From Next Year, Virtual Asset Inheritance and Gifts Taxed Based on 'Two-Month Average Price' of Four Major Exchanges

National Tax Service Announces 'Upbit, Bithumb, Korbit, Coinone' as Virtual Asset Service Providers

[Sejong=Asia Economy Reporter Kim Hyunjung] Starting next year, when inheriting or receiving virtual assets such as Bitcoin, taxes must be reported and paid based on the average value over two months of the relevant assets on the four major exchanges where KRW transactions are possible, Upbit (Dunamu), Bithumb (Bithumb Korea), Korbit, and Coinone.

The National Tax Service (NTS) announced on the 28th that it has designated these four exchanges, which have completed registration with the Financial Intelligence Unit (FIU) as virtual asset service providers for property evaluation in cases of virtual asset inheritance and gifting.

Previously, taxation on capital gains from virtual asset transfers was postponed until after 2023, but a taxation policy for inheritance and gifting was established. Accordingly, in the case of inheriting virtual assets, taxes must be reported and paid within six months from the last day of the month in which the inheritance commencement date falls, and in the case of gifting, within three months from the last day of the month in which the gifting date falls.

Until now, when inheriting or receiving virtual assets as gifts, the taxable evaluation amount was calculated based on the 'current market price' at the time of inheritance or gifting, which was somewhat unclear. However, starting January 1 next year, the method of calculating the evaluation amount will change according to the revised Inheritance and Gift Tax Act and its enforcement decree.

The virtual assets traded on the four major exchanges announced by the NTS will be evaluated based on the average of the daily average prices published by each exchange over two months, one month before and one month after the inheritance commencement date or gifting date. For example, if Bitcoin is gifted on February 5 next year, the average daily price will be calculated from January 5 to March 4 across the four major exchanges. The sum of the daily average prices for each day divided by the number of days will be the evaluation amount for gift tax reporting.

Even if virtual assets are inherited or gifted through exchanges other than the four major ones, if the assets are traded on the four major exchanges, the evaluation amount will be calculated based on the average daily prices of the four major exchanges. For virtual assets traded only on some of the four major exchanges, the average daily price will be calculated based only on the prices published by the exchanges where the assets are traded.

For virtual assets not traded at all on the four major exchanges, the NTS explained that taxation will be based on reasonably recognized values such as the daily average price on other exchanges or the closing time published market price. The daily average prices of virtual assets traded on the four major exchanges can be checked on each exchange’s official website.

The NTS plans to establish a virtual asset daily average price inquiry screen on the Hometax system in March next year. By entering the type of virtual asset and the evaluation reference date on this screen, users will be able to check the evaluation amount of the relevant virtual asset.