Mandatory declaration of financial accounts abroad to cover cryptocurrency investments

Foreign cryptocurrency exchange accounts will be subject to overseas financial accounts reporting from January 1, 2022.

The National Tax Service announced on June 3 that the accounts of foreign cryptocurrency exchanges will be subject to overseas financial accounts reporting on January 1, 2022.

The mandatory declaration applies to residents and legal entities in South Korea. If the total overseas account balance exceeds 500 million won on the last day of a month, the fact must be reported in June of the following year. Currently, mandatory reporting covers all financial products ranging from deposits, savings, stocks and bonds to funds, derivatives and insurance. Cryptocurrencies will be included in the scope next year.

This year’s reporting deadline is June 30. A violation is punishable by a fine equivalent to 10% to 20% of the undeclared or underreported amount. A violation exceeding five billion won is subject to criminal penalties.

The number of breaches discovered is increasing based on the exchange of financial data with several governments. Last year, 47.4 billion won were imposed on 68 violators. A total of 2,685 reports worth a total of 59.9 trillion won were made last year.

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