South Korea defends classifying virtual asset income as miscellaneous income

South Korea’s Ministry of Economy and Finance said classifying virtual asset income as miscellaneous income was not due to unclear legal status, but was intended to apply a taxpayer-friendly tax regime, including reducing the potential for disputes through comprehensive taxation. The ministry made the remarks in response to a Seoul Economic Daily report on Sept. 14 that said virtual assets were categorized as miscellaneous income rather than financial investment income because their legal nature is not clearly defined. On the issue of not allowing loss carryforwards on virtual asset investments, the ministry said capital gains on overseas stocks and ETFs are also not eligible for carryforwards, adding the approach reflects fairness across income types. It also said, as with other assets, taxpayers must directly prove acquisition costs. The ministry added that for assets acquired on or before Dec. 31, 2026, if acquisition costs are difficult to verify, the market price as of Dec. 31, 2026 may be recognized as the acquisition cost. For assets acquired from 2027 onward, if objective documentation is difficult to provide, 50% of the transfer value may be recognized as the acquisition cost.