South Koreans Report Record Amount of Overseas Assets, Including Cryptocurrencies
In 2023, South Koreans declared a total of 186.4 trillion won in overseas assets, a significant increase from the previous year’s 64 trillion won. This surge is a result of a new regulation introduced by the National Tax Service (NTS), according to the Yonhap news agency.
Out of the reported amount, 131 trillion won ($98.4 billion) was held in cryptocurrencies. The NTS also revealed that 1,432 companies and individuals disclosed their crypto assets in overseas accounts.
For businesses, the United States was the primary destination for these overseas accounts, followed by Japan and Britain. As for individuals, Singapore and Hong Kong ranked second and third respectively, after the United States.
Difficulty Tracking Cryptocurrency Holdings
The NTS clarified that the breakdown by country does not include cryptocurrency holdings because it is challenging to track the geographical location of digital assets held on crypto trading platforms.
Obligation to Report Foreign Financial Accounts
According to current tax legislation in South Korea, individuals and legal entities with more than 500 million won (approximately $377,000) in foreign financial accounts must report them to the authorities by June. Failure to do so can result in fines of up to 20% of the undeclared amount.
Government’s Efforts to Increase Budget Receipts
While postponing a 20% tax on crypto-related capital gains until 2025, the South Korean government has been actively seeking to increase its revenue from citizens’ cryptocurrency holdings. In recent years, they have seized crypto assets worth nearly 260 billion won ($184 million at the time) due to tax arrears.
Hot Take: South Koreans Embrace Overseas Crypto Accounts
The surge in South Koreans declaring overseas assets, including cryptocurrencies, reflects the growing popularity and acceptance of digital currencies in the country. With an increasing number of companies and individuals reporting their crypto holdings, it is evident that people are recognizing the importance of complying with tax regulations.
Although tracking cryptocurrency holdings remains a challenge for tax authorities, the government’s efforts to enforce reporting requirements demonstrate their commitment to ensuring transparency in the crypto space. As South Korea continues to navigate its regulatory framework for cryptocurrencies, it will be interesting to see how these developments shape the future of the industry in the country.
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