South Korea Legislative Research Service Flags Risk of Legal Disputes Ahead of Crypto Tax

South Korea’s National Assembly Research Service said legal disputes could arise when taxation of virtual assets, including cryptocurrencies, takes effect in earnest next year.

The legislative research body recently submitted a written response on virtual-asset income taxation to the office of People Power Party lawmaker Park Jeong-hoon, Seoul Shinmun reported on July 9.

The service said tax rules for virtual assets need to be clarified, particularly for newer forms of token acquisition such as staking and airdrops. Those methods could spark disputes over whether the assets should be taxed and how, it said, making it necessary to set more detailed tax standards.

The agency also addressed the treatment of investment losses. Under the current virtual-asset tax framework, gains and losses from crypto investing can be combined, but losses cannot be carried forward to offset income in future years. Given the nature of crypto investing, the service said, not allowing loss carryforwards is problematic.

It also raised concerns about double taxation. Profits earned by South Korean residents through overseas exchanges could be taxed both in South Korea and abroad, the service said.

The government plans to fully implement crypto taxation next year. Income from virtual-asset investing will be classified as other income, with an annual deduction of 2.5 million won ($1,810) and tax imposed on amounts above that threshold. South Korean crypto investors will therefore have to report annual gains exceeding 2.5 million won directly to authorities and pay the related tax.