Hey everyone,
I’m an international student living in Japan, and I made a significant amount of money by holding virtual items in a videogame (the items can be sold for real cash). I have held these items for years now, and they have multipled in price by an unbelievable amount. I know that If i decide to sell them I will be required to pay taxes. The main reason to sell the items is because I would like to purchase a property in Japan.
I’m not sure how to go about paying taxes on this income, or how much I’ll need to pay. I believe that one of the problems for me is that I am currently on a student visa and I am not sure If there is any way to declare a huge amount of money without it making it look like I am into in some suspicious activity. Although, It would be easy for me to proof the sales of each item once I decide to sell them.
From what I’ve read online, I will hit the highest tax bracket (45%) as the sales would be over 40 million YEN. I am not sure if this tax bracket will apply to me as I am not really an employee or own a business. Moreover, I am confused about how the tax system in Japan works as I have read there is a municipal tax of 10% on top of the 45% tax for income. Does that mean that I would need to pay around 55% on taxes from the income I receive?
If anyone has any experience or knowledge about paying taxes on income earned from virtual items, I’d really appreciate any advice or information you could share. Also, if you have any recommendations for tax professionals or resources I can use to better understand the process, please let me know.
Thanks in advance for your help!
18 comments
First you need to determine if you are tax resident. I think it is if you lived more than 5 years in Japan over le last 10. If not, just declare taxes in your home country and for avoiding complications use your foreign bank account.
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If you are tax resident then yes you need to pay taxes. Also you need to make sure from immigration perspective you are authorized for those activity.
Have you tried asking tax office instead of Reddit?
Check or ask on r/japanfinance if you can’t find the help you need in here.
No help but congratulations – what a windfall!
4000万円 for virtual items? What video game if you don’t mind me asking? I’m curious lol
**EMPEROR’S BOWELS!!** Why the bloody hell isn’t this sort of nonsense taught in school? I’m still pissed that they didn’t teach us that becoming a top Premiere League football player would make us mad mint; I would have developed an interest in sports then.
Anyway, it looks like you’ve already got some appropriate advice 🙂
Don’t forget to follow up here with the results, because this is really quite interesting, and quite frankly, mind-boggling.
^(I have some of those Steam card things sitting in my account, I wonder if I could trade those in for a nice Balenciaga handbag for my darling princess…)
Damn, what kinda game items pay that much?
Don’t have any advice but to go to r/JapanFinance, especially the admin there is very knowledgeable and helpful, received excellent advice in the sub some time ago.
Also, good job for making an effort trying to figure out the taxation of a transaction like this. A lot of people would probably just think “it’s not real money so I don’t have to report it”. I’m sure you’ll find a way to do this the right way, and you’ll thank yourself many times having done that when you’re eventually using the money for a legitimate purpose.
I used to spend hours wasting time on CSGO as a student. If only I’d known.
Damn congratulations!
For this amount the best thing to do is email the top international tax specialists such as KPMG, Vialto, E&Y etc and briefly tell them you have ¥40m of gains you would like tax advice on. Mention the amount and don’t tell them you are a student until the second email. They are not very good at responding unless they know it’ll be worth their while.
It’ll cost you about ¥300k-400k to sort out which may seem a lot but it’ll mean you get the proper amounts paid from an international perspective. Tax season is over so they’ll have time to work through the issue with you.
Don’t ask r/japanfinance – they’ll just pull you in to ask you about your visa status and give you zero advice about tax efficiency.
Well. How timely. I have an appointment at the Yokohama tax office 4 hours from now. I was unable to decipher my taxes this past year so I asked them for some professional help. In any case asking the tax man can help you avoid problems later. Also, as an add-on my nephew made a big gain in crypto two years ago. He avoided Japanese taxes by selling his house near Tokyo and moving his family to the US, where taxes are much less on capital gains.
Who’s paying that much for virtual items? Is that really a thing? Genuinely curious.
I would go to a lawyer or accountant for these kinds of amounts. I would NOT follow Internet advice (I understand my comment is also Internet advice). Just go to a company that does taxes with a good reputation or reviews.
It may depend where you are a tax resident.
If you are a tax resident of another country you may need to pay tax there.
I would say when you’ve sold and have cash in hand you would do a tax return – it’s just income it doesn’t matter what from and pay the tax owed once the tax office tells you.
Create an offshore LLC, pay no taxes and than legally send back to Japan.
Was it CSGO 👀
Dunno but if you sell them all at once and it counts as income you’ll be taxed more (city tax next year too). If you sell them slowly over a few years, you’ll be taxed less …. But that’s assuming the value holds.