As the cryptocurrency investment craze is on the rise, interest in cryptocurrency taxation starting from January 1st next year is also increasing.
The tax on the return on investment in cryptocurrency is calculated by multiplying the tax rate by the tax base calculated through’transfer price-(acquisition price + incidental cost)-basic deduction’. The basic deduction amount was set at 2.5 million won and the tax rate was set at 20%. If local tax is included, it is 22%. Incidental expenses are recognized as transaction fees (0.1~0.25% of the transaction amount).
If you buy a cryptocurrency worth 10 million won and sell it for 20 million won, subtracting the transfer gain of 10 million won and the basic deduction of 2.5 million won, the tax base is 7.5 million won, and the tax comes out 1.65 million won. Considering the incidental costs, the tax may be lower. If the profit is less than the deductible of 2.5 million won, there is no tax. The transfer/acquisition price is based on the actual transaction price. The government plans to complete the taxation infrastructure by the end of the year so that the actual transaction price can be accurately identified.
Cryptocurrencies acquired several years ago may be difficult to prove the actual transaction price. In view of this, the government is planning to operate the’Agenda Acquisition Value’ rule. If the actual acquisition price cannot be proved, the market price as of 0 o’clock on January 1, 2022 is recognized as the acquisition price. Even if you have an attestable acquisition price, you can choose that price if the market price on January 1, 2022 is more favorable to you.
It is important to note that the realization of profits from’exchange’ is also taxed. This is because the tax law and the Supreme Court precedent stipulate the transfer of assets by exchange as well. There may be a case of buying 10 million won worth of Ethereum and exchanging it for 20 million won worth of Bitcoin when it reaches 20 million won. This person does not convert profits into cash, but is taxed as he raises his investment income by 10 million won. An official from the Ministry of Strategy and Finance said, “It is subject to taxation even if the profit is realized by purchasing goods at an internet shopping mall dedicated to cryptocurrency.
Cryptocurrency transfer tax must be reported by the taxpayer. Every year from May 1 to 31, the previous year’s investment income is reported and paid. The first filing and payment of the cryptocurrency transfer tax will be made in May 2023. Taxation is imposed on investment income from January to December 2022.
When gifting or inheriting cryptocurrencies, inheritance and gift taxes are imposed like stocks and real estate. It is evaluated as’average of daily average price for 1 month before and after the inheritance/donation date’. The standard is the price published by the business site designated by the National Tax Service among virtual asset business operators. The tax rate is 10-50% depending on the price of the asset. Anyone who has been given a cryptocurrency must report it to the tax authorities within three months from the end of the month in which the donation date belongs. The inheritance tax is less than 6 months.
In-wook Kwon, a cryptocurrency expert, said, “Because we pay taxes on investment income through overseas exchanges, we must faithfully report, as well as provide proof of the acquisition price.” There is” he said.
■ What is an exchange margin?
If 10 million won worth of Ethereum is 20 million won and exchanged for bitcoin, 10 million won is regarded as investment income.
Reporter Seo Min-joon [email protected].
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