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News

Korea Taxes Crypto Gifts, Airdrops With 10-50% Rate

August 22, 2022 - Around 3 mins mins to read
The South Korean government said it would impose a gift tax on investors who receive freely transferable cryptocurrencies, even airdrops, and must submit forms within 3 months of the gift, at a rate of 10-50%.
korean

According to the Ministry of Strategy and Finance on August 22nd (local time), the government recently responded to an investigation explaining the tax law as to whether a transaction in which the issuer of virtual assets provides a virtual property of the same or different kind to a member who owns a particular asset. Virtual property is a gift taxable transaction. The free transfer of property is a “gift” under the Inheritance and Gift Tax Act.

“In this case, the gift tax will be levied on the third party to whom the virtual property is transferred free of charge.”

Free virtual asset transactions include airdrops, payments of new virtual assets to holders of specific virtual assets in proportion to investment, hard forks that create other virtual assets through a new blockchain, and deposit virtual assets into a blockchain network. Virtual assets are paid as a reward.

For example, if a virtual asset investor receives a virtual asset payment in the form of an airdrop reward from an exchange, this means that the investor may be subject to gift tax.

According to the tax authority, taxation on income from virtual assets will begin in 2025, but donations of virtual assets are still being taxed.

This is because the gift tax is levied comprehensively on all objects of convertible economic value or on all legal rights and de facto economic and asset value.

Persons obligated to pay gift tax must file a gift tax return within 3 months from the end of the month in which the gift is received and the tax is levied at the rate of 10-50%.

korea

“In the case of being given free virtual assets, in principle, they are of course subject to tax. However, the government’s position is that the actual taxing of gifts should be considered on a case-by-case basis. The Ministry of Strategy and Finance said, “Whether a particular virtual asset transaction is subject to gift tax is an issue that needs to be determined when considering the transaction situation, such as the review of assets and whether the actual profit is transferable or not.”

A tax official said

However, the government’s position is that the actual taxing of gifts should be considered on a case-by-case basis.

Furthermore, to explicitly exclude airdrops etc. from being subject to the gift tax, it is necessary to strengthen the system through additional legislation. It is difficult for tax authorities to grasp the details of gifting virtual assets, even when taxing, is considered a dilemma.

In virtual asset transactions, there are many new types of transactions that do not have a legal basis, the related infrastructure is still lacking, so taxing itself is not simple.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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News

Korea Taxes Crypto Gifts, Airdrops With 10-50% Rate

The South Korean government said it would impose a gift tax on investors who receive freely transferable cryptocurrencies, even airdrops, and must submit forms within 3 months of the gift, at a rate of 10-50%.
korean

According to the Ministry of Strategy and Finance on August 22nd (local time), the government recently responded to an investigation explaining the tax law as to whether a transaction in which the issuer of virtual assets provides a virtual property of the same or different kind to a member who owns a particular asset. Virtual property is a gift taxable transaction. The free transfer of property is a “gift” under the Inheritance and Gift Tax Act.

“In this case, the gift tax will be levied on the third party to whom the virtual property is transferred free of charge.”

Free virtual asset transactions include airdrops, payments of new virtual assets to holders of specific virtual assets in proportion to investment, hard forks that create other virtual assets through a new blockchain, and deposit virtual assets into a blockchain network. Virtual assets are paid as a reward.

For example, if a virtual asset investor receives a virtual asset payment in the form of an airdrop reward from an exchange, this means that the investor may be subject to gift tax.

According to the tax authority, taxation on income from virtual assets will begin in 2025, but donations of virtual assets are still being taxed.

This is because the gift tax is levied comprehensively on all objects of convertible economic value or on all legal rights and de facto economic and asset value.

Persons obligated to pay gift tax must file a gift tax return within 3 months from the end of the month in which the gift is received and the tax is levied at the rate of 10-50%.

korea

“In the case of being given free virtual assets, in principle, they are of course subject to tax. However, the government’s position is that the actual taxing of gifts should be considered on a case-by-case basis. The Ministry of Strategy and Finance said, “Whether a particular virtual asset transaction is subject to gift tax is an issue that needs to be determined when considering the transaction situation, such as the review of assets and whether the actual profit is transferable or not.”

A tax official said

However, the government’s position is that the actual taxing of gifts should be considered on a case-by-case basis.

Furthermore, to explicitly exclude airdrops etc. from being subject to the gift tax, it is necessary to strengthen the system through additional legislation. It is difficult for tax authorities to grasp the details of gifting virtual assets, even when taxing, is considered a dilemma.

In virtual asset transactions, there are many new types of transactions that do not have a legal basis, the related infrastructure is still lacking, so taxing itself is not simple.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Join CoinCu Telegram to keep track of news: https://t.me/coincunews

Follow CoinCu Youtube Channel | Follow CoinCu Facebook page

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