Why the gain is tax-free
In a taxable account, gains and dividends on listed securities are subject to income tax, the reconstruction surtax, and local tax. About 20.315% is the figure often used as a combined illustration: 15% income tax, 0.315% reconstruction surtax, and 5% local tax.
A qualifying gain, dividend, or distribution on an eligible product held in NISA falls outside that tax. The exemption applies when there is a qualifying return. It does not protect principal.
Swipe horizontally to see the full table.
| Treatment | NISA account | Taxable account |
|---|---|---|
| Qualifying gain on a sale | Tax-free | Generally taxed. About 20.315% is the usual illustration |
| Qualifying dividends | Tax-free when the conditions are met | Generally taxed |
| Losses | Cannot offset a taxable account | Offset and carryforward may be available |
Dividends and distributions
Eligible dividends and distributions can be tax-free. For a dividend on a Japanese listed stock, receiving it through the broker under the proportional-allocation method (kabushiki-su hirei haibun) can be required for that treatment. Another payment method, such as registration for a designated dividend account, can leave the dividend taxable even if the shares sit in NISA.
A fund distribution can also split into an ordinary distribution and a return of capital. Check the product note and the payment method before you rely on the exemption.
Losses, offsetting, and carryforward
A loss inside NISA cannot be netted against a gain in a taxable account. It also cannot be carried forward to reduce a later taxable gain.
If NISA shows a ¥300,000 loss and a taxable account shows a ¥300,000 gain, the taxable gain is not reduced by the NISA loss. Tax-free treatment and the ability to use a loss on a return are different things.
Common misunderstandings
The opposite. A NISA loss cannot offset a taxable account or be carried forward.
A Japanese-stock dividend may need the proportional-allocation method to stay tax-free.
It is an illustration. The actual tax depends on the type of return and how it is received.
Questions on this page
Is a NISA sale taxed?
A qualifying gain is tax-free within the account rules.
Are dividends tax-free?
Eligible dividends can be. For a Japanese listed stock, the proportional-allocation method can be part of that condition.
Can a NISA loss reduce tax on a taxable account?
Generally, no. Offsetting and carryforward do not apply to a loss inside NISA.
Related pages
When the answer depends on your situation
Residency, length of stay, which quota you want, and the amount are personal. After the published explanation, you can put those facts into a question.
Official sources: Japan Financial Services Agency, NISA site, National Tax Agency, No. 1535 NISA
This page is general information, not tax, legal, or investment advice. Amounts and procedures can change. Before you trade or file, check the latest material from the Financial Services Agency, the National Tax Agency, and your financial institution.