Japanese residents: if I sell shares today, how much will I keep after tax?

Which account is the sale in?

This guide is for an individual who is a Japanese tax resident and sells listed shares or ETFs. The account type decides what you have to do. Gains on eligible products in a NISA account are tax free, but a loss there cannot be netted against other gains or carried forward.

In a specific account (tokutei koza) with withholding, the broker calculates the gain and withholds the tax, and you may not need to file. A specific account without withholding gives you an annual trade report to file from, and a general account (ippan koza) leaves the calculation to you. Unlisted shares, business trading, and non-residents follow different rules.

How do I calculate the gain?

The gain is the sale proceeds minus the acquisition cost and selling expenses such as commissions. Purchase commissions are part of the acquisition cost. Tax applies to the gain, not to the full sale value.

For foreign shares, each trade is converted into yen at the rate for its date. A US stock that rose a little in dollars can show a larger yen gain if the yen weakened while you held it, so convert the purchase and the sale separately instead of using one current rate for both.

How is the cost of shares bought at different prices averaged?

Japan does not let you choose which purchase you sold. Shares of the same issue use an average cost method in which each new purchase recalculates the average cost per share, and a sale uses that average without changing it for the shares that remain.

If you bought 1,000 shares at ¥1,200 and later 1,000 at ¥1,600, the cost of every share is ¥1,400, whichever ones you think of as sold. Brokers keep this average within each specific account, so the same share held at two brokers can carry two different costs.

What makes up the 20.315% rate?

For listed shares in a taxable account, the gain is taxed separately from salary at 15% income tax, a reconstruction surtax of 2.1% of that income tax (0.315% of the gain), and 5% residents’ tax, for 20.315% in total. The rate does not depend on your income bracket.

There is no annual exempt amount, so the first yen of net gain is taxed. An estimate can show the 15.315% national part and the 5% residents’ tax part separately so the source of the total is visible.

When does a sale count for the tax year?

Specific accounts count a sale in the year it settles. Japanese shares settle two business days after the trade, so a sale in the last trading days of December can fall into the next tax year.

Brokers publish the last trade date that settles within the year. Check it before relying on a December sale to realize a gain or loss in the current year.

Can I offset losses at another broker or from earlier years?

Within one specific account with withholding, the broker nets gains and losses for the year and adjusts the tax it withholds. Netting across brokers, or with a general account, requires filing a final tax return. Dividends on listed shares can also be netted with share losses when you choose separate self-assessment taxation for them.

A listed share loss left after netting can be carried forward for three years, provided you file a return each year to keep it. Losses inside NISA never enter this calculation.

Worked example: how much is withheld, and how much does a tax return change it?

Assume 1,000 shares bought at ¥1,200 and another 1,000 at ¥1,600, including commissions, all in one specific account with withholding. The average cost is ¥1,400 per share. Selling 1,000 shares for ¥2,000,000 with a ¥2,000 fee gives a gain of ¥598,000, on which the account withholds about ¥121,480 if it has no other gains or losses that year.

If you also realized a ¥98,000 loss in a specific account at another broker and file a return combining both, the year’s taxable gain is ¥500,000 and the tax is ¥101,575: ¥76,575 of national tax and ¥25,000 of residents’ tax. Cash after the fee and that tax is ¥1,896,425, and about ¥19,900 of the amount withheld is returned after filing.

What should a Japanese pre-sale estimate ask and show?

Inputs should include tax residence, account type and withholding choice, shares sold, expected proceeds and fees, the average cost in that account, trade currencies and dates, other gains and losses this year at every broker, listed dividends taxed separately, and losses carried forward from the past three years. Results should show proceeds, cost, gain, net annual gain after netting, national tax, residents’ tax, amount withheld, and after-tax sale cash.

Official references: National Tax Agency Tax Answer No.1463 on taxation of share sales and No.1474 on netting and carrying forward listed share losses (nta.go.jp), and the Financial Services Agency NISA pages (fsa.go.jp). This is an educational estimate, not tax advice or a completed tax return.

Portle’s Japanese tax view is simpler than that list. It takes the gains already realized this year plus the gains on current holdings in accounts not marked tax-sheltered, in yen and at average cost, and applies 20.315% with no allowance. It leaves out fees, gains held elsewhere, losses carried forward, and tax already withheld, and converts at Yahoo closing rates, so the figure is rough.