When calculating the capital gains tax on foreign stocks/ETFs, one needs to calculate the gains in yen using the average cost basis in yen (using the exchange rate at the time of purchase), right?
For example:
1. Bought 100 stocks for $100 each when the exchange rate was 110 yen/dollar (so for tax purposes: bought 100 stocks for 1,100,000 yen)
2. Bought 150 more stocks at $110 each when the exchange rate was 120 yen/dollar (so for tax purposes: bought another 150 stocks for 1,320,000 yen. Average cost basis in yen: (1,100,000+1,320,000)/250=9,680 yen/share)
3. Sold 50 stocks for $105 each when the exchange rate was 150 yen/dollar (so the price in yen was 15,750 yen/share). Capital gain in yen: (sold price in yen) minus (average cost basis) times (number of shares sold) = (15,750 – 9,680) \* 50 = 303,500 yen. Tax on this is 20.315% so 61,656 yen (and no other tax is due on the transaction of selling these stocks as far as Japan is concerned)
Is my understanding correct? Is there any official source about this method of calculation? (I couldn’t find it on the NTA’s website)
If one did not record the exchange rate at the time of purchase, this comment has links to historical rates: [https://www.reddit.com/r/JapanFinance/comments/u9akd5/comment/iljn9tg/](https://www.reddit.com/r/JapanFinance/comments/u9akd5/comment/iljn9tg/)
Past threads on this:
* [https://www.reddit.com/r/JapanFinance/comments/lljmvz/cost\_basis\_when\_selling\_shares\_on\_foreign\_broker/](https://www.reddit.com/r/JapanFinance/comments/lljmvz/cost_basis_when_selling_shares_on_foreign_broker/)
* [https://www.reddit.com/r/JapanFinance/comments/u9akd5/guide\_to\_the\_taxation\_of\_foreign\_currency/](https://www.reddit.com/r/JapanFinance/comments/u9akd5/guide_to_the_taxation_of_foreign_currency/)
* [https://www.reddit.com/r/JapanFinance/comments/1ccrbwb/gains\_from\_the\_sell\_of\_foreign\_stocks\_how\_much\_is/](https://www.reddit.com/r/JapanFinance/comments/1ccrbwb/gains_from_the_sell_of_foreign_stocks_how_much_is/)
by Ok_Philosopher_7716