South Koreans with digital assets held in non-custodial or decentralized crypto wallets like Metamask or Ledger are reportedly not subject to the country’s overseas financial account reporting requirement. According to a South Korean tax accountant, only virtual assets held on overseas centralized exchanges are subject to this requirement.
The Overseas Account Reporting Requirement Controversy
The South Korean revenue collector, known as the National Tax Service (NTS), has reportedly clarified that residents holding digital assets in decentralized and non-custodial wallets are not subject to the country’s overseas financial account reporting requirement. The NTS clarified that Article 53 of the Act on International Tax Adjustment does not apply to South Koreans who have digital assets stored in wallets such as Metamask or Ledger.
According to a report, the clarification was in response to residents who wanted to know if the overseas account reporting, which commenced in January 2023, is also applicable to cold wallets and decentralized wallets holding assets worth over $380,000 (500 million won).
However, at the time when the revenue collector began enforcing the new law, many digital asset holders were reportedly unsure if the requirement applied to them. This prompted some residents to ask for clarification.
The report quotes a South Korean tax accountant, Kim Ji-ho, who spoke of how the clarification sparked a debate on what constitutes an overseas crypto wallet.
“The purpose of reporting overseas financial accounts is to report because there are limitations in obtaining overseas tax data, but there was controversy as to whether the Metamask wallet was an overseas wallet,” Ji-ho said.
The tax accountant, however, insisted that the South Korean taxman’s explanation potentially means many decentralized wallets will not be obliged to adhere to the overseas account reporting requirement. Only virtual assets held on overseas centralized exchanges are subject to this requirement, the tax accountant added.
What are your thoughts on this story? Let us know what you think in the comments section below.
