Due to a lack of regulatory framework and investor protection measures, South Korea has repeatedly delayed the implementation of its cryptocurrency gains tax.
Although the postponement of the cryptocurrency gains tax until 2025, the South Korean Ministry of Strategy and Finance announced on Monday that hard forked tokens, staking rewards, and airdrops of virtual assets would all be subject to gift taxes under the Inheritance and Gift Tax Act.
The South Korean tax authority stated in response to a tax law inquiry about transfers of virtual asset airdrops by crypto exchanges that any free virtual asset transfer by crypto exchanges, including those made in the form of airdrops, staking rewards, and hard-forked tokens, would be subject to the gift tax.
According to a local news source, the gift tax will be “assessed against the third party to whom the virtual asset is transferred free of charge.”
The tax authority confirmed that free virtual asset transfers would still be subject to a 10–50% tax under the Inheritance and Gift Tax Act even though virtual asset gains tax would now be applicable starting in 2025. According to the aforementioned tax, the recipient of the free “gift” must submit a gift tax return three months after receiving it.
However, the ministry also stated that, given the absence of regulations surrounding the virtual asset market, actual taxation on such virtual asset transfers should be taken into account on a case-by-case basis. According to a ministry statement:
“Whether a specific virtual asset transaction is subject to gift tax or not is a matter to be determined in consideration of the transaction situation, such as whether it is a consideration or whether actual property and profits are transferred.”
“Whether a specific virtual asset transaction is subject to gift tax or not is a matter to be determined in consideration of the transaction situation, such as whether it is a consideration or whether actual property and profits are transferred.”
