SOUTH KOREA Trends and Developments Contributed by: Ohoon Kwon and Yeon Seo, Cha & Kwon Law Offices
Personal Income Tax on Crypto Gains: 2027 Start Date, Open Questions on Execution Korea’s personal income tax on virtual asset gains is currently scheduled to take effect on 1 January 2027. Gains from the transfer or lending of virtual assets are classified as miscellaneous income, with a KRW2.5 million annual deduction and a separate 20% tax rate (22% with local surtax). Annual gains and losses will be netted, and the first filings will be due in May 2028 as part of the comprehensive income tax return. The regime has been deferred three times – from 2022 to 2023, then to 2025, and finally to 2027 – each time on the same ground that filing infrastructure is not ready. A bill to remove the regime altogether was intro- duced by opposition legislators in early 2026, but the ruling party has indicated that further deferral is not under consideration. Practitioners should plan for 2027 implementation and closely monitor the legisla- tive position through the second half of 2026. Even if the start date holds, execution remains the harder question. The tax applies on a worldwide basis to Korean residents, but trade data sitting on foreign exchanges, decentralised platforms or self-custody wallets is not systematically reported to the Nation- al Tax Service, and acquisition cost rules for assets moved between venues are not fully specified. Korean exchanges can produce trade histories for activity on their own platforms, but they do not see the rest of a user’s portfolio. The practical consequence is that the burden will fall on individual taxpayers to assemble cross-venue records, and tax-administration guidance through 2026 will be the most useful indicator of how strictly the regime is actually enforced.
profit category is narrowly drawn, covering only des- ignated public-interest donee organisations and non- profit entities subject to external audit with at least five years of operating history. Established universi- ties, public foundations and comparable bodies are the typical recipients. Eligible entities must establish an internal Donation Review Committee, assess each donation’s propriety in advance, and verify the source of funds and the purpose of the proposed disposal. The intention is to let charitable and academic recipi- ents convert digital donations to fiat in an orderly way, while keeping AML controls at the exchange level. Phase two would extend access to listed compa- nies and registered professional investors. As of April 2026, phase two has not been announced, let alone come into force. For corporates that are not listed, the practical route is professional-investor registration with the Korea Financial Investment Association: an applicant must hold at least KRW10 billion in financial investment instruments (KRW5 billion for an externally audited stock company), and the registration is typi- cally processed by a securities firm acting on the cor- porate’s behalf. Media commentary has associated phase two with an indicative annual investment cap of around 5% of equity capital, although that figure does not appear in the FSC’s formal materials. For- eign-affiliated corporates planning entry now should plan against phase one and the professional-investor route only. Qualifying on paper is not enough. The FSC has con- firmed that the bank and the exchange together make the final case-by-case call on each real-name account, with the bank conducting an AML review of trans- action purpose and source of funds. An entity that meets every published criterion can still be declined at onboarding. The bank therefore holds the practical veto. If it declines, the application stops there, regardless of how thoroughly the eligibility evidence is documented. The same constraint will apply to listed companies and registered professional investors once phase two is introduced.
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