Investing in Japanese stocks from Canada? Here’s your guide

Japan is an appealing market for foreign investors, with some of the country’s biggest businesses offering lucrative stock options and investor-friendly policies.

We take a look at exactly how to invest in Japanese stocks from Canada, including your tax implications and how to use Wise to save money on currency conversion.

This article is for informational purposes only and should not be considered financial advice. Please consult a relevant professional for investment related support.

Can Canadians invest in Japanese stocks?

You’ll need to be a Japanese citizen or permanent resident to trade stocks directly via the Tokyo Stock Exchange (TSE). However, you can use an international broker or trading platform to trade on your behalf.¹

Many foreigners purchase shares in public Japanese companies, or you can buy a mutual fund to access a portfolio of investments managed by experts in the TSE.²

Regulatory overview and access

Although you won’t be able to buy stocks directly from the TSE, Japan’s thriving economy is still very open to investments from foreign buyers.

Any foreign direct investments (FDI) in Japan are regulated by the Foreign Exchange and Foreign Trade Act (FEFTA). For national security reasons, you may need to notify Japan’s Minister of Finance if your investment is in a sensitive business sector.³

As a Canadian investor, you’ll also need to report investments worth over 100,000 CAD on your tax return.⁴

How to invest in Japanese stocks from Canada

Let’s take a look at how to invest in Japanese stocks from Canada – everything you need to know.

Through international brokerage accounts

An international brokerage account lets non-Japanese citizens invest in local stocks. A broker can help you manage investments in multiple international markets – and the platform will invest in the TSE for you.⁵

There are a few popular international brokerage platforms, including:

• Interactive Brokers®
• Forex.com®
• Fidelity®

Using an international brokerage account is a good option if you want to diversify your investments and get guidance from those who know the Japanese market.

However, you’ll typically pay a fee for the service. For example, Interactive Brokers charges access fees of 2.70 JPY per order for all stocks.

You’ll also pay an exchange rate fee. This will vary, but the Standard Market fee is 0.0038% (as of 1 May 2025).⁶

Via exchange-traded funds or ETFs

An exchange-traded fund (ETF) is an investment fund that holds multiple assets. Just like stocks, you can buy and sell your assets on an exchange.⁷

Foreign investors can buy ETFs to invest in a broad market index and get good exposure to the Japanese stock market. Popular ETFs for 2025 include iShares MSCI Japan® ETF and WisdomTree Japan Hedged Equity Fund® ETF.⁸

ETFs are typically less expensive than buying stocks individually. You may also find that you’ll pay less brokerage commission for your investment.⁷

Using American Depositary Receipts or ADRs

American Depositary Receipts (ADRs) let foreign investors invest in Japan without worrying about the complexities of the TSE.

An ADR represents a certain number of shares in a Japanese company. ADRs work like regular stocks, but they’re US-traded proxies, meaning you can buy them on US stock markets.⁹

You can access a range of Japanese stocks via ADRs, including:

• Sony® ADR
• Mitsubishi UFJ Financial® ADR
• Toyota Motor® ADR¹⁰

ADRs are issued by a US bank or brokerage company, which will hold your stock and pay you dividends. This offers a certain level of security, but you’ll need to consider how much it costs to use.

For example, you’ll likely pay a service fee and exchange rate charge to transfer your dividends from JPY to USD.⁹

Currency exchange and fees when investing

If you want to invest in Japanese stocks, chances are you’ll make your deposit in a foreign currency. So, what does this mean?

Why currency matters

When you pay for Japanese stocks using your Canadian bank account, you’ll need to convert your CAD to JPY. In some cases, you may also need to convert your CAD to other currencies, such as USD. Your financial institution will do this for you, but at a price.

Your provider may add a markup to the standard mid-market exchange rate. This is how banks make their money, but it can add a significant cost to your deposits.

This may also affect any returns you receive from your investment, as your funds will likely be converted back into CAD at a markup.

For investments via ADRs, the bank holding your dividends will convert them from JPY to USD.⁹ You may then want to exchange your USD for CAD. Each time your money is converted, you’ll lose out to exchange rate charges.

Currency conversion costs at a glance

Method	Currency rate markup	Additional fees
Bank FX transfer	Most banks add a markup to the standard exchange rate – you may not know exactly how much your transfer will cost	Some banks charge transaction fees for transfers into international accounts – speak to your bank for more information
Broker FX	Exchange rates vary, but you may pay a markup on the standard rate	Fees vary – speak to your brokerage platform for more information
Wise	Mid-market exchange rate – the ‘fair’ rate with no markups	From 0.48% per transfer*

How Wise helps you avoid hidden fees

Use Wise to avoid hidden fees. You can send and receive money in over 150 countries across the world, all at the mid-market exchange rate. You can even open accounts in multiple currencies to hold money in over 40 currencies, including USD, CAD and JPY. Simple!

Tax implications for Canadian investors

There may be some tax implications for your Japanese investment. Let’s take a closer look.

Capital gains and foreign income reporting

If you own foreign investments worth over 100,000 CAD, you’ll need to report them on your tax return. You’ll also need to declare capital gains or losses if you sell your Japanese stocks.

The taxes you’ll pay for dividends may depend on several factors, including:

• whether your dividends are eligible or non-eligible
• where you live
• your marginal tax rate

Typically, if you receive dividends from stock in big corporations, they are considered eligible. If you receive dividends from a smaller business, they may be non-eligible.

These categories reflect the rate of tax paid by the company, which will affect how much the government charges you.¹¹

Before reporting your dividends or profits, you may need to convert them into Canadian dollars.⁴

Japanese stock investment - tax summary

Tax type	Applicable to Japanese stocks	Canada Revenue Agency (CRA) notes
Capital gains tax	Yes, you’ll pay capital gains tax if you sell your Japanese investments	You can work out your capital gains by subtracting the amount you paid for your investment, plus commission and fees (adjusted cost base), from the amount you sold it for If you earn money from the transaction, you must report 100% of it via your income tax return. If you make a loss, you may still need to report it.⁴
Dividend tax	Yes, you’ll pay tax on dividends from your Japanese investments	You’ll need to work out if your dividends are eligible or non-eligible to understand how much tax you’ll pay. Unlike Canadian dividends, you won’t qualify for a federal dividend tax credit if you receive dividends from Japan.¹¹

Risks and benefits of investing in Japanese stocks

There are a few risks and benefits of investing money in Japanese stocks. Let’s take a closer look.

Benefits

Japan’s economy is growing, with plenty of opportunities for foreign investors looking to buy stock via the Tokyo Stock Exchange.

By investing in Japanese stocks, you can diversify your geographic investment portfolio and put your money in a stable, pro-growth economy.²

You may also find that many Japanese companies are currently increasing dividends, with a range of government incentives for foreign investors.¹²

Risks to consider

It’s important to consider the risks before investing money. Investing in Japanese stock can be a complicated process, so make sure to consult an expert.

Consider how geopolitical or economic factors may affect your investments, as well as fluctuations in currency strength. You aren’t guaranteed to make a return on your investment.

Final thoughts on investing in Japanese stocks in Canada

Investing in Japan can help you expand your investment portfolio overseas. However, you’ll need to look into any fees and taxes for your investment.

Always compare providers before investing your money abroad – and choose a flexible platform like Wise to avoid unnecessary currency conversion costs.

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Sources:

1. Finder - How to invest in the Tokyo Stock Exchange from the UK
2. Hennessy Funds - Guide to investing in Japan
3. Pinsent Masons - Foreign direct investment in Japan
4. Turbo Tax - Taxes from selling foreign investments
5. Investopedia - Best brokers for international trading for May 2025
6. Interactive Brokers - Tokyo Stock Exchange
7. Investopedia- Exchange-traded fund (ETF): How to invest and what it is
8. Admiral Markets - Top Japan ETFs to watch 2025
9. TSI Network - US-listed ADRs: A smart way for Canadian investors to buy foreign stocks
10. Investing.com - Japan ADRs
11. Turbo Tax - How are dividends taxed in Canada?
12. Morgan Stanley - Four reasons to buy Japanese stocks now

Sources verified on 3 June 2025