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How do taxes on bitcoin profits differ in the US, UK, and Japan?
Research question: How do tax rules on bitcoin profits differ between the United States, the United Kingdom, and Japan?
The records show that the US treats virtual currency as property, so general property tax principles apply 121. US brokers report digital asset sale proceeds on Form 1099-DA 17, and taxpayers may be required to recognize taxable gain on dispositions 19. In the UK, HMRC generally applies Capital Gains Tax to crypto held as an investment, with a £3,000 annual exempt amount and gains taxed at 18% or 24% 2022. In Japan, crypto gains are taxed as miscellaneous income at progressive rates that can reach a top combined rate of about 55.9%, and holding for years does not earn a lower capital gains rate 1112. Japan has announced a planned flat 20% rate for specified crypto starting in 2026, but it had not been enacted as of June 2026 1415. The newest facts run to about early October 2026, since the IRS FAQ record covers changes through 2026-10-03 1.
Checked 2026-10-23. Only documented and supported facts are used.
Dig deeper on this questionSources
[1] documented
The IRS FAQ states that virtual currency is treated as property for federal income tax purposes, so general property tax principles apply to it.
"938 , explaining that virtual currency is treated as property for federal income tax purposes and providing examples of how longstanding tax principles applicable to transactions involving property apply to virtual currency."What changed on www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactions between 2019-10-10 and 2026-10-03
[2] supported
In Japan, profits from selling or using bitcoin and other cryptocurrencies are classified as miscellaneous income (雑所得) under the income tax law.
"ビットコイン 等の 暗号資産 を売却又は使用することによる利益"雑所得
[3] documented
Under proposed US rules, when one digital asset is exchanged for a different digital asset that differs materially in kind or extent, the basis of the received asset is its fair market value plus one-half of the total transaction costs paid.
"Accordingly, if a taxpayer exchanges digital asset DE for digital asset ST and pays digital asset transaction costs, the basis of the digital asset ST is computed using the fair market value of the digital asset ST received, plus one-half of the total digital asset transaction costs."Gross Proceeds and Basis Reporting by Brokers and Determination of Amount Realized and Basis for Digital Asset Transactions (Treasury Department, Internal Revenue Service, 2023-08-29)
[4] supported
Under the US Form 1040 virtual currency question for 2021, a taxpayer whose only virtual currency activity was buying it with real currency does not have to answer yes and should check the no box.
"If your only transactions involving virtual currency during 2021 were purchases of virtual currency with real currency, you are not required to answer “yes” to the Form 1040 question, and should, instead, check the “no” box."What changed on www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactions between 2019-10-10 and 2026-10-03
[5] supported
In Japan, crypto asset transfers done continuously for profit can be treated as business income rather than miscellaneous income.
"営利を目的として継続的に行う資産の譲渡から生ずる所得（ 暗号資産 などが該当。事業所得になる場合もあり）"雑所得
[6] documented
Under the proposed US rules, the cost basis of digital assets received in certain exchanges equals their fair market value as of the date and time of the exchange.
"Under these rules, the cost of the digital assets received equals the fair market value of those digital assets as of the date and time of the exchange."Gross Proceeds and Basis Reporting by Brokers and Determination of Amount Realized and Basis for Digital Asset Transactions (Treasury Department, Internal Revenue Service, 2023-08-29)
[7] supported
The document says the United States applies a capital gains taxation model for cryptocurrency that depends on how specific assets are categorized.
"whereas the United States maintains a capital gains taxation model predicated on specific asset categorizations."Towards Effective Cryptocurrency Taxation: Comparative Policy Lessons from the EU, the United States, and Southeast Asia (2026)
[8] documented
In the US, sales of digital assets by US digital asset brokers are generally treated as effected inside the United States, which determines reporting obligations, while the document does not address UK or Japanese tax rules.
"In general, sales by U.S. digital asset brokers are treated as effected at an office inside the United States, and sales by CFC digital asset brokers and non-U.S. digital asset brokers are treated as effected at an office outside the United States"Gross Proceeds and Basis Reporting by Brokers and Determination of Amount Realized and Basis for Digital Asset Transactions (Treasury Department, Internal Revenue Service, 2023-08-29)
[9] documented
The U.S. IRS rule requiring certain decentralized finance participants to report as brokers under section 6045 was disapproved under the Congressional Review Act and has no legal force or effect.
"Under Public Law 119-5 and by operation of the CRA, the Final Rule has no force or effect."Gross Proceeds Reporting by Brokers That Regularly Provide Services Effectuating Digital Asset Sales (Treasury Department, Internal Revenue Service, 2025-07-11)
[10] supported
The revoked U.S. Treasury/IRS final rule would have required certain decentralized finance industry participants to file and furnish information returns as brokers under section 6045 of the Internal Revenue Code.
"The Final Rule contained amendments to the Income Tax Regulations (26 CFR part 1) under section 6045 of the Internal Revenue Code to require certain decentralized finance industry participants to file and furnish information returns as brokers."Gross Proceeds Reporting by Brokers That Regularly Provide Services Effectuating Digital Asset Sales (Treasury Department, Internal Revenue Service, 2025-07-11)
[11] supported
In Japan, individual crypto gains are currently taxed as miscellaneous income at progressive rates ranging from 5% to 45%, plus a 10% local inhabitant tax and a 2.1% reconstruction surtax, resulting in a top combined rate of approximately 55.9%.
"Japan currently taxes most individual crypto gains and rewards as miscellaneous income, added to your other earnings. National rates run from 5% to 45%, plus a 10% local inhabitant tax and a 2.1% reconstruction surtax on the national tax. The top combined rate is about 55.9%."Guide to Crypto Taxes in Japan for 2026
[12] supported
Under the current Japanese system, holding crypto for several years does not qualify investors for a lower long-term capital gains rate, as gains are treated as miscellaneous income rather than capital gains.
"The NTA generally treats gains from selling or using crypto as miscellaneous income rather than capital gains. ... Holding crypto for several years does not currently qualify you for a lower long-term capital gains rate."Guide to Crypto Taxes in Japan for 2026
[13] supported
In Japan, cryptocurrency gains are currently taxed as miscellaneous income at progressive rates up to 55%, rather than as capital gains.
"Unfortunately, Japan taxes crypto in the worst possible way: as miscellaneous income. What does this mean for the investor? It means that you could be looking at taxes on your gains of up to 55% ."Japan’s Crypto Problem - How is Bitcoin taxed?
[14] supported
Japan has proposed reforms to tax eligible crypto assets at a flat rate of 20.315%, aligning them more closely with stocks, though this has not yet been enacted.
"gressive rate of up to 55% to a flat 20.315%, bringing the tax treatment of eligible crypto assets closer to that of stocks and investment trusts."Japan’s Crypto Problem - How is Bitcoin taxed?
[15] supported
Japan plans to reduce the tax rate on specified crypto assets like Bitcoin and Ethereum to a flat 20% starting in 2026.
"Japan will tax specified crypto assets like Bitcoin and Ethereum at a flat 20% from 2026, aligning them with stocks and investment trusts."Bitcoin, Ethereum set for 20% flat tax under Japan’s 2026 crypto overhaul
[16] supported
The new Japanese tax rate of 20% is a reduction from the current maximum rate of 55%.
"Japan announced plans to reduce taxes on certain cryptocurrencies to a flat 20%, down from the current rate of up to 55%, as part of the country’s 2026 tax reform blueprint, according to government officials."Bitcoin, Ethereum set for 20% flat tax under Japan’s 2026 crypto overhaul
[17] documented
U.S. brokers use Form 1099-DA to report proceeds from digital asset dispositions to taxpayers and the IRS under Internal Revenue Code section 6045(a).
"Form 1099-DA is used by brokers to report proceeds from (and in some cases, basis for) digital asset dispositions to taxpayers and to the IRS (Internal Revenue Code section 6045(a))."Agency Information Collection Activities; New Proposed Information Collection Request; Request for Comments; Digital Asset Proceeds From Broker Transactions (Treasury Department, 2024-10-07)
[18] supported
In Japan, crypto assets and FX trading fall under different income categories, so crypto losses cannot be netted against FX gains to reduce tax.
"一方FXは、仮想通貨とは異なる区分である「先物取引に係る雑所得等」の取引のため、仮想通貨はFXとの[[損益通算]]による減税ができない"ミセスワタナベ
[19] documented
In the United States, taxpayers may be required to recognize taxable gain from dispositions of digital assets.
"Taxpayers may be required to recognize gain from these dispositions of digital assets."Agency Information Collection Activities; New Proposed Information Collection Request; Request for Comments; Digital Asset Proceeds From Broker Transactions (Treasury Department, 2024-10-07)
[20] supported
In the UK, HMRC generally applies Capital Gains Tax when individuals dispose of crypto held as an investment, while tokens earned or received in certain circumstances can be taxed as Income Tax.
"For most individuals, HMRC applies Capital Gains Tax when crypto held as an investment is disposed of, while tokens earned or received in particular circumstances can fall under Income Tax."UK Crypto Tax Guide 2026: HMRC Rules, CGT and SA
[21] supported
The US IRS treats digital assets as property rather than currency, so most crypto transactions are taxed under general property tax principles.
"цифрові активи як власність, а не валюту"TAXATION OF TRANSACTIONS WITH DIGITAL ASSETS (2025)
[22] supported
The UK Capital Gains Tax annual exempt amount is £3,000, and gains above it are taxed at 18% or 24% depending on how much basic-rate band remains.
"at 18%, 24% or a combination of both, depending on how much of your basic-rate band remains available."UK Crypto Tax Guide 2026: HMRC Rules, CGT and SA
[23] supported
UK crypto matching rules include a 30-day rule that matches disposals with acquisitions of the same token made in the following 30 days, before the Section 104 pool is applied.
"30-day rule: remaining disposals are matched with acquisitions of the same token made during the following 30 days."UK Crypto Tax Guide 2026: HMRC Rules, CGT and SA
[24] supported
The UK's Cryptoasset Reporting Framework requires crypto service providers to collect user identification information, which can be passed to HMRC, starting 1 January 2026.
"З 1 січня 2026 року користувачі постачальників послуг з криптоактивів будуть зобовʼязані"TAXATION OF TRANSACTIONS WITH DIGITAL ASSETS (2025)
[25] supported
In the UK, crypto gains must be reported if they exceed the £3,000 exemption, and capital gains pages may be required even below it if total disposal proceeds exceed £50,000 and the person is already in Self Assessment.
"Even where gains are below the exemption, the capital gains pages may still be required when you are already within Self Assessment and total disposal proceeds exceed £50,000."UK Crypto Tax Guide 2026: HMRC Rules, CGT and SA
[26] supported
UK crypto gains are calculated under a Section 104 pool, where remaining disposals are matched against the token's pooled average allowable cost.
"Section 104 pool: anything left is matched with the token’s pooled average allowable cost."UK Crypto Tax Guide 2026: HMRC Rules, CGT and SA