Currently in Japan, regulatory preparations are being discussed toward lifting the domestic ban on crypto-asset ETFs. However,Explanation published by the Financial Services Agency in October 2025Currently, the creation and sale of crypto asset ETFs are not yet permitted within Japan.

Meanwhile, in the United States,The listing and trading of spot Bitcoin ETFs was approved on January 10, 2024.About two and a half years ago. In this paper, we mainly focus on US trust-type ETFs that hold physical Bitcoin. Futures-type or corporation-type products are not treated in the same manner.

So, how are profits taxed in Japan when a Japan resident buys that U.S. ETF and sells it on a U.S. stock exchange?

To cut to the chase,In this paper, we consider that if the legal structure of the subject product satisfies the requirements described below, the capital gains will be subject to the separate self-assessment taxation for listed shares, etc. The key is how Japanese law classifies the rights held.

Even if not yet approved in Japan, there are cases where residents of Japan hold them.

The inability to create and sell a product domestically and a Japanese resident acquiring that product overseas are not the same issue.

When trading through a foreign securities firm, Japanese residents may be able to acquire US crypto asset ETFs, provided certain conditions are met, such as the broker accepting Japanese residents and handling the eligible products. In fact, the tax inquiry discussed below also covers the sale of US Bitcoin ETFs by Japanese residents.

At this time, it cannot be said that the act of acquisition by the purchaser is immediately illegal solely on the grounds that it has not yet been approved domestically. What should be checked includes the registration of the seller conducting the sales and solicitation, the notification of the issuer, and the transaction channels.Financial Services Agency supervisory guidelinesAlso, it shows certain exceptions, such as when a foreign securities dealer accepts orders without soliciting domestic parties.

However, this does not mean that "any foreign business operator can freely sell to residents of Japan." It is necessary to check whether there is solicitation targeting domestic consumers and whether the requirements for statutory exceptions are met.

Being able to purchase overseas products and meeting the regulations for sales targeting Japan are separate issues, which is similarly true for stocks and other assets. However, different laws apply to insurance and physical crypto assets respectively. Regarding the sale of physical crypto assets, there are also business regulations under the Payment Services Act. In legal terms, "crypto asset exchange business" includes selling (trading), and conducting such sales as a business targeting Japanese residents without obtaining the necessary registration is not permitted.The Financial Services Agency explains that even overseas businesses must register in Japan if they engage in crypto asset exchange services for Japanese residents.. EspeciallyArticle 186 of the Insurance Business Act also includes regulations on the policyholder side regarding foreign insurance.Therefore, it cannot be generalized that "the purchasing side is always fine."

It's not that tax laws don't exist, it's that it's hard to figure out which provision applies.

You might feel that since the product is not yet selling in Japan, Japanese tax law does not anticipate its sale.

However, Japanese tax law has comprehensive provisions dealing with foreign stocks, investment trusts, and trust beneficiary rights. Even for new products, their structures are examined and fitted into existing regulations.Just because a product has not yet been officially released domestically does not mean tax laws do not apply to it.

The difficulty is that the product name "US crypto asset ETF" alone does not make it clear which Japanese regulatory category it falls under. Even though it is traded as an ETF in the US and tracks the price of Bitcoin, investors do not necessarily hold Bitcoin directly. What they hold may be rights in a trust.

Based on the scope of the published materials reviewed in this paper, no written response has been found in which the National Tax Agency itself simultaneously outlines the structure of representative U.S. spot crypto asset ETFs and their tax classification in Japan.National Tax Agency's guide on cryptocurrencyIt is difficult to judge even these foreign products with just that.

Is it okay to process it as "miscellaneous income because it's crypto" just by looking at the product name? Or is it subject to separate taxation like stocks and investment trusts? In practical work, this application is what causes hesitation in judgment.

Professor Izumi explains that it will be subject to separate taxation as a corporate taxation trust.

Professor Junya Izumi of the Faculty of Law at Toyo University, who is well-known for his tax research on crypto assets, has suggested in a paper examining the taxation of U.S. Bitcoin ETFs that past gold ETF cases can be used to connect them to separate taxation as corporate tax trusts.

Furthermore,It reports that on December 5, 2024, a verbal response was received from the National Tax Agency, via the tax office, stating that it will be subject to separate taxation.The inquiry is about a case where a Japanese resident sells their holding in a U.S. Bitcoin ETF. The explanation considers the fact that it is a security-issuing trust and the exclusion requirements, and then connects this to the provision that treats beneficiary rights in a corporation-taxable trust as shares or investments.

Professor Junya Izumi's report that he received a verbal response from the National Tax Agency regarding the sale of US Bitcoin ETFs.

Read Professor Junya Izumi's original post on X (December 6, 2024)

The text shown before the embed is a summary by this article. If it is not displayed, you can read the original post from the link.

This is not merely an academic theory, but a practical report of having received a response to an individual inquiry. However, it is not an official published document by the National Tax Agency, but rather a summary introduced by the recipient of the response. Since not all of the target issues and underlying facts are made public, it does not necessarily apply as-is to other ETFs.

Furthermore, this is a verbal response rather than a written one. Therefore, in tax practice, even when the tax treatment of such specific products is not explicitly stated in official authorities' published documents, we must interpret existing laws and regulations, apply them to the specific facts, and proceed with tax filing operations.

Gold ETFs had a similar problem.

Clues to understanding the debate surrounding cryptocurrency ETFs can be found in gold ETFs.

The US gold ETF "GLD (SPDR Gold Trust)" was for Japan in 2012It is disclosed as foreign investment trust beneficiary certificates in the annual securities report.This is a statutory disclosure by the issuer and is not an individual certification by the National Tax Agency. Furthermore, it cannot be determined solely from this 2012 document that the same classification applied prior to that time.

2008 Inquiry Cases

Pages 41 to 42 of Professor Izumi's paper and footnote 51Osaka Regional Taxation Bureau Ruling Information No. 127 (Taxation First Information No. 66, September 29, 2008)is introduced. The subject line is "Regarding the eligibility of shares of the physical gold-backed ETF 'SPDR Gold Shares' for inclusion in a specified account."

Introduction by thesisRegarding the gold ETFs at that time, it was explained that because gold was not listed as a specified asset, they did not fall under foreign investment trusts, nor did they fall under trusts issuing specified beneficiary certificates based on the Japanese Trust Act; therefore, they were categorized as corporate taxation trusts and became eligible for specified accounts.

The original text of this National Tax Agency document could not be obtained through the public web research for this paper. The paper states that it is available on TAINS. Therefore, the content of the response is an introduction based on the paper, and has not been independently verified by us as the original. Furthermore, it has not been confirmed as a case of trading ETFs overseas that are unregistered and unsold in Japan.

When independently checking the materials from the Financial Services Agency at that time

On the other hand, regarding the institutional revisions, you can check the primary sources from the Financial Services Agency directly.Overview of the December 2008 RevisionIt explains that, as an expansion of specified assets, physical commodities and futures such as gold are being added to the main investment targets of investment trusts.

Furthermore,Comparison table of the old and new Cabinet Order, page 96Now, Article 3, Item 9 of the Investment Trusts Act Enforcement Order has been newly established to list "products."FSA enforcement explanationAccording to this, the effective date of the amendment is December 12, 2008. The response from the National Tax Agency that was introduced was issued in September prior to that.

What we want to distinguish here is the fact that gold was explicitly added as a specific asset, and the question of how to interpret the foreign trusts prior to that. The mere addition of the provision does not mean there was no dispute regarding all previous interpretations. However, the introduced National Tax Agency materials at least indicate the authorities' judgment that it is not applicable.

What we can learn from past examples of gold ETFs is that even for similar investment products, the path to taxation changes depending on the target assets and trust classifications under Japanese laws and regulations. Simply copying the current classification of gold ETFs to crypto ETFs is not enough to explain it.

Even in the case of a corporate taxation trust, Japanese corporate tax is not necessarily incurred on the trust itself.

Corporate taxation trusts are a mechanism that subjects trust income to corporate tax. Article 4, Paragraph 1 and Article 4-2, Paragraph 1 of the Corporation Tax ActThis makes the trustee the taxpayer and treats the assets, liabilities, revenues, and expenses of each trust separately from the trustee's own property and other trusts, treating them as separate entities. In other words, even if the trust itself does not have legal personality, it is a system that imposes corporate tax on the trust's income.This tax mechanism is also explained in the National Tax Agency's Q&A examples.。

However, the fact that it is a mechanism subject to corporate tax and whether Japanese corporate tax actually arises for a foreign trust are two different issues.

Explanation by the National Tax AgencyAccording to, securities-issuing trusts based on foreign law may also fall under the category of corporate-taxable trusts. On the other hand, when treated as a foreign corporation, the scope of income subject to Japanese corporate tax is limited. If there is no taxable income in Japan, no Japanese corporate tax will be incurred.

The mere fact that a Japanese resident holds a beneficiary interest does not mean that Japan's corporate tax is imposed on the entire overseas investment income of a foreign fund.

And on the investor side,Item 4 of Article 6-3 of the Income Tax ActTherefore, beneficiary rights in a corporate taxation trust are, in principle, deemed to be shares or equity investments. As for interests listed on a US exchange,Taxation provisions on the transfer of listed stocks, etc.leads to.

Taxation on the trust itself and taxation on the investor's capital gains must be considered separately.

How should we consider the possibility of it falling under the category of a foreign investment trust?

Another option being considered is foreign investment trusts.

Article 2, Paragraph 24 of the Investment Trust Actis a trust established under foreign law, and considers those "similar" to Japanese investment trusts as foreign investment trusts.

Japanese investment trusts have a requirement to invest primarily in specified assets, and the extent to which this requirement should be applied to foreign trusts is an issue.Financial Services Agency's 2019 responses (Nos. 22 to 26)provides individual judgments on the applicability to foreign investment trusts based on legal characteristics and investment policies.

Therefore, the interpretation that it falls under a foreign investment trust must also be examined in accordance with the structure of the product. However, past regulatory decisions regarding gold ETFs and,Financial Services Agency explanation linking the expansion of specified assets to the applicability of foreign investment trusts, is a material that emphasizes investment target requirements. Regarding trusts that mainly hold physical crypto assets, I do not believe that the foreign investment trust theory and the corporate taxation trust theory can be supported with equal strength.

Assuming it falls under a foreign investment trust, it is excluded from corporate taxation trusts as a collective investment trust. Even so, its beneficiary rightsis included in "stocks and other securities" for capital gains taxation purposesCapital gains from the sale of beneficiary certificates listed on the U.S. market are also subject to separate self-assessment taxation through this route.

Conclusion: The two classifications lead to the conclusion of separate taxation of capital gains.

To summarize the discussion so far, it is as follows:

The tax rates are for the year 2026. This assumes a market sale of ETF holdings through standard personal investing. Distributions, redemptions, in-kind exchanges, or products with different legal structures may not necessarily lead to the same conclusion.

Based on the above, regarding US trust-type spot crypto asset ETFs like the one discussed in this paper, it is considered that if a resident of Japan sells shares that meet these requirements, the profit will be subject to separate self-assessment taxation. Merely labeling something as a "crypto-asset-linked product" and treating it as miscellaneous income, just like the sale of actual crypto-assets, is not appropriate.

However, this is not proof that "any ETF will necessarily fall into one of these two categories." Confirming the trust agreement, securities issuance provisions, and exclusion requirements of individual products is a prerequisite for reaching a conclusion.

Also, overseas brokerage accounts usually do not have the Japanese tax-exempt/designated account system.A specified account is a system that simplifies calculation and tax filing.and it is not a requirement of separate taxation itself. Even when sold through an overseas account, profit and loss are calculated based on the acquisition cost, sales proceeds, and fees converted into Japanese yen, and in principle, they must be declared in Japan.

Pay attention to the timing of the legal revision's implementation as well.Explanation of the FY2026 Tax ReformAlthough public offering investment trusts and the like, with crypto-asset ETFs in mind, are beginning to appear, it cannot be read that the existing classification of foreign ETFs or capital gains of individuals have been uniformly settled by this amendment to the withholding tax on redemption proceeds and the like for corporate investors.

We would like the National Tax Agency and the Financial Services Agency to publicly release documents regarding representative foreign products, detailing the underlying product structure, applicable statutory provisions, reasons for classification, and the treatment both before and after the amendments. It is necessary not only to present individual verbal responses, but also to establish a state where investors and tax accountants can make judgments based on common materials.

Physical stocks are subject to comprehensive taxation, while ETFs are subject to separate taxation. Is that fair?

Here, the issue of tax equity remains. While comprehensive taxation is applied to spot crypto assets, if capital gains from US ETFs linked to their prices are subject to separate taxation, the tax burden will change depending on the form of investment, even for profits derived from the same rise in the price of Bitcoin.

Explanation by the National Tax AgencyGenerally, profits from the sale of crypto assets are classified as miscellaneous income, unless they fall under business income or a similar category. This comparison looks at transactions prior to the implementation of the tax reform regarding separate taxation for spot crypto assets. Under comprehensive taxation, income is combined with other sources and subject to progressive tax rates, meaning that the higher an individual's income, the greater the potential difference compared to the standard 20.315% separate self-assessment tax.

Although the profits are from economically similar investments, the tax burden varies depending on whether one holds the physical asset directly or through an ETF. This discrepancy is an issue that should be examined from the perspectives of tax fairness and "neutrality"—the principle that the tax system should not distort choices in investment methods.

However, this difference does not occur only in cryptoassets. The same structural difference already exists between physical gold and gold ETFs.

According to the National Tax Agency, profits from the sale of gold bullion are, in principle, subject to comprehensive taxation.. Meanwhile,Explanation of Mitsubishi UFJ Trust and Banking's Gold ETFTherefore, capital gains from the sale of ETFs are subject to the same 20.315% tax rate as listed stocks and other securities. The tax rates in the table are based on the assumption of a market sale in a taxable account in 2026.

However, capital gains from physical gold have an annual special deduction of 500,000 yen combined with other comprehensively taxed capital gains, and if the holding period exceeds 5 years, half of the long-term capital gains after the deduction is subject to comprehensive taxation. Therefore, ETFs do not necessarily carry a lighter tax burden. In addition, this physical gold deduction and long-term holding treatment do not apply to miscellaneous income from crypto assets.

Precedents for gold do not prove that the difference in tax burdens is fair. However, the fact that physical assets and ETFs have different tax systems can itself be seen in existing systems.We need to separate the policy issue of how to correct the difference in tax burden compared to physical assets from the interpretation issue of how ETF capital gains are taxed under current law. You cannot subject a fractional interest, which is subject to separate taxation under the law, to comprehensive taxation simply because its fairness is in question.

In future regulatory frameworks, it is desirable to consider physical assets and ETFs together and establish a system where the difference in tax burden based on the investment vehicle has a rational explanation.

Comparison: What happens if US or Singapore residents buy it?

Finally, let us compare the case where residents of different countries buy and sell the same US crypto asset ETF. Here, taking the US trust-based product IBIT, which holds spot Bitcoin, as an example, we consider an individual investing their own funds in a standard taxable account. Futures-type investments, corporate investments, and pension accounts are excluded. Furthermore, for examples other than Japan, it is assumed that the individual is a non-resident for Japanese tax purposes.

US: Taxation as a holder of Bitcoin through trusts

IBIT prospectusIt explains that, for US federal income tax purposes, assuming it is treated as a grantor trust, investors are viewed as holding their proportionate share of the Bitcoin within the trust. It is not structured to incur double corporate taxation at the trust level like a regular corporation. However, this classification is also explained with certain assumptions in the prospectus.

Regarding the capital gains,Short-term net capital gains are taxed at ordinary income progressive tax rates, while long-term gains are generally subject to federal tax rates of 0%, 15%, and 20% depending on income levels.are taxed. For certain high-income earners,3.81 TP3T Net Investment Income Taxis added, so state and local taxes must also be checked separately. Therefore, it is not simply a flat 20% across the United States.

Furthermore, even if investors do not sell their ETFs,If the trust disposes of bitcoin to pay expenses, gains or losses may be attributed to the investors.It is necessary to check not only the trading details but also the issuer's tax documents.

Singapore: Personal investment gains are generally tax-free, but check the U.S. side as well.

The Inland Revenue Authority of Singapore (IRAS)Profits from the trading of stocks and other financial instruments by individuals are generally not taxed, as they are considered to arise from personal investments.and explains. Investment in US ETFs, if it is a regular individual investment subject to capital gains, should also be considered in accordance with this general principle. This is not a response to a specific inquiry regarding IBIT.

Meanwhile, conducting transactions as a business,It is a different story if the profits fall under business income.It is. Just because you are using an overseas market does not mean it is automatically tax-exempt.

Furthermore, since it is a US ETF, we will also check how it is treated on the US side. Here, rather than US citizens or US tax residents, we are referring to income effectively connected with a US trade or business, orExceptions associated with staying in the United States for 183 days or more in a yearAssuming there are no such cases, as a general rule, capital gains from such investments by regular non-residents are not subject to US federal income tax, butDistributed income from U.S. sources and the like are treated differently.It is important not to confuse "capital gains" with "dividends and distributions."

What this comparison shows isEven for the same product, taxation varies depending on the investor's place of residence and how that country classifies the product.That is the case. Being treated as holdings through a trust in the United States does not mean the classification will be the same in Japan. For this reason, it is also necessary to clarify the reasoning leading to the conclusion regarding the classification in Japan.