Cryptopolitan
2026-05-07 17:10:10

South Korea locks 2027 crypto tax as traders weigh exit

The South Korean government has made a decision regarding the delayed 22% tax on profits from virtual assets. Now, the tax measures will take effect from January 1, 2027. According to a report by Edaily, the government is determined to impose taxes under the Income Tax Act’s existing provisions. Given that there are around 13.26 million crypto traders in South Korea, analysts believe this move will surely affect Asia’s most dynamic crypto market. South Korean government confirms 2027 rollout despite delays The National Tax Service has initiated the final processes towards the implementation of the tax, whose initial schedule in 2025 was postponed twice due to political differences and market unpreparedness. According to reports , with respect to the present Income Tax Act, any gains derived from the sale or borrowing of virtual currency will be considered as “other income.” The gains will be subject to a fixed income tax rate of 22%, consisting of 20% national income tax and 2% local income tax. This income tax shall only apply to those whose annual income exceeds 2.5 million Korean won ($1,800). Below this level, their gains will not be taxed under the retail trader exemption. Also, the tax policy applies to domestic transactions as well as cross-border transactions involving at least one Korean resident. The National Tax Service is stressing the need for specific guidelines on this aspect. Director Moon Kyung-ho of the income tax department in the Ministry of Economy and Finance confirmed that “We will proceed with virtual asset taxation as scheduled in January next year.” The draft notice outlining the guidelines for implementation is anticipated to be released sometime in 2026. This gives the exchange platforms and investors around 18 months to adjust accordingly. The NTS is currently working with South Korea’s five leading digital currency exchanges, including Upbit (managed by Dunamu), Bithumb, Coinone, Korbit, and Gopax. Negotiations are currently underway to develop effective tax schemes, with particular emphasis on information-sharing and withholding systems. With the 2027 deadline fast approaching, many Korean traders are already exploring foreign exchange strategies to mitigate their exposure to this tax measure. From conversations on crypto forums, it appears that many will attempt to transfer their funds to exchanges where crypto capital gains are not taxed. Previous delays in tax implementation have already led to some trading volumes exodus, demonstrating the impact taxes may have on traders. Germany signals a 2027 crypto tax overhaul While South Korea is ready to implement heavy crypto taxes, the German government is poised for a major overhaul, planning to do away with its favorable one-year tax break period beginning in 2027. According to an interview with German Finance Minister Lars Klingbeil at a press conference on the national budget, the change will yield an additional €2 billion (around $2.3 billion). Under German tax law, profits realized from Bitcoin or other crypto assets held for over one year, referred to as the “Haltefrist,” are exempt from taxation. Short-term holdings of less than one year are taxed at progressive rates up to 45%, plus the solidarity surcharge. This includes profits earned from using cryptocurrencies for purposes such as staking and lending, in accordance with guidelines issued by the German Ministry of Finance in 2022 and 2025. The adoption of such changes would put Germany in a position similar to that of the United Kingdom (taxing capital gains at up to 24%). If you want a calmer entry point into DeFi crypto without the usual hype, start with this free video.

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