The South Korean Ministry of Strategy and Finance has announced that Cryptocurrency airdrops, staking rewards, and hard-forked tokens will be liable to gift tax under the country’s Inheritance and Gift Tax Act.
Cryptocurrencies have been officially classified as virtual assets under South Korean law, despite the postponement of the crypto gains tax to 2025. In response to a tax inquiry regarding exchanges’ transfers of virtual asset airdrops, South Korea’s tax authority stated that any free virtual asset transfers in the form of airdrops, staking rewards, and hard-forked tokens would now be subject to a gift tax.
According to Yonhap News, a local news publication, the gift tax will be: Charged to the third party to whom the virtual asset is given away for free.
Although the tax on virtual asset gains has been delayed until 2025, free virtual asset transfers will be subject to a 10-50% tax under the Inheritance and Gift Tax Act, according to the tax authority. The Act requires recipients who receive a free “gift” to file a gift tax return within three months of accepting it.
Because there are currently no regulations governing the virtual asset market, the ministry stated that actual taxation on such virtual asset transfers will be considered on a case-by-case basis.
The ministry continues: Whether or not a specific virtual asset transaction is subject to gift tax depends on the transaction situation, like whether it is a perk or whether actual property and profits are transferred.
The virtual asset gains tax has been delayed due to a lack of proper regulatory guidelines surrounding virtual assets. The virtual asset gains tax, which was supposed to be introduced in 2023, will now be implemented in 2025.
South Korea has taken a number of steps to combat illegal activity in the Cryptocurrency market. The country suspended sixteen Cryptocurrency platforms last week, with regulators claiming that some of these platforms had not been properly registered. The South Korean police force has also launched two pilot programs that allow it to seize Cryptocurrencies in exchange for unpaid traffic fines.
