Crypto gains accrued through end-2028 to remain tax-exempt if South Korea delays tax plan

If the government’s proposal to delay cryptocurrency taxation by an additional two years passes the National Assembly, valuation gains accrued through the end of 2028 will be excluded from taxation even if the assets are sold after 2029. According to material released on Nov. 10 by Bae, Kim & Lee LLC, cryptocurrencies acquired before the tax takes effect and held continuously will be recognized at the higher of their market value at the end of 2028 or their actual purchase price as the acquisition cost. That means there is no need to sell before the tax takes effect solely to realize unrealized gains. Conversely, if the actual purchase price is higher than the market value at the end of 2028, gains and losses on a later sale will be calculated based on the actual purchase price, meaning price declines before the tax takes effect could be reflected as capital losses. The government said, however, that losses finalized through sales made before the tax takes effect will not be eligible for carryforward deductions. A plan is being pursued to allow losses incurred after the tax takes effect to be deducted from gains in the next three tax years following the year the loss occurs. The basic deduction of 2.5 million won and the 22% tax rate, including local income tax, will remain unchanged. Overseas financial account reporting requirements and inheritance and gift taxes will continue to apply regardless of the delay.