The government announced the 2026 tax reform plan, excluding the proposal to delay taxation on virtual assets. If the reform is finalized after deliberation in the National Assembly, taxation on capital gains from virtual assets will take effect in January next year. The first filing and payment will take place in May 2028.
Income from virtual assets is classified as "other income" and is subject to a 22% tax rate. Annual income up to 2.5 million won is tax-exempt. Loss carryforwards do not apply. If you record a loss of 10 million won from virtual assets this year and revenue of 5 million won next year, the result is a loss overall, but the 5 million won revenue next year will still be taxed. Key points on virtual asset taxation are summarized in a Q&A.
―What is the virtual asset tax structure?
"Money earned from virtual assets is classified as other income, like lottery winnings, under the Income Tax Act and is taxed separately from other comprehensive income."
―What is the applicable tax rate?
"Annual net income up to 2.5 million won is tax-exempt. If annual net income after the basic deduction exceeds 2.5 million won, a 20% rate applies to the excess, and a 2% local income tax must also be paid. If you earn 3 million won from virtual assets next year, you will pay 110,000 won in tax on the 500,000 won excess."
―Is there a possibility of raising the basic deduction limit?
"In politics, including the People Power Party, a bill is being pushed to raise it to 50 million won to match stocks."
―What if you do not know the acquisition cost?
"If you cannot determine the cost basis due to long-ago bitcoin mining or an airdrop (AirDrop; free distribution of virtual assets), by exception you may provisionally calculate the acquisition cost as 50% of the transfer price for all virtual assets of the same kind. In this case, incidental expenses such as separate fees are not recognized."
―What are the filing and payment periods?
"Aggregate from Jan. 1 to Dec. 31 each year, and if income arises, you must file and pay directly via the National Tax Service Hometax when filing comprehensive income tax from May 1 to May 31 of the following year."
―What about users of overseas exchanges?
"Even when using overseas virtual asset exchanges such as Binance Holdings Ltd., if you have an address in Korea or have resided for 183 days or more, you are subject to taxation under the resident taxation principle. If the total balance of overseas accounts exceeds 500 million won as of the end of each month, investors must report their overseas financial accounts to the National Tax Service in June of the following year. Fines may be imposed for non-reporting. Overseas virtual asset accounts have been subject to reporting starting with 2023 filings."
―What documents should investors prepare?
"You must submit records documenting the timing of virtual asset trades, type, quantity, price, fees, and deposits/withdrawals. You must also apply foreign currency conversion using the National Tax Service's announced exchange rate or the base exchange rate at the time of the transaction. Experts recommend submitting materials using CSV (Comma Separated Values), a text file format that stores data in comma-separated form. If you do not file, an additional tax of 20% may be imposed. If you fail to file due to wrongful acts such as concealing assets, the additional tax rate can rise to 40%."
―Do loss carryforwards apply?
"It is not possible to carry forward losses from virtual assets incurred this year to the following year for deduction. Even if you incur a loss of 100 million won this year and earn 50 million won next year, past losses are ignored and you must pay tax on the 50 million won profit next year."
―If the price of virtual assets purchased before taxation begins rises next year?
"For virtual assets held before taxation begins, a special rule applies that recognizes the higher of the acquisition cost and the market price at the end of this year as the acquisition cost. Valuation gains before taxation begins are not taxed. If you bought 1 bitcoin in the past for 50 million won and it rises to 100 million won by the end of this year, then you sell it for 150 million won next year, the tax law recognizes 100 million won as the acquisition cost as of the end of this year. Only the 50 million won gain (150 million won − 100 million won) realized next year or later is taxable. If you sell bitcoin for 90 million won next year, no taxable income arises."
―What if you give or bequeath virtual assets?
"When virtual assets are gifted or inherited, inheritance tax or gift tax must be paid. In such cases, the acquisition cost of the virtual assets is valued as the average of the daily average prices announced by virtual asset exchanges, such as Upbit, during the one-month periods before and after the valuation base date on which the virtual assets are traded on exchanges.
For example, if you gift bitcoin on Aug. 5 this year, you calculate the average of the daily average prices on virtual asset exchanges from the 5th of the previous month to the 4th of the following month. The daily average price can be checked on the National Tax Service Hometax."
―Is there a possibility of a deferral of taxation?
"The People Power Party has introduced an amendment to the Income Tax Act, arguing for a complete repeal of virtual asset taxation for consistency with the abolition of the financial investment income tax. In contrast, the Ministry of Economy and Finance finalized the 2026 tax reform plan excluding the proposal to defer virtual asset taxation."