Crypto Taxation in South Korea: A Complete Guide

South Korea is the global crypto hub, generating a revenue of $823.4 million by 2025. Driven by a young tech-savvy population, and making the crypto economy a “Kimchi Premium,” where crypto prices are higher than in other parts of the world. In South Korea, cryptocurrency is maintained under the National Tax Service (NTS), which works as an enforcer of law and prevents tax evasion.

Tax Authorities & Regulations

In South Korea, the authority that oversees crypto tax rules is National Tax Service (NTS). It simultaneously works with the Financial Services Commission (FSC) and Korea Financial Intelligence Unit (KoFIU). The Digital Asset Basic Act (DABA), due in 2025, will establish clear guidelines for crypto firms on asset listings and transparency. The 2025 Tax Reform Bill, passed in December 2024, sets the latest tax policies where cryptocurrency are considered as intangible assets. 

Types of Crypto Taxes in South Korea

• Capital Gains Tax (CGT): Applied on profits from selling or trading cryptocurrencies exceeding a certain threshold amount.
• Income Tax: Applies to every crypto earnings either from mining, staking, airdrops, or payments for services.
• Value-Added Tax (VAT): Currently, is not imposed on crypto transactions, as cryptocurrencies are not treated as goods or services.
• Other Taxes: No wealth or inheritance taxes specifically target cryptocurrencies, but general inheritance tax may apply to crypto assets.

Tax Rates & Brackets

• Crypto profits exceeding 50 million KRW (approximately $35,900 USD) are annually subject to a 20% capital gains tax, or 22% including local taxes.
• Every earnings from mining, staking, or airdrops is taxed as “other income” at individual income tax rates, ranging from 6.6% to 49.5%, including local taxes.
• Foreign individuals or corporations are subject to a withholding tax of 11% on the transfer price or 22% on net capital gains for crypto disposals.
• No tax exemptions for small investors if gains are below 50 million KRW annually.

Crypto Transactions & Tax Treatment

• Buying and Selling Crypto: Buying is not taxable; selling triggers CGT if profits exceed 50 million KRW annually.
• Crypto Mining and Staking: Earnings are taxed as income at the time of receipt, based on market value.
• Crypto as Salary or Payment: Treated as income, taxed at individual income tax rates.
• Crypto-to-Crypto Trades: Considered taxable events, with gains calculated based on market value at the time of trade.
• DeFi, Lending, and Yield Farming: Income from these activities is taxed as “other income.”
• NFT Transactions: Subject to CGT if sold for profit; creation or minting may be taxed as income.

Crypto Tax Reporting & Compliance

• Filing Requirements: Crypto gains must be reported in annual income tax returns using specific schedules.
• Tax Forms: Schedule for virtual assets in income tax returns, detailing acquisition, transfer, and gains.
• Record-Keeping: Investors must maintain transaction logs, including dates, values, and cost bases, for at least five years.
• Deadlines and Penalties: Tax returns are due by May 31 annually; late filing or underreporting incurs penalties up to 20% of unpaid taxes plus interest.

Tax Deductions & Exemptions

South Korea allows limited deductions for crypto transactions. Only the cost of acquisition is deductible when calculating taxable gains; transaction fees or other expenses cannot be claimed. Losses from crypto transactions cannot be offset against other income or carried forward, unlike stock market gains. The 50 million KRW annual threshold for CGT acts as an exemption, sparing small investors. Investors should maintain accurate records to claim allowable deductions and ensure compliance with NTS guidelines.

Enforcement & Penalties for Non-Compliance

South Korea is strict about crypto tax evasion that laid the foundation of strict penalties. Under the NTS it uses advanced blockchain analytics and collaborates with exchanges to track crypto transactions, enforcing strict Know Your Customer (KYC) and Anti-Money Laundering (AML) rules. Local governments, like Paju, have warned tax dodgers of crypto asset liquidation. Failing to report or underreporting crypto taxes can result in penalties up to 20% of unpaid taxes plus interest. Serious offenses, like tax evasion, may lead to fines up to five times the unreported gains or at least one year in prison. The FSC can also suspend or close non-compliant exchanges, reflecting South Korea’s strict enforcement.

Future of Crypto Taxation in South Korea

As global crypto adoption grows, new statutory regulations regarding crypto taxation are also being implemented. South Korea has pushed its crypto tax rules to 2027, aligning with the OECD’s Crypto Asset Reporting Framework for better global transparency. As for now 2025 the Digital Asset Basic Act (DABA), will create stricter rules while encouraging innovation and protecting investors. The government plans to simplify tax guidelines for mining, staking, and airdrops, and may offer perks for long-term crypto holders. Expect tougher reporting requirements and global cooperation to stop tax evasion.

Conclusion

South Korea’s crypto future is bright and full of great opportunities. From 2027 there will be a 20% tax on crypto profits over 50 million KRW will apply, along with income tax on mining and staking earnings. The South Korean government, the National Tax Service (NTS) , will keep tabs on every transaction, so following the rules is important. Investors need to track all transactions and file taxes by May 31 each year to avoid big penalties. Consulting a tax expert is a smart way to thrive and grow in South Korea’s vibrant crypto world.

FAQs

1. Does South Korea have cryptocurrency taxation?

In South Korea there is still cryptocurrency taxation scheduled for 2027, deferred from 2025, as decided by the National Assembly.

2. How much capital gains is taxed on crypto trading in South Korea?

A 20% capital gains tax, or 22% including local taxes, applies to cryptocurrency profits exceeding 50 million KRW annually.

3. Are crypto-to-crypto trades subject to taxation?

Yes, crypto-to-crypto trades are taxable events, with gains determined based on the market value at the time of the trade.

4. Can cryptocurrency losses be deducted in South Korea?

No, cryptocurrency losses cannot be offset against other income or carried forward.

5. What are the penalties for non-compliance traders of failing to report cryptocurrency gains?

Non-compliance may result in penalties of up to 20% of unpaid taxes, plus interest, or imprisonment for serious violations.