South Korea prepares for 2027 digital asset taxation

South Korea is preparing to implement taxation on digital asset transfer and lending income starting January 1, 2027. Under the current plan, such earnings are classified as ‘other income,’ which carries a combined tax rate of 22% (including local income tax) after a 2.5 million won annual basic deduction.

Concerns have been raised regarding the classification of these earnings. Critics suggest that the current system may not reflect the economic reality of different transaction types, such as distinguishing between price appreciation from trading and rewards from mining or staking. Additionally, the National Tax Service faces challenges in tracking transactions involving overseas exchanges and private wallets to accurately calculate acquisition costs and actual income.

Beyond direct taxation, the classification of digital asset gains as ‘other income’ could significantly impact health insurance premiums. For employees, if total non-salary income exceeds 20 million won, additional premiums may apply. For dependents, such as retirees or homemakers, exceeding the 20 million won annual income threshold could result in the loss of dependent status and mandatory conversion to local subscriber status.