In recent years, financial institutions have introduced various promotional foreign currency deposit interest products to attract investors with high interest rates. Citizens earn not only interest income from foreign deposits but also profits from fluctuations in exchange rates. The trading of foreign currency is considered a property transaction. As prescribed in Category 7 of Paragraph 1 of Article 14 of the Income Tax Act, income from property transactions is calculated as the transaction price minus the original cost and all expenses necessary for acquisition. Taxpayers must proactively file this income as part of their individual consolidated income tax in May of the year following the transaction.

For example, Party A purchased USD with NT$12,000,000 in 2022 and placed it in a one-year fixed deposit. After the deposit matured in 2023, Party A exchanged all the USD, including both the principal and the interest, back to NT$13,200,000. Of the NT$1,200,000 gain, NT$400,000 is considered income derived from deposit interest. In this regard, the bank will fill out a “Withholding & Non-Withholding Tax Statement” and provide it to Party A for filing the interest income. The remaining NT$800,000 is considered income from the property transaction due to exchange rate fluctuations during the trading of USD, and the bank will not fill out a “Withholding & Non-Withholding Tax Statement.” Therefore, Party A should file both the interest income and the income from the property transaction as part of their individual consolidated income tax for 2023 in May 2024.

The Bureau reminds taxpayers that, for profits generated from trading foreign currencies, if taxpayers fail to file the tax on income from property transactions due to temporary ignorance or unfamiliarity with regulations, they are strongly encouraged to file a supplementary tax declaration with the tax collection authority and make a supplementary payment covering the tax amount and interest in accordance with Article 48-1 of the Tax Collection Act, before being reported or investigated by the tax collection agency. This will help them avoid being penalized. If you have any questions, please dial the free service hotline 0800-000-321 for more information or go to the Bureau’s website（https://www.ntbk.gov.tw） to make an inquiry online through the national tax smart customer service “National Tax Assistant.”

Provided by: First Individual Income Tax Section
Contact person: Section Chief, Mr. Feng.    Phone number: （07）7256600 ext. 7270
Contributor: Ms. Lee.                                    Phone number: （07）7256600 ext. 7222