Deductible Expenses for Offshore Forex Traders in Japan
For residents of Japan, offshore forex income is calculated as total receipts minus necessary expenses (NTA No. 1500), so costs you incur to trade may be deductible. Typical examples are a trading computer, internet and phone costs, a VPS, books, paid tools and deposit or withdrawal fees; anything also used privately is deducted only in proportion to its trading use. Expenses can only reduce your forex income to zero: an expense-driven loss can't be offset against your salary.
Who this guide is for
This guide is for people who live in Japan and trade with an offshore broker. Japan taxes that profit as miscellaneous income together with your other income (NTA Tax Answer No. 1521), so every yen of genuine expense you can document reduces tax at your marginal rate. If you live elsewhere, see the general forex tax guide.
How expenses work
Miscellaneous income is calculated as total receipts minus necessary expenses (NTA Tax Answer No. 1500). Necessary expenses are costs directly needed to earn that income. Three practical tests:
- Direct link to trading. You can explain why the cost was needed to trade.
- Apportion mixed use. If something is also used privately, deduct only the trading share.
- Proof of payment. Receipts, invoices, card statements or e-mail confirmations.
Costs that may be deductible
| Item | Examples | Points to watch |
|---|---|---|
| Computers and tablets | Trading PC, monitors | Apportion if also used privately; ¥100,000 or more is generally depreciated |
| Communications | Internet line, mobile phone | Deduct the share used for trading |
| VPS | A server that runs your EA around the clock | Often fully trading-related (see choosing a forex VPS) |
| Paid tools and data | Paid indicators, charting subscriptions, news services | Must be used for trading |
| Books and courses | Forex books, seminar fees | Content related to trading |
| Funding fees | Bank transfer fees, e-wallet fees | Fees on moving money to and from your trading account |
On equipment: the NTA explains that assets with a useful life under one year or costing less than ¥100,000 are deducted in full in the year you start using them; more expensive items are generally depreciated over their useful life (NTA Tax Answer No. 2100).
Costs that are not expenses
- Trading losses themselves: they’re already part of your profit-and-loss figure
- Margin held at the broker: it’s still your money
- Living costs and personal purchases
- Meals and entertainment unrelated to trading
A worked example
Suppose your offshore trading result for the year is +¥600,000, and your expenses are:
- VPS: ¥2,000 a month × 12 = ¥24,000
- Internet: ¥6,000 a month × 12 × 30% trading share = ¥21,600
- Books: ¥8,000
- Bank transfer fees for funding and withdrawals: ¥12,000
Total expenses are ¥65,600, so miscellaneous income is ¥534,400. For someone whose forex income falls in the 20% national band, that’s ¥13,120 less income tax (before the 2.1% surtax) and ¥6,560 less resident tax, about ¥20,000 in total. Try your own numbers in the Japan offshore forex tax calculator.
Expenses can’t create a loss against salary
The NTA states that a loss arising in miscellaneous income can’t be offset against other income. If your offshore profit is ¥100,000 and your expenses are ¥150,000, the ¥50,000 shortfall does not reduce the tax on your salary. More on this in offshore forex losses in Japan.
Keep good records
- Log each expense with the date, amount, what it was for and the share you deducted.
- Save card statements and e-mailed receipts as PDFs.
- Write down how you arrived at each split (for example, the hours a line is used for trading).
- Keep each broker’s annual statement alongside your expense log, in case the tax office asks.
Related
- Whether you need to file at all: Japan’s ¥200,000 rule
- What brokers and banks ask for: My Number and offshore brokers
What counts as an expense depends on the facts of your case. When in doubt, ask your local tax office or a licensed tax accountant (zeirishi).
Related
- Japan Offshore Forex Tax Calculator: Estimate Your Tax
- Forex Deposit Methods Compared: Card, Bank and Crypto
- How to Fund a Forex Account With USDT
- bitwallet for Forex Deposits and Withdrawals: How It Works
- Forex Brokers That Accept Korean Won (KRW) Deposits
- Forex Withdrawal Problems: Causes and Fixes
- Why Brokers Reject Withdrawals and How to Avoid It
- Forex Trading Tax: What You Owe by Country
- Japan's ¥200,000 Rule for Offshore Forex Profits Explained
- Offshore Forex Losses in Japan: Carry-Forward and Offset Rules
- When Korean Residents Must Report Offshore Forex Accounts
- Funding a Forex Account by Credit Card: What to Know
- Do Offshore Brokers Ask Japanese Clients for a My Number?
- Funding a Forex Account in Thai Baht: PromptPay and Thai Banks
- Funding a Forex Account in Ringgit: FPX, DuitNow and Local Banks
- Funding Forex in Indonesian Rupiah: Banks, QRIS and E-wallets
- Forex Glossary
Frequently asked questions
Can I deduct the full cost of a computer?
If it's used only for trading, it may qualify; if you also use it privately, deduct only the trading share. Items costing ¥100,000 or more are generally depreciated over their useful life rather than deducted in the year of purchase (NTA No. 2100).
What if my expenses are bigger than my profit?
The NTA states that a loss in miscellaneous income can't be offset against other income, so an expense-driven loss won't reduce tax on your salary.
Can I deduct rent or electricity because I trade from home?
Only the part you can reasonably link to trading, and you need to be able to explain how you split it. Keep a note of the basis you used.
Are trading losses an expense?
No. Losses on trades are part of the profit-and-loss calculation itself, not an expense. Margin held at the broker is not an expense either.
