• The free transfer of tokens will in future be subject to gift tax
• The individual case decides on taxation
• Taxation of capital gains from 2025
According to a report by the South Korean broadcaster Yonhap News TV, the South Korean Ministry of Finance wants to tax crypto airdrops and the donation of blockchain-based tokens in the future.
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Application of tax liability to digital transactions
A person subject to gift tax must in future submit a gift tax return no later than the end of the third month after the gift. The amount of the gift tax will be between 10 and 50 percent, the broadcaster quotes Treasury Department officials as saying.
Whether a transfer of tokens falls under the gift tax is checked on a case-by-case basis. According to the Inheritance and Gift Tax Act, the transfer of assets is considered a gift and is therefore taxable.
As Coindesk reports, the South Korean government announced a tax on inherited tokens last September. This was also confirmed in a recent government inquiry. The free transfer of digital assets from one person to another will also be subject to gift tax in the future.
Gratuitous transactions of digital assets
Airdrops, i.e. the allocation of new tokens to the holders of a cryptocurrency, could also be subject to taxation. Crypto exchanges use airdrops as an investment incentive for their investors. According to the interpretation of the Ministry of Finance, however, under certain circumstances this is a digital asset transfer with economic value.
“Whether a specific virtual asset transaction is subject to gift tax or not must be determined taking into account the transaction situation, such as whether it is a consideration or whether actual property and profits are transferred,” the ministry said.
Other examples of the free transfer of digital assets are hard forks, i.e. the transaction of tokens via newly generated blockchains, or the deposit of digital assets on blockchains. These could also be subject to taxation.
Tax reform plan postponed to 2025
As CoinDesk reports, the 20 percent tax on transaction profits with Bitcoin, Ethereum and Co. will be postponed to 2025 for the time being, this also includes the “transfer or lending of virtual assets”.
Blockchain advocates criticize the possible disadvantages for small investors in the crypto sector: Because the threshold for the taxation of capital gains provided for in the South Korean tax reform plan is significantly lower than that for equity gains.
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