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

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

Many Americans I meet in Japan still have brokerage accounts in the United States.

They may hold U.S. stocks, ETFs, RSUs, or ESPPs through Charles Schwab, Fidelity, Vanguard, or another U.S. broker.

A common question is:

“Can I just use the capital gain shown on my 1099-B for my Japanese tax return?”

No.

For Japanese tax purposes, the acquisition cost and sale proceeds need to be calculated in Japanese yen under Japanese tax rules.

Therefore, your U.S. capital gain and your Japanese capital gain are not necessarily the same.

1. If You Live in Japan and Sell U.S. Stocks, Japan Generally Taxes the Gain

If you are a tax resident of Japan and sell U.S. stocks at a gain, the gain is generally taxable in Japan.

It does not matter that your brokerage account is in the United States.

Leaving the sale proceeds in your U.S. account does not by itself keep the gain outside Japanese taxation.

However, special rules apply if you are a non-permanent resident of Japan. I will explain this later.

2. Do Not Simply Use the Capital Gain on Your 1099-B

Suppose your 1099-B shows:

Purchase price: $50
Sale price: $80
Capital gain: $30

For Japanese tax purposes, you do not simply convert the $30 gain into yen.

You convert the acquisition cost into yen using the applicable exchange rate and calculate the sale proceeds in yen as well.

Japanese capital gain = Sale proceeds in yen − Acquisition cost in yen − Selling expenses

A 1099-B is an important document, but it is not the answer for your Japanese capital gain.

3. You Can Have a Japanese Gain Even If You Made No Profit in Dollars

Suppose you bought a stock for $100 and later sold it for $100.

In U.S. dollar terms, your gain is zero.

Purchase: $1 = ¥100
Sale: $1 = ¥150

Acquisition cost: ¥10,000
Sale proceeds: ¥15,000

For Japanese tax purposes, you have a ¥5,000 gain.

“Do I really have a taxable gain in Japan even though I made no money in dollars?”

Yes.

Japan calculates the gain in Japanese yen.

The opposite can also happen. You may have a gain in dollars but a smaller gain, or even a loss, in yen.

The foreign exchange movement included in the stock transaction is not separately reported as miscellaneous income. It is included in the calculation of the capital gain or loss on the stock.

4. If You Bought the Same Stock Many Times, the Cost Basis Needs to Be Recalculated

U.S. brokerage statements often track the cost basis by lot.

Japan does not necessarily use the same lot shown by your U.S. broker.

If you acquired the same stock several times, the acquisition cost is generally calculated using a method similar to the total average method under Japanese tax rules.

For example:

Buy 100 shares of Apple
Buy another 50 shares
Sell 80 shares

The basis of the specific lot shown as sold by your U.S. broker is not necessarily the basis used in Japan.

We need to review the acquisition history under Japanese rules.

This can become quite a job if you have been accumulating the same stock for many years.

5. RSUs and ESPPs Need Another Step

For RSUs, I am sometimes asked:

“I received the shares from my employer, so is my acquisition cost zero?”

Usually, no.

If the fair market value of the shares was already recognized as employment income when the RSUs vested, that value needs to be considered when determining the acquisition cost of the shares.

In other words:

Vesting → Employment income
Later sale → Capital gain or loss

ESPPs also need to be reviewed separately. We do not simply copy the ordinary income and capital gain classifications from the U.S. tax return into the Japanese return.

6. Do Not Automatically Use a Cost Basis Adjusted for a U.S. Wash Sale

This is a little technical, but I see it in actual brokerage records.

Under the U.S. wash sale rule, a loss can be disallowed and added to the basis of newly acquired shares.

As a result, the cost basis shown by your U.S. broker may already include a wash sale adjustment.

Japan does not simply apply the U.S. wash sale rule.

Therefore, a U.S. cost basis after a wash sale adjustment is not automatically the cost basis used in Japan.

Again, we need to look at the actual acquisition history.

7. For Non-Permanent Residents, When You Bought the Stock Matters

The rules become more complicated if you are a non-permanent resident of Japan.

You cannot simply say:

“It is a U.S. stock, so if I keep the money in the United States, Japan does not tax it.”

One important factor is when you acquired the stock.

For example:

2018 — Bought Apple shares while living in the United States
2024 — Moved to Japan
2025 — Bought additional Apple shares
2026 — Sold some Apple shares

The same Apple position now contains shares acquired before moving to Japan and shares acquired after becoming a Japanese resident.

For a non-permanent resident, I need to look not only at when the shares were sold, but also at when they were acquired.

In a case like this, I start with the acquisition history.

For more information about non-permanent resident taxation, see:
Moving to Japan? How Your U.S. Income Is Taxed in Japan

8. “I Did Not Remit the Money to Japan” Does Not Automatically Mean Tax-Free

A non-permanent resident may tell me:

“I left the money in my Fidelity account, so Japan does not tax the gain, right?”

Not necessarily.

First, we determine how the capital gain is treated under the Japanese non-permanent resident rules.

Then we look at remittances.

First determine the nature of the income. Then look at the remittance.

Starting with “I did not remit it, so it is not taxable” can lead to the wrong conclusion.

Also, using a U.S. credit card in Japan can count as a remittance even if you never made a wire transfer to a Japanese bank account.

I explain this point separately here:
Does Using a U.S. Credit Card in Japan Count as a Remittance?

9. Once You Are No Longer a Non-Permanent Resident, Keeping the Money in the U.S. Does Not Matter

Once you are no longer a non-permanent resident, your foreign income is generally within the scope of Japanese taxation.

So:

“I sold the shares in Fidelity.”
“I left the money in the United States.”

These facts generally do not change the Japanese taxation of the capital gain.

I explain what changes after the non-permanent resident period here:
What Happens to Your Japanese Taxes After Living in Japan for 5 Years? A Guide for Americans

10. U.S. Citizens Can Be Taxed in the United States Too

Under the U.S.-Japan Tax Treaty, ordinary capital gains from stocks are generally taxable in the country of residence.

So for a resident of Japan, Japan is generally the primary taxing country.

However, U.S. citizens are different.

The United States taxes its citizens on worldwide income, and the U.S.-Japan Tax Treaty contains a saving clause.

As a result, an American living in Japan can be taxed on the same capital gain in both Japan and the United States.

11. For Ordinary U.S. Stock Gains, the Foreign Tax Credit Is Generally Considered on the U.S. Side

This is different from U.S. rental property.

For ordinary capital gains from U.S. stocks, Japan generally taxes the gain as the country of residence.

If the United States also taxes the gain because you are a U.S. citizen, the general approach is to consider a foreign tax credit in the United States for the Japanese income tax.

For U.S. rental property, the situation is different. The United States taxes the rental income as the country where the real estate is located, so the foreign tax credit is generally considered on the Japanese side.

The asset is in the United States in both cases, but the direction of the foreign tax credit can be different.

This is an important practical difference.

For more information about foreign tax credits in Japan, see:
Foreign Tax Credit for Non-Permanent Residents in Japan

12. Example: A $20,000 U.S. Gain Can Become a Much Larger Gain in Japan

Suppose you bought U.S. stocks for $50,000 in 2019 and sold them for $70,000 in 2026.

Your U.S. capital gain is $20,000.

Purchase: $1 = ¥105
Sale: $1 = ¥150

Japanese acquisition cost: ¥5,250,000
Japanese sale proceeds: ¥10,500,000

The capital gain for Japanese tax purposes is ¥5,250,000.

The U.S. gain is only $20,000, but the Japanese gain is more than ¥5 million.

That is not a mistake.

Japan calculates the gain in yen.

13. Documents I Usually Check

For a Japanese tax return involving U.S. stocks, I usually check documents such as:

• 1099-B;
• Form 8949;
• Schedule D;
• brokerage transaction history;
• cost basis reports;
• RSU vesting statements;
• ESPP purchase statements;
• stock split history;
• records of transfers between brokers; and
• records of remittances to Japan.

For stocks held for many years, the old acquisition history is particularly important.

Sometimes the current broker does not have the cost basis from before the shares were transferred into the account.

In practice, reconstructing the old acquisition history can take more time than calculating the tax itself.

14. Frequently Asked Questions

Q. Can I simply convert the capital gain on my 1099-B into yen?

No. You calculate the acquisition cost and sale proceeds separately in yen and determine the Japanese capital gain.

Q. Can I owe Japanese tax even if I made no profit in U.S. dollars?

Yes. If the exchange rate changed between the purchase and sale, you can have a gain in yen even when the gain in dollars is zero.

Q. Is the foreign exchange gain reported separately as miscellaneous income?

No. The foreign exchange movement included in the foreign stock transaction is reflected in the capital gain or loss on the stock.

Q. Can I use the cost basis shown by Fidelity or another U.S. broker?

Not necessarily. If you acquired the same stock several times, the acquisition cost needs to be calculated under Japanese tax rules.

Q. Is a U.S. wash sale adjusted basis also used in Japan?

Not automatically. The U.S. wash sale rule and the Japanese calculation of acquisition cost are different.

Q. Is the acquisition cost of an RSU zero?

Usually, no. If the value of the shares was recognized as employment income when the RSUs vested, that value needs to be considered when determining the acquisition cost.

Q. If I sell U.S. stocks but do not remit the money to Japan, is the gain tax-free in Japan?

Not necessarily. For a non-permanent resident, the acquisition date and tax classification of the gain need to be checked first, and then the remittance rules are considered.

Q. If I also pay U.S. tax on the capital gain, do I claim a foreign tax credit in Japan?

For ordinary U.S. stock gains where the United States taxes you because you are a U.S. citizen, the foreign tax credit is generally considered on the U.S. side for Japanese income tax. This is different from U.S. rental income.

15. For U.S. Stocks, I Look at the Acquisition History, Not Just the 1099-B

A 1099-B is an important document for preparing a Japanese tax return, but I do not make the calculation from that document alone.

I look at when the shares were acquired, how much they cost, the exchange rate at the time, whether the same stock was purchased several times, whether the shares came from an RSU or ESPP, whether the taxpayer was a non-permanent resident, and whether there were remittances to Japan.

If you have owned U.S. stocks for many years before moving to Japan, I recommend keeping your old transaction records.

Sometimes finding the acquisition history is harder than calculating the tax.

Contact

Koshida Accounting and Tax Office provides Japanese tax return preparation and international tax support for foreign residents, particularly Americans living in Japan.

If you have U.S. stocks, capital gains, RSUs, ESPPs, or questions about non-permanent resident taxation and foreign tax credits in Japan, please feel free to contact us.

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