- The South Korean government will impose a new gift tax on freely transferable crypto assets, including airdrops.
- To pay the gift tax, one must file a gift tax return within 3 months from the end of the month in which the gift date belongs.
- The gift tax on virtual assets is levied at a rate of 10-50%.
On August 22, the South Korean Ministry of Economics and Finance notified that a new gift tax will be imposed on freely transferable crypto assets, including airdrops.
According to Yonhap News, a South Korean news agency, the government responded to a tax law interpretation inquiry about whether free virtual assets transactions are subject to the gift tax.
Free virtual asset transactions include airdrops. Airdrops are free tokens sent out to the members of the community as part of a marketing initiative to encourage adoption. A crypto airdrop is usually sent to raise awareness about new crypto projects and services.
The South Korean Ministry of Economics and Finance states:
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.
According to the tax authorities, taxation on capital gains from virtual assets will begin in 2025, but the gift of virtual assets is still being taxed. A person obligated to pay gift tax must file a gift tax return within 3 months from the end of the month in which the gift date belongs, and the tax is levied at a rate of 10-50%.
Furthermore, to exclude freely transferable cryptocurrencies from the subject of gift tax, it is necessary to reinforce the system through additional legislation.
Adding on, it is a great concern that tax authorities find it difficult to grasp the details of virtual asset donations while levying the tax.
In the U.S, one needs to report gifts above $15,000 to the IRS (Internal Revenue Service) using Form 709.
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