Crypto Inheritance Tax in Japan: Valuation and Basis

When someone in Japan dies holding cryptocurrency, two separate taxes come into view, and they arrive at different times. Inheritance tax (souzoku-zei) is assessed on the value of the coins at the date of death. Income tax follows later, when the heir actually sells or swaps them. The two are calculated on completely different figures, and the gap between those figures is where most of the difficulty in a Japanese crypto estate sits.

This guide sets out what the National Tax Agency has actually published on the subject, what is settled, and what an heir should collect before the deadlines start running. It is general information and not tax advice. Confirm your own position with the NTA or a qualified zeirishi.

Inherited crypto is taxable, and there is no carve-out

The NTA addresses this directly in its published FAQ, Handling of crypto assets for tax purposes, at section 4-1 (crypto acquired by inheritance or gift). Where a person acquires crypto from a decedent by inheritance, bequest or gift, inheritance tax or gift tax applies.

The reasoning the NTA gives is worth understanding, because it explains why no special crypto rule was needed. The Inheritance Tax Act taxes any property with economic value capable of being measured in money. Crypto is defined under the Payment Services Act as property value that can be used to pay unspecified persons. It therefore falls inside the existing definition without amendment. The FAQ cites articles 2 and 2-2 of the Inheritance Tax Act and paragraph 11-2-1 of the associated circular.

The practical consequence: an exchange account or a hardware wallet that nobody in the family knew about is still part of the estate, and is still taxable.

How the coins are valued

Section 4-2 of the same FAQ sets out the valuation rule, and it is more workable than most people expect.

Japan's property valuation circular contains no rule written for crypto. The NTA therefore applies paragraph 5 of that circular, which covers property with no prescribed valuation method, and values crypto by analogy to foreign currency. For a crypto asset with an active market, the value is the trading price published by the crypto asset exchange service provider that the taxpayer deals with, as at the valuation date.

Four points from the FAQ's own notes matter when you are actually doing this:

• What counts as an active market. The asset must trade in sufficient volume and frequency on an exchange or dealer, with price information provided on a continuing basis.
• A balance certificate is acceptable evidence. The trading price stated on a zandaka shoumeisho that the exchange issues on request is included in the published price. For an estate this is usually the cleanest document to obtain, and most Japanese exchanges will issue one to a personal representative.
• Bid or ask. Where a dealer publishes separate purchase and sale prices, valuing at the price at which the taxpayer would sell to the dealer is accepted.
• Several exchanges, your choice. If the decedent dealt with more than one exchange, the taxpayer may value using the published price of the exchange they select.

An asset with no active market has no objective exchange value, so the FAQ requires it to be valued individually, taking into account the nature of the asset and the actual dealings in it. Illiquid tokens, project allocations and anything that never traded meaningfully sit here, and these are the positions that need a specialist rather than a spreadsheet.

The basic deduction

Inheritance tax is not charged on the first slice of an estate. NTA Tax Answer No.4152 gives the basic deduction as 30,000,000 yen plus 6,000,000 yen multiplied by the number of statutory heirs.

The crypto is added to everything else in the estate before that deduction is applied. So a modest holding inside an otherwise small estate may produce no inheritance tax at all, while a large holding can lift an estate that would have been comfortably under the line above it. Because the crypto is valued at the date of death, a position that has since fallen in value can still drive the liability. Verify current figures with the NTA or your zeirishi before relying on them.

The four month deadline people miss

Separate from the inheritance tax return, the decedent's own final income tax return may be due. NTA Tax Answer No.2022 covers this filing, made on behalf of a deceased taxpayer, and requires it within four months of the day after the heirs learn that the succession has commenced.

If the decedent traded, swapped or received staking or lending rewards during the year of death, that activity belongs in this return. Four months is short when the family is still working out which exchanges the accounts were on, which is why locating the accounts is the first task rather than a later one.

The second tax: what happens when the heir sells

Inheritance tax settles the value at death. It does not settle what the heir owes when the coins are eventually sold.

In Japan, crypto gains are treated as miscellaneous income and aggregated with the individual's other income, taxed at progressive national rates of 5% to 45% plus a flat 10% resident tax, so the effective ceiling is around 55%. A crypto to crypto swap is itself a taxable disposal, valued in yen, so an heir who simply reorganises the inherited portfolio has already triggered the second tax without taking any yen out. Cost basis is computed using either the total average method or the moving average method, and the chosen method must be applied consistently.

Where the cost basis question gets sharp

The number that decides the second tax bill is the heir's acquisition cost, and it is not automatically the inheritance tax valuation.

The FAQ is explicit for gifts and bequests. Section 2-10 states that where an individual transfers crypto by gift or bequest, other than a gift on death to an heir and other than a comprehensive bequest or a specific bequest to an heir, the market value at the time of the transfer is brought into the transferor's gross revenue, and the recipient's acquisition cost becomes that same market value. It cites article 40 of the Income Tax Act, article 87 of its enforcement order and paragraphs 40-2 and 40-3 of the basic circular.

Read those exclusions carefully, because ordinary inheritance by an heir is precisely what they carve out of that rule. The step up to market value that a lifetime gift produces is not what a normal succession produces. An heir can therefore find themselves taxed on appreciation that accrued during the decedent's lifetime, on top of the inheritance tax already paid on the same coins. That is the double burden this topic is known for.

The treatment turns on the precise legal form of the transfer: inheritance, bequest, gift taking effect on death, specific versus comprehensive bequest, and whether the recipient is a statutory heir. Those distinctions change the answer. Get them confirmed by a zeirishi on your actual facts before selling anything.

What to collect, in order

• Every exchange account and every wallet, including hardware devices, and every seed phrase backup. Coins nobody can reach are still taxable, so an unreachable wallet is the worst outcome available.
• A balance certificate from each exchange as at the date of death, which gives you the valuation evidence the FAQ accepts.
• The decedent's full transaction history, back to first acquisition. This is what the eventual disposal calculation is built on, and it becomes harder to reconstruct every year that passes.
• Records of staking, lending and reward activity in the year of death, for the final income tax return.

Reconstructing a decedent's cost basis across several exchanges and on-chain wallets is the part that consumes the professional fees. Starting from an already reconciled history rather than a folder of CSV exports is what keeps the eventual bill about advice rather than data entry. Our guide to crypto tax in Japan covers the income tax side in full, and our page on finding a crypto tax accountant covers what to ask before you engage one.

This is general information, not tax advice. Rules and thresholds change. Verify current figures and your own treatment with the National Tax Agency or a qualified tax professional.