Good question really. Though the swastika flag was Germany's national flag for a time, it was initially a nazi party flag and so is identified more with Nazi era Germany rather than Germany per se, at least in my mind. Does kyokujitsu have the same connotation or link with a particular movement in Japan's history? If so, I could see why it might be considered inappropriate. Otherwise leave it be, especially if it has been around for a long time and was initially a Navy flag.
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