto Assets, in Chapter 3, Corporation Tax. Both are marked Added December 2024 in the contents.

Both were inserted within chapters rather than at the end, shifting subsequent question numbers by one. Although only two questions were added, numbering changed across broader sections. For the overall revision history, see History of Crypto Asset FAQ Revisions summarizing in

Overview

Why Was a Question on Specified Transfer-Restricted Crypto Assets Needed?

The background to new question 3-1-11 is the FY2024 Outline of Tax Reform. Its corporate taxation chapter provides that market crypto assets held by corporations with transfer restrictions and other conditions may be valued at year-end using either the cost method or market value method elected by the corporation.

A note defines crypto assets subject to transfer restrictions and other conditions through two requirements. First, certain transfer restrictions must apply, such as technical measures preventing transfer to others. Second, the holder or another relevant party must notify a crypto asset exchange or take similar steps so that an authorized payment service provider association publicly discloses the restriction. A restriction alone is insufficient; external visibility is also required.

The outline also specifies how to elect. Choose the valuation method for each crypto asset type and notify the district director of the competent tax office by the final return deadline for the fiscal year of acquisition. Without an election, the cost method applies. The underlying issue of taxation merely from holding assets is covered in Are companies taxed just by having them? We are dealing with that.

From Self-Issued Tokens to Tokens Issued by Other Companies

Reading this amendment alongside the preceding year's makes its direction clear. The FY2023 Outline of Tax Reform excluded certain year-end corporate crypto holdings from mark-to-market gains and losses if they met two conditions: they were self-issued and continuously held from issuance, and transfer restrictions had applied continuously from issuance. This led to new question 3-1-9, Crypto Assets Qualifying as Specified Self-Issued Crypto Assets, in the December 2023 FAQ.

The two years differ as follows.

• The FY2023 measure was limited to self-issued crypto assets. The FY2024 measure has no such limitation, covering assets issued by others if transfer restrictions apply.
• The FY2023 measure excluded assets from mark-to-market valuation. The FY2024 measure allows a corporate election between cost and market value. Its structure is a choice rather than simple inclusion or exclusion.
• The FY2024 outline also provides that self-issued crypto assets continuously held from issuance use the cost method. Self-issued assets therefore remain on cost without an election.

The previous year concerned self-issued tokens; this year extends to tokens issued by others. Scope for avoiding year-end mark-to-market valuation expands from the issuer's own holdings to corporations generally holding transfer-restricted tokens. The relationship between restrictions and valuation is discussed in Transfer Restrictions Can Exclude Assets from Mark-to-Market Valuation, while self-issued assets are discussed in Will there be any inclusion income tax charged on tokens issued by myself? for an overview.

Giving Was Added to the Ways of Disposing of Crypto Assets

The other addition is 1-4, Donations in Crypto Assets. Its location reveals the gap it fills.

Questions 1-1 through 1-3 have appeared since the first edition and each involve giving up crypto assets in exchange for something. Question 1-4 follows them but differs because nothing is received. Giving joins selling, spending, and exchanging.

The heading does not reveal the answer to this question. This article confirms only its addition to the contents and its location.

What a One-Number Shift Means

The renumbered questions are as follows.

• Former 1-4, Acquisition Cost of Crypto Assets, became 1-5, followed by acquisition through a split at 1-6, mining and similar acquisition at 1-7, and transactions by nonresidents or foreign corporations at 1-8.
• Former 3-1-11, Crypto Asset Margin Transactions, became 3-1-12, followed by recognition timing for transfer gains and losses at 3-1-13 and deemed settlement gains and losses at 3-1-14.
• Chapter 2, Income Tax, section 3-2 on electronic payment instruments, and Chapters 4 onward were not renumbered.

This may be the most significant practical effect. December 2023 Edition or earlier versions cited in articles and internal notes now have question numbers shifted by one. An article calling acquisition cost question 1-4 refers to 1-5 in this and later editions. Check the heading as well as the number.

Where Are the Nine Updated Questions Concentrated?

Besides the two additions, nine questions carry an Updated December 2024 note.

Seven of the nine are consecutive questions 3-1-2 through 3-1-8. This updates a continuous corporate tax section on year-end market valuation. Questions on active markets, locked assets, lent assets, and borrowed assets appear shortly before new question 3-1-11. What is "an active market for crypto assets"? Please also see.

However, the notes establish only that the questions were revised. This article has not confirmed which passages changed or how.

Points that require care in practice

• The choice between cost and market value is tied to a notification deadline. A method is chosen for each crypto asset type and notified by the final return deadline for the acquisition year, so beginning consideration only at year-end may leave insufficient time.
• Without an election, the cost method applies. Inaction does not preserve mark-to-market treatment, so check that the result matches your expectation.
• Transfer restrictions alone are insufficient; requirements include notification for public disclosure by an authorized payment service provider association. Preventing transfer and completing the required procedures are separate matters.
• Self-issued tokens and tokens issued by others rely on different amendments. Identifying which is being discussed at the outset reduces confusion.
• Materials citing the December 2023 edition or earlier have shifted question numbers. Update them for this edition or identify the edition cited.

Sources

• National Tax Agency: Tax Treatment of Crypto Assets (Information), December 20, 2024 PDF
• National Tax Agency: Archived Information on Crypto-Assets List