Taxation of Listed Stocks

Tax Rate:

Net gains from stock sales are taxed at 20.315%.

Tax collection methods:

Through withholding at source, or annual tax return filing.

Securities Account Types:

Domestic Securities Account: Tax is automatically withheld.
Foreign Securities Account: Tax must be paid through annual tax return filing.

Special Considerations for Foreign-Issued Stock Options:

When stocks acquired through foreign-issued stock options are held in foreign securities accounts (common scenario), the capital losses cannot be offset against dividend income nor be carried forward to future tax years.

Note: Generally, use the closing rate on the transaction date (or previous day’s rate if unavailable) published by a major Japanese bank.

Salary Income:

Foreign currency amounts must be converted to Japanese yen using the applicable exchange rate at the time of transaction.

Income from exercise of stock options or vesting of RSUs:
Use Telegraphic Transfer Middle Rate (TTM) on the date of exercise or vesting Capital losses cannot be combined with dividend income for Japanese tax purposes.
Capital losses cannot be carried forward for Japanese tax purposes.

Capital Gains:

Income from stock sales:
Use Telegraphic Transfer Buying Rate (TTB) on the date of sale
Cost basis:
Use Telegraphic Transfer Selling Rate (TTS) on the date of exercise or vesting