The Controversial Overseas Account Reporting Requirement
South Koreans who hold digital assets in decentralized or non-custodial wallets like Metamask or Ledger are reportedly not required to report their holdings as overseas financial accounts. The National Tax Service (NTS) of South Korea clarified that Article 53 of the Act on International Tax Adjustment does not apply to residents who store their digital assets in wallets such as Metamask or Ledger.
A recent report states that this clarification was a response to residents seeking clarification on whether the new overseas account reporting requirement applies to cold wallets and decentralized wallets containing assets worth over $380,000 (500 million won).
When the revenue collector began enforcing the law, many digital asset holders were uncertain if they had to comply. This led to requests for clarification.
The Debate on Overseas Crypto Wallets
A South Korean tax accountant, Kim Ji-ho, discussed how the NTS clarification sparked a debate on the definition of an overseas crypto wallet. Ji-ho stated that the purpose of reporting overseas financial accounts is to address limitations in obtaining overseas tax data. However, there was a controversy over whether wallets like Metamask were considered overseas wallets.
According to the tax accountant, the explanation from the South Korean tax authorities implies that many decentralized wallets will not be required to comply with the overseas account reporting requirement. This requirement only applies to virtual assets held on overseas centralized exchanges.
Hot Take: South Korean Crypto Wallets Exempt from Reporting Requirement
The National Tax Service of South Korea has clarified that residents holding their digital assets in decentralized or non-custodial wallets are not subject to the country’s overseas financial account reporting requirement. This exemption applies to wallets like Metamask or Ledger. The reporting requirement controversy arose when many digital asset holders were unsure if they had to comply with the law. The clarification provided by the tax authorities indicates that only virtual assets on overseas centralized exchanges are subject to this reporting requirement. As a result, many decentralized wallets are not obligated to report their holdings as overseas accounts.
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