FX-related taxes on overseas investments

[eagleyes]

You need to list up the Buy Price Paid x Exch Rate for each transaction

....

This is then taxed at the Capital Gains Tax Rate of 20.315% (15% National, 0.315% Reconstruction and 5% Residents' Taxes)

Thank you for the detailed steps. So you confirm this is the way it should be calculated? The problem is for stocks I purchased when I was not in Japan a long time ago I do not have the details. My broker I think only keep records for the past 2 years...

[Tkydon]

You need to list up the Buy Price Paid x Exch Rate for each transaction

....

This is then taxed at the Capital Gains Tax Rate of 20.315% (15% National, 0.315% Reconstruction and 5% Residents' Taxes)

Thank you for the detailed steps. So you confirm this is the way it should be calculated? The problem is for stocks I purchased when I was not in Japan a long time ago I do not have the details. My broker I think only keep records for the past 2 years...

You would have to go back and reconstruct the transactions from MUFG Kawase Site I sent you (They have rates all the way back to 1990) and maybe Yahoo Finance History...

[eagleyes]

Thanks. Finding the rates is not the issue with the site you gave me. The problem is to find back the transactions with my broker...

[sutebayashi]

So if you acquire one time and you took some memo it is ok but then the calculations become very complex if you start to buy at different points in time because the Fx rate is different every time.

I am sorry to get into the details but this is important. This is not as easy as just "get a tokutei koza and you do not need to do the calculations". I had stocks before coming to Japan which if I sell now will be subject to such calculations.

You need to list up the Buy Price Paid x Exch Rate for each transaction

Sum up the total number of units or shares bought

Divide Total Units or Shares Bought by Total Yen Paid

This gives Average Yen Price Paid per Unit
In Japan you must use this Average Price, and not different transaction prices.
This becomes your Tax Basis.

So, I am preparing to do my kakutei shinkoku, and was checking a foreign currency transaction I did last year.
Back in 2020, I sold my home foreign currency for USD dollars.
Then in 2022, I sold those USD dollars back into my home foreign currency. (In my home foreign currency terms, I made a profit, so I assumed I'd need to pay some income tax on this.)

According to this https://www.nta.go.jp/law/shitsugi/shotoku/02/41.htm it seems to confirm what had been discussed earlier on this topic, although it is specific to foreign currency transactions.

But, when I did the sums, using the USD/JPY rate from 2020, and my home currency / JPY rate in 2022, and subtracted the 2020 JPY equivalent from the 2022 JPY equivalent, I find that I actually "lost" almost 0.5 million yen.

Since I "lost" money when converted back into JPY terms, it means I actually owe no income tax, because I "lost" 0.5 million yen?

That seems ridiculous to me - I am sure that I made money on the deal, but then I am thinking in terms of my foreign currency.
This is all a function of the fact that the JPY plunged from 2020 versus 2022 when I made the transaction.

Have I really got this right?

Also, this "loss" of miscellaneous income can seemingly offset the interest income I earned on my foreign currency. On the other hand, if it reduces my 2022 income, that could impact my furusato nozei calculations. I guess I will have an experiment with the NTA kakutei shinkoku website to find out whether reporting this "loss" of income benefits me or not. If not, then I will pass on reporting it, since the NTA seems to think I lost money, even though I gained foreign currency.