National Tax Service Sends Filing Notices via Mobile and Mail
All Overseas Financial Accounts Including Cash, Stocks, and Virtual Assets Targeted
Residents and domestic corporations holding overseas financial accounts must report the account information to the head of the tax office with jurisdiction over their tax payment location by the end of the following month if the combined balance of cash, stocks, virtual assets, and other holdings in all overseas financial accounts exceeds 500 million KRW on any day at the end of each month in 2023. This year, since June 30th is a holiday, the report can be submitted by July 1st.
On the 30th, the National Tax Service (NTS) announced that it plans to send notification letters via mobile and mail to taxpayers who are likely to hold overseas financial accounts exceeding 500 million KRW.
In particular, since overseas virtual asset accounts have been included in the overseas financial account reporting requirements starting from last year’s reporting, the NTS has coordinated with domestic virtual asset service providers to provide guidance on the overseas financial account reporting system to ensure that holders of overseas virtual assets do not omit reporting their overseas financial accounts.
The reporting obligation applies to residents and domestic corporations holding overseas financial accounts. Residents are individuals who have an address in Korea or have stayed in Korea for 183 days or more, and domestic corporations refer to corporations with their head office, main office, or the place of substantial business management located in Korea.
The balance of accounts held at the end of each month is calculated by asset type within the account, and the calculated amounts are converted into Korean won by applying the exchange rate of the respective currency before being summed up. If multiple heirs jointly inherit an overseas financial account registered under the name of the deceased, only the amount corresponding to each heir’s share of the inherited balance should be summed.
For virtual assets, the reporting obligor must check the final price on the last day of each month at the overseas virtual asset exchange where the virtual asset account (account) is opened to calculate the balance. In cases where the overseas virtual asset service provider does not offer trading services and thus the final price on the last day of each month cannot be confirmed, such as with virtual asset wallets, the reporting obligor must arbitrarily select one of the final prices on the last day of each month from domestic or overseas exchanges where the held virtual assets are traded to calculate the virtual asset balance.
Violations of the overseas financial account reporting obligation may result in a fine of up to 20% of the unreported (or underreported) amount, capped at 2 billion KRW. If the unreported (or underreported) amount exceeds 5 billion KRW, criminal penalties and public disclosure of the offender’s name may apply.
An NTS official stated, "The NTS is strengthening verification of violations of overseas financial account reporting obligations by thoroughly analyzing financial information exchanged between countries and data collected from other agencies. We urge taxpayers to confirm whether they have an overseas financial account reporting obligation and to file their reports within the deadline, whether or not they have received a notification letter."
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