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South Korea mulls gift tax on airdrops, staking rewards, and hard-forked tokens

By:
on Aug 22, 2022
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  • South Korea will charge gift tax on crypto airdrops, staking rewards, and hard forked tokens.
  • The move comes despite the postponing of crypto gains tax to 2025.
  • The gift tax is under the Inheritance and Gift Tax Act.

Despite postponing crypto gains tax to 2025, the South Korean Ministry of Strategy and Finance has today declared that virtual asset airdrops, hard forked tokens, and staking rewards will be subject to a gift tax under the Inheritance and Gift Tax Act.

South Korea has on several occasions postponed crypto gains tax citing a lack of regulatory guidelines and investor protection measures concerning cryptocurrencies which are officially referred to as virtual assets under South Korean law.

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Crypto gift tax in South Korea

Today’s declaration by the South Korean tax authority is in response to an inquiry about transfers of virtual asset airdrops by crypto exchanges.

In its response, the tax authority directed that any virtual asset transfers made by crypto exchanges in form of staking rewards, airdrops, and hard forked tokens will attract a gift tax.

According to a local publication, the gift tax will be charged to the third party to whom the virtual asset is being transferred too freely.

Despite the postponement of the crypto gains tax, virtual asset transfers will attract a 10% to 15% tax under the Inheritance and Gift Tax Act. According to the law, the recipient of the “gift” (i.e. staking reward, hard-forked tokens, or airdrops) is required to file a gift tax within three months of receiving the gift.

However, due to a lack of regulations, the ministry clarified that the actual taxation of such transfers shall be considered on a “case-to-case basis.” A statement from the ministry read:

“Whether a specific virtual asset transaction is subject to gift tax or not is a matter to be determined in consideration of the transaction situation, such as whether it is a consideration or whether actual property and profits are transferred.”

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