Was Taiwan returned to Chinese sovereignty on 25 October 1945?
In order for us to know the significance of the so-called "Taiwan Retrocession Day" it is paramount for us to understand the basis of Republic of China's authority on Taiwan.
First, we must establish that Taiwan was ceded in full and perpetuity to Japan under the terms of Treaty of Shimonoseki in 1895.
On 2 September 1945, Japanese forces surrendered to the Allied Powers. The Japanese Government issued a document called Instrument of Surrender, while the Supreme Commander for the Allied Powers issued the terms of surrender called General Order No. 1. Under the terms of General Order No. 1, Japanese forces in Taiwan and Penghu surrender themselves to Generalissimo Chiang Kai Shek.
On 25 October 1945, Japanese forces in Taiwan surrendered to the Allied Powers in a ceremony. Surrender of the Japanese paved the way for military occupation by Chiang Kai Shek's forces. Authority of Chiang came from General Order No. 1. The basis for Chiang's governance is military occupation. As a rule, military occupation does not transfer territorial sovereignty to the occupying State.
Did any of the Allied Powers recognize transfer of sovereignty for Taiwan, from Japan to China on 25 October 1945? The answer is NO.
On 12 January 1946, the Executive Yuan of the Republic of China issued an order to restore Chinese nationality to the Taiwanese population on and effective from 25 October 1945. This led to diplomatic protests by the United States and United Kingdom. In diplomatic memorandums sent to the Republic of China, both US and UK insisted that transfer of Taiwan's sovereignty be formalized in a treaty of cession with Japan.
Pro-unification camps argued that the Cairo, Postdam and Yalta Declarations could restore Taiwan back to China. Common sense tells us that declarations are statements of intentions which do not carry the force of law. The diplomatic protests are solid evidence that US and UK did not recognize those declarations as having the force of law. Those documents cannot be cited as the basis for return of Taiwan to China. Instead, only a treaty can settle territorial questions.
What's wrong with changing the nationality of Taiwanese population? Firstly, China altered the nationality of Taiwanese people without first obtaining documentary evidence of sovereignty. Secondly, it is a violation of Article 45 of Hague Conventions governing wars on land, since China could only be recognized as occupying power over Taiwan.
25 October 1945 was the day when Taiwan came under Chinese [military] occupation. It can only be called Taiwan Occupation Day.