Profit from NFT sales is “miscellaneous income” or “business income” ──National Tax Agency, explanation of tax treatment | coindesk JAPAN | Coindesk Japan

On January 13, the National Tax Agency announced a summary of the tax treatment of NFTs in a question-and-answer format. It shows how to handle income tax, corporate tax, inheritance tax, gift tax, consumption tax, etc. when NFT is resold or transferred.

Regarding income tax, he explained that if he sells NFTs linked to digital art to a third party, the profit will be subject to income tax. Regarding the income classification, it was decided that it would be “miscellaneous income” or “business income.”

Furthermore, if the income from the sale is received in tokens circulating within the sales platform, the transfer income will be calculated based on the market price of the token.

Paid sales of NFTs subject to consumption tax

Regarding gift tax, we explain cases where NFTs with economic value are acquired by gift, inheritance, or bequest.

The National Tax Agency clearly states, “Gift tax or inheritance tax will be imposed after evaluating the value individually, taking into consideration the content, nature, and actual transaction status.” On top of that, the evaluation method of the value will be in accordance with the evaluation notification of the National Tax Agency.

Regarding consumption tax, when selling an NFT linked to digital art for a fee, whether the seller is the creator of the NFT or a third party resells the NFT, the consumption tax will be charged. It explains that it will be an imposed transaction. Free-of-charge transactions are not subject to consumption tax.

Reference material: Tax treatment of NFTs (information) | National Tax Agency

｜Sentence: Reuters Board Co., Ltd.
｜Editing: Coindesk JAPAN Editorial Department
| Top image: Shutterstock