Statutory definition

“...The value of crypto assets held on December 31 of the year shall be the amount valued using the valuation method selected by the person for crypto assets (if no valuation method was selected, or valuation was not performed using the selected method, the amount valued using the method prescribed by Cabinet Order from among the valuation methods).” (Income Tax Act, Article 48-2(1))

Profit on a crypto asset sale is calculated by subtracting acquisition cost from the sale proceeds. This provision determines the amount to subtract.

There are two key points. First, the amount is not automatically determined; it depends on “the valuation method selected by the person for crypto assets.”The taxpayer chooses the method.That is the premise. Second, the parenthetical provision says that, “if no valuation method was selected” or “valuation was not performed using the selected method,” the “method prescribed by Cabinet Order” applies.

Which methods are available, how do you select one, and which applies if you do not? The answers all appear in the income tax Order, as Article 48-2(2) states: “The types of valuation methods that may be selected under the preceding paragraph, the procedures for selection, and other necessary matters concerning valuation of crypto assets shall be prescribed by Cabinet Order.”

Overview

What is the total average method?

“The total average method (meaning a method under which crypto assets (crypto assets prescribed in Article 48-2(1) of the Act; hereinafter the same in this Subsection) are distinguished by type, and, for assets of the same type, the total acquisition cost of assets of that type held on January 1 of the year plus the total acquisition cost of assets of that type acquired during the year is divided by the total quantity of those crypto assets to determine acquisition cost per unit).” (Order for Enforcement of the Income Tax Act, Article 119-2(1)(i))

The calculation uses three inputs: total acquisition cost of assets held at the beginning of the year, total acquisition cost of assets acquired during the year, and “the total quantity of those crypto assets.” Add the first two and divide by the total quantity to obtain acquisition cost per unit for the year. The denominator is not the quantity remaining at year-end; it includes assets sold during the year.

Under this method,the unit cost is not finalized until the year ends.A large additional purchase in December changes even the unit cost of assets sold in January. On the other hand, recordkeeping is simpler because only the year's total acquisition costs and quantities need to be compiled.

What is the moving average method?

“The moving average method (meaning a method under which crypto assets are distinguished by type, and, for assets of the same type, when further assets of that type are acquired, the initial acquisition cost per unit is deemed revised to the average unit cost calculated from the quantities and acquisition costs of the assets held at that time and the newly acquired assets; thereafter, acquisition cost per unit is deemed revised in the same way upon each further acquisition of assets of that type, and the acquisition cost per unit deemed revised on the date closest to December 31 of the year is used as acquisition cost per unit).” (Order for Enforcement of the Income Tax Act, Article 119-2(1)(ii))

The provision uses “revised” three times. When more assets of the same type are acquired, unit cost is deemed revised to the “average unit cost calculated from the quantities and acquisition costs” of existing and newly acquired assets, and this is repeated at each acquisition. The “acquisition cost per unit deemed revised on the date closest to December 31 of the year” then becomes the unit cost for that year.

In plain terms,recalculate average unit cost each time you buy more, and use the latest unit cost.That is the method. It differs from the total average method in when unit cost is determined. Since unit cost is determined at each acquisition, you can calculate the cost of a sale even during the year. If there is no acquisition in December, the unit cost on the year's last acquisition date becomes the year-end unit cost.

What counts as an “acquisition”?

“Acquisitions prescribed in the items of the preceding paragraph shall not include acquisition of other crypto assets temporarily needed when intending to purchase or sell crypto assets or exchange them for crypto assets of a different type.” (Order for Enforcement of the Income Tax Act, Article 119-2(2))

Both the total average and moving average methods change unit cost by counting acquisitions. The calculation cannot be settled unless it is clear what counts as an acquisition.

The provision envisages cases in which the desired crypto asset cannot be purchased directly and another crypto asset is used as an intermediate step. An acquisition made merely in transit does not count as an “acquisition” for the total average or moving average calculations.

This treatment also applies to notification, because Article 119-3(3) of the Order says: “The provisions of paragraph (2) of the preceding Article shall apply mutatis mutandis to acquisitions prescribed in the preceding paragraph.”

By when, and to whom, must notification be filed?

“A valuation method for crypto assets must be selected for each type.” (Order for Enforcement of the Income Tax Act, Article 119-3(1))

“...By the final income tax return filing deadline for the year in which that date falls, for crypto assets of the same type, the taxpayer must notify the district director of the tax office with jurisdiction over the place of tax payment in writing of the method to be applied from among the valuation methods prescribed in paragraph (1) of the preceding Article.” (Order for Enforcement of the Income Tax Act, Article 119-3(2))

These two provisions identify four elements of notification. The unit iseach type of crypto asset;the deadline isthe final income tax return filing deadline for the year of acquisition;the recipient isthe district director of the tax office with jurisdiction over the place of tax payment;and the form iswritten notification.The deadline is the tax return filing deadline for the year of acquisition, rather than a period counted from the acquisition date.

Also consider the parenthetical wording in paragraph (2): “excluding cases in which notification under this paragraph was required for crypto assets of the same type in or before the year preceding the year of acquisition.” If notification for the same type was already required in an earlier year, this obligation does not apply. It does not require a fresh notification whenever more of the same type is purchased.

Conversely,the year in which you first acquire a type you have not previously heldis the year to consider filing a notification.

What happens if no notification is filed?

“The method prescribed by Cabinet Order referred to in Article 48-2(1) of the Act (Calculation of the cost of transferred crypto assets, etc. and their valuation methods) shall be valuation at acquisition cost calculated using the total average method listed in Article 119-2(1)(i) (Crypto asset valuation methods).” (Order for Enforcement of the Income Tax Act, Article 119-5(1))

This specifies the “method prescribed by Cabinet Order” mentioned in the parentheses in Article 48-2(1) of the Income Tax Act.Total average methodIt is.

Failure to file a notification does not make the calculation impossible or cause the loss of a benefit. It simply means that the total average method applies. Conversely,notification is required if you wish to use the moving average method.That is the implication.

Paragraph (2) then provides that, where valuation did not follow the selected method, if the resident's actual method is either the total average or moving average method and the tax office director finds that it “allows the amount of business income or miscellaneous income for each year to be calculated appropriately,” the director “may make a reassessment or determination.” The parenthetical wording also includes the total average method that residents who filed no notification are required to use.

However, the subject is “the tax office director,” and the operative wording is “may.” This does not give taxpayers freedom to reselect their method at will.

How can the selected method be changed?

“A resident wishing to change the valuation method selected for crypto assets (including the valuation method prescribed in paragraph (1) of the following Article that a person who did not notify a valuation method is required to use) must obtain approval from the district director of the tax office with jurisdiction over the place of tax payment.” (Order for Enforcement of the Income Tax Act, Article 119-4(1))

A change requiresapproval.Selection requires notification, but a change requires approval.

The parenthetical reference to “the valuation method prescribed in paragraph (1) of the following Article” means the total average method. Someone who has never filed a notification and now wishes to use the moving average method is also “wishing to change” the method and needs approval.

Paragraph (2) applies the procedures for changing inventory valuation methods mutatis mutandis, replacing “amount of business income” with “amount of business income or miscellaneous income.”

Points that require care in practice

• Consider holdings of the same asset spread across multiple exchanges or wallets. The provision says to “distinguish by type”; it does not instruct taxpayers to distinguish by storage location.
• Consider using another crypto asset as an intermediate step to purchase the intended asset. Article 119-2(2) excludes this from “acquisitions” for calculation purposes, and Article 119-3(3) applies that treatment to notification as well.
• Consider what to include in acquisition cost. For purchased crypto assets, Article 119-6(1)(i) specifies “the purchase price (where there are purchase commissions or other expenses incurred to purchase the crypto assets, the amount including those expenses).”
• Consider acquisition by inheritance or similar succession. For gifts effective on death to an heir, inheritance, universal bequests, and specific bequests to an heir, Article 119-6(2)(i) carries over the amount valued at death using the method the decedent was required to apply. For other gifts or bequests, including ordinary lifetime gifts, acquisition cost is market value at the time of the gift or bequest. Verify separately the acquisition cost carried over and the valuation method selected by the recipient.
• Consider cases where no record remains of whether a notification was filed. Without notification, the total average method applies, so keeping a copy supports calculations in later years.
• The system itself is also changing. Key points of the FY2026 tax system revision outline sets out a review of the taxation framework for individuals' crypto assets. The outline is not legislation itself, so the finalized provisions must be checked in the amended law.

Legal basis

• Income Tax Act, Article 48-2(1) (Calculation of the cost of transferred crypto assets, etc. and their valuation methods) / Quoted wording: “The value of crypto assets held on December 31 of the year shall be the amount valued using the valuation method selected by the person for crypto assets (if no valuation method was selected, or valuation was not performed using the selected method, the amount valued using the method prescribed by Cabinet Order from among the valuation methods).”
• Income Tax Act, Article 48-2(2) (Same) / Quoted wording: “The types of valuation methods that may be selected under the preceding paragraph, the procedures for selection, and other necessary matters concerning valuation of crypto assets shall be prescribed by Cabinet Order.”
• Order for Enforcement of the Income Tax Act, Article 119-2(1)(i) (Crypto asset valuation methods) / Quoted wording: “A method under which the total acquisition cost of crypto assets of the same type held on January 1 of the year plus the total acquisition cost of crypto assets of that type acquired during the year is divided by the total quantity of those crypto assets to determine acquisition cost per unit.”
• Order for Enforcement of the Income Tax Act, Article 119-2(1)(ii) (Same) / Quoted wording: “Thereafter, acquisition cost per unit is deemed revised in the same way upon each further acquisition of crypto assets of the same type, and the acquisition cost per unit deemed revised on the date closest to December 31 of the year is used as acquisition cost per unit.”
• Order for Enforcement of the Income Tax Act, Article 119-2(2) (Same) / Quoted wording: “Acquisitions prescribed in the items of the preceding paragraph shall not include acquisition of other crypto assets temporarily needed when intending to purchase or sell crypto assets or exchange them for crypto assets of a different type.”
• Order for Enforcement of the Income Tax Act, Article 119-3(1) (Selection of a crypto asset valuation method) / Quoted wording: “A valuation method for crypto assets must be selected for each type.”
• Order for Enforcement of the Income Tax Act, Article 119-3(2) (Same) / Quoted wording: “By the final income tax return filing deadline for the year in which that date falls, for crypto assets of the same type, the taxpayer must notify the district director of the tax office with jurisdiction over the place of tax payment in writing of the method to be applied from among the valuation methods prescribed in paragraph (1) of the preceding Article.”
• Order for Enforcement of the Income Tax Act, Article 119-3(3) (Same) / Quoted wording: “The provisions of paragraph (2) of the preceding Article shall apply mutatis mutandis to acquisitions prescribed in the preceding paragraph.”
• Order for Enforcement of the Income Tax Act, Article 119-4(1) (Procedures for changing crypto asset valuation methods) / Quoted wording: “A resident wishing to change the valuation method selected for crypto assets (including the valuation method prescribed in paragraph (1) of the following Article that a person who did not notify a valuation method is required to use) must obtain approval from the district director of the tax office with jurisdiction over the place of tax payment.”
• Order for Enforcement of the Income Tax Act, Article 119-5(1) (Statutory Crypto Asset Valuation Method) / Quoted wording: “The method prescribed by Cabinet Order in Article 48-2(1) of the Act (Calculation of Crypto Asset Transfer Costs and Methods of Valuation) shall be valuation at acquisition cost calculated using the total average method specified in Article 119-2(1)(i) (Methods of Valuation of Crypto Assets).”
• Order for Enforcement of the Income Tax Act, Article 119-5(2) (Same) / Quoted wording: “May make a reassessment or determination based on the amount of business income or miscellaneous income for each year calculated using the valuation method actually applied.”
• Order for Enforcement of the Income Tax Act, Article 119-6(1)(i) (Acquisition Cost of Crypto Assets) / Quoted wording: “the purchase price (plus purchase commissions and other acquisition expenses, if any).”
• Order for Enforcement of the Income Tax Act, Article 119-6(2)(i) (Same) / Quoted wording: “The amount valued at the time of the decedent's death using the valuation method that the decedent was required to apply to those crypto assets.”

Additional Authorities and Sources

• National Tax Agency: Tax Treatment of Crypto-Assets, etc. (FAQ), December 26, 2025
• Income Tax Act (e-Gov)
• Order for Enforcement of the Income Tax Act (e-Gov)

Sources checked September 7, 2026.