Tax on Cryptocurrency Gifts Confirmed by South Korean Court

WenAirdrop · 2026-02-05T05:14:34+00:00

The South Korean Supreme Court has upheld the government's decision to tax cryptocurrency gifts received at trading events, emphasizing that such rewards do not qualify for tax exemptions and clarifying legal obligations for crypto users.

WenAirdrop

2026-02-05 05:14:34

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Recently, South Korea’s Supreme Court has validated the government’s decision to impose income tax on cryptocurrency gifts distributed during crypto exchange trading events. This ruling marks a significant development in digital asset tax regulation in East Asia, providing legal certainty for tax authorities while raising questions within the crypto user community.

Plaintiff Rejects Recognition of Gifts as Competition Prizes

The case began when a plaintiff challenged the tax assessment on the gifts they received, arguing that these cryptocurrency gifts were part of a trading ranking competition. According to NS3.AI, the plaintiff claimed that such gifts should qualify for special tax deductions, as outlined in provisions applicable to ranking competitions under national income tax regulations.

However, the court firmly rejected this premise. The judge stated that cryptocurrency gifts given in the context of trading events do not meet the legal criteria to be classified as ranking competition prizes eligible for tax deductions. The legal basis used is the South Korean Income Tax Act, which specifically distinguishes between gifts that are part of legitimate ranking competitions and other commercial gifts.

Implications of Cryptocurrency Gifts in Global Tax Regulation

This court decision has significant implications for both the local and international crypto ecosystems. First, it affirms that cryptocurrency gifts are not exempt from normal tax burdens but are still subject to income tax as assets or benefits. Second, this legal clarity helps reduce ambiguity in tax reporting, although for some users, it means greater tax obligations.

For investors and traders in South Korea, this ruling underscores the importance of understanding the tax implications of every cryptocurrency gift received. The main message is: gifts are not always tax-exempt, and each recipient of cryptocurrency gifts should record the value of the assets received at the time of receipt for accurate tax reporting.

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