Can You Offset Overseas Stock Losses Against Gains in Japan?

【Koshida Accounting Firm Column Date:2026.10.02】

Hello, my name is Taisei Koshida, and I am a certified public accountant and licensed tax accountant in Japan.

If you have more than one brokerage account, you can have a gain in one account and a loss in another.

Can you offset the loss against the gain on your Japanese tax return?

Yes. For listed shares, gains and losses included in Japan’s taxable income are combined within the same calendar year. This includes shares traded on qualifying foreign stock markets.

The broker does not need to be registered in Japan for this same-year calculation.

However, using a loss against dividends or carrying it forward to another year requires a separate check.

This article covers the 2026 Japanese income tax return (kakutei shinkoku).

1. Gains and Losses in Two Overseas Accounts Can Be Combined

Suppose you sell U.S.-listed shares in 2026:

Overseas brokerage account A: ¥10,000,000 gain
Overseas brokerage account B: ¥6,000,000 loss

Your net gain for Japanese tax purposes is ¥4,000,000.

You do not report ¥10,000,000 as your taxable gain and ignore the loss simply because it arose in another overseas account.

Both transactions belong to the listed-share capital gains category. The gains and losses are combined in that category for the year. [1]

This example assumes that both transactions fall within the scope of Japanese taxation and that the amounts have been calculated under Japanese tax rules.

2. A Japanese Account and an Overseas Account Can Also Be Combined

The same approach applies when one account is in Japan and the other is overseas.

For example:

Overseas account: ¥8,000,000 gain on listed shares
Japanese taxable account: ¥3,000,000 loss on listed shares

The net gain is ¥5,000,000.

The location of the account does not create a separate capital gains category.

A NISA loss is excluded. You cannot use a loss from a tax-exempt NISA account to reduce taxable gains in another account. [2]

3. Does the Overseas Broker Need to Be Registered in Japan?

No, for the same-year netting of listed-share sale gains and losses.

The Japanese registration requirement belongs to the special rules for offsetting losses against dividends and carrying losses forward.

It is not a requirement for combining sale gains and losses within the listed-share capital gains category for the same year.

This distinction matters. A loss can reduce your stock sale gains for the year even when it does not qualify for dividend offset or carryforward.

4. Offsetting a Loss Against Dividends Is a Different Rule

Now suppose your listed-share sales produce an overall loss, and you also receive dividends.

You cannot automatically deduct that loss from the dividends.

The special relief under Article 37-12-2 of Japan’s Act on Special Measures Concerning Taxation requires an eligible disposal. For an ordinary brokerage sale, this includes selling through a qualifying Japanese-registered financial instruments business operator or registered financial institution.

A direct sale through an overseas broker that is not registered in Japan does not qualify through that brokerage route.

The dividends must also qualify for separate taxation on the Japanese return. [2]

A broker’s international brand name does not answer this question. I check the legal entity holding the account and how the sale was carried out. The law also covers specified disposal routes other than ordinary brokerage sales. [3]

5. Can You Carry Forward Losses From an Overseas Brokerage Account?

An unused listed-share loss does not automatically carry forward.

For an ordinary brokerage sale, the three-year carryforward requires a loss from a sale through a qualifying Japanese-registered financial instruments business operator or registered financial institution. The registration requirement applies to the broker or financial institution, not to the shares themselves. U.S.-listed shares sold through a qualifying broker are included.

A loss from a direct sale through an overseas broker that is not registered in Japan cannot be carried forward under this relief. It can still offset taxable listed-share sale gains in the same year.

The law also covers specified disposal routes other than ordinary brokerage sales. [3]

The loss must satisfy the special relief requirements. Filing a Japanese tax return does not turn an ineligible loss into an eligible one.

For an eligible loss, the carryforward period is the following three years. You must file the required return and schedules for the loss year, followed by returns for each intervening year, including years with no share sales. [2]

For example, an eligible unused loss from 2026 can be carried forward to 2027, 2028 and 2029.

6. Calculate the Gains and Losses in Yen First

Do not simply add the dollar gains and losses shown by your overseas brokers and convert the final total into yen.

For Japanese tax purposes, calculate the sale proceeds, acquisition cost and relevant expenses in yen under Japanese rules. Then combine the resulting gains and losses.

Exchange rate movements affect the Japanese result. A loss shown in dollars is not necessarily a loss in yen. [4]

I explain the calculation and acquisition records in more detail here:

How Are U.S. Stocks and Capital Gains Taxed in Japan? A Guide for Americans

7. What I Check Before Preparing the Return

For overseas stock transactions, I check:

The shares sold and the market on which they were traded
The acquisition history, sale records and transaction fees
The gain or loss calculated in Japanese yen
Transactions in other brokerage accounts during the same year
Your Japanese tax residency status
The broker’s legal entity and transaction route, if dividend offset or carryforward is involved
Previous Japanese returns, if you are claiming a carried-forward loss

For a non-permanent resident, I also check the acquisition dates and the applicable remittance rules before deciding which transactions belong in the Japanese calculation.

For the wider rules on Japanese tax residency and Remittance-Based Taxation, see:

Moving to Japan? How Your U.S. Income Is Taxed in Japan

Two separate questions need to be answered: how much is your net listed-share gain or loss for this year, and does any remaining loss qualify for further relief?

8. A Question About Using a Carried-Forward Loss

Can an eligible loss carried forward from a Japanese brokerage account reduce a gain in an overseas account in a later year?

Yes. The later gain must be taxable in Japan and belong to the listed-share capital gains category. It does not have to arise through a Japanese-registered broker.

The disposal requirements determine whether the original loss qualifies for carryforward. They do not restrict the later listed-share gain to a Japanese brokerage account. The three-year limit and continuous filing requirements still apply. [2]