JJapan Finance

Exchange rate date for cap gains from foreign acquisitions

  • November 29, 2025

So… I had a stake in a corp, and it got acquired (cash). I earned some on that, gotta pay my tax.

  • acquisition announced on day A
  • distribution agent contacted me on day B
  • lots of C,D,E
  • they said they are sending money on day F
  • bank in Japan notified me on day G
  • had to fill all kinds of paperwork for the bank H,I
  • actually saw the money on day J
  • could exchange to jpy on day K

Which of these counts as the day, on which I gotta use official exchange rate to compute capital gains according to Japanese tax authorities?

Do I have any flexibility here?

Thank, ye knowledgeable elders!

by Jormun-gander

1 comment

  1. You have two taxable events here:

    (A third may have applied in the past at what I call Z depending on whether you were a Japanese resident back then and other factors.)

    One is realizing capital (?) gains (at (2.) below), the other is your actual foreign currency to JPY cash conversion (at (4.) further below).

    For the former you have:

    * (1.) Day Z (before A), some time in the past. You acquired the stake. Perhaps many Zs. Assuming you bought those from foreign currency, the exchange rates for these dates would determine the stake’s value. TTS, if we are talking about shares.

    * (2.) And you have either A, B, C, D, E, depending on what actually happened. From your description this cannot be determined by us. What’s important is for you to find out at what point the promise (“you *will* receive this amount for your stake”) was legally binding, regardless of how long settlement took. You then use TTB (if we are talkIng about shares).

    And then you derive the gains from the difference.

    But maybe you want to explain more what kind of stake this was in detail. Was it shares / stock? Was it a private company? There may be slightly different rules around the type of income depending on the investment type, including perhaps even treatment as something other than “capital gains”.

    Though, it’s likely it’s treated similar to stock (
    a silent partnership for instance would be: https://www.nta.go.jp/law/shitsugi/shohi/24/01.htm).

    Though, keep in mind that unless it was a stock shares of a public company you are subject to marginal / progressive taxation.

    —-

    For the cash FX portion, you have:

    * (3.) When you received the cash. Given the long delay between contract and settlement, it would be a bit odd if there was a big gap to assess the difference. I think taking the date you received the *right* to it is likely accepted (but I haven’t looked this up in detail, yet). So that would be basically the yen value of the funds in (2.) of the discussion above.

    * (4.) When you make the conversion. That’s easy: day K (at spot rate of the FX you did).

    Note that when (3.) happens you need to combine that and work it into your overall <insert currency>-to-JPY cost basis per monetary currency unit.

    And then at (4.) you calculate the FX gains (to be reported as misc. income) based on:

    (actual rate on K – <insert currency>-to-JPY cost basis per unit) * monetary units (e.g., dollars) converted (“sold” in exchange for JPY)

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