Hi all,
Been looking into taxation in Japan on options recently.
JP licensed brokerage:
According to https://www.nomuraholdings.com/jp/investor/shareholders/tax/data/2022/tax_4_11.pdf I believe the following is true:
Long options:
Sell: 先物取引に係る雑所得 gain or loss
Exercise: 譲渡所得 and the option value is rolled into the cost basis or value (depending on call/put)
Expire: 先物取引に係る雑所得 loss (not sure about this)
Short options:
Buy: 先物取引に係る雑所得 gain or loss
Assigned: 譲渡所得 and the option value is rolled into the cost basis or value (depending on call/put)
Expire: 先物取引に係る雑所得 gain (not sure about this)
Foreign brokerages:
Long options:
Sell: 総合課税雑所得 gain or loss
Exercise: Not sure here – could be 総合課税雑所得 loss OR rolled into the basis/value like for JP brokers
Expire: 総合課税雑所得 loss (not sure)
Short options:
Buy: 総合課税雑所得 gain or loss
Assigned: Not sure here – could be 総合課税雑所得 loss OR rolled into the basis/value like for JP brokers
Expire: 総合課税雑所得 gain (not sure)
Notably, if exercising options in a foreign brokerage rolls the option value into the underlying and it's treated as CGT, you would be taxed at the separate rate (~20%) which could be a significant tax discount compared to the aggregate rate. But, I can't find any information one way or the other on this, for foreign brokerages.
Also I am unsure if this is the same for cash settled options. I would /guess/ that in both cases (JP broker and foreign broker) that expiration/exercise behave the same way and you just pay the separate rate for JP brokers or the aggregate rate for foreign brokers on the cash gain. But, I suppose it could be defined as getting rolled into the basis/value for the currency if it's denominated in a foreign currency, although I think this would be very convoluted. Does anyone know?
Thanks all.
by Edgeworth