Foreign virtual assets worth W131tr unveiled

Virtual assets accounted for more than two-thirds of the value held in registered overseas accounts this year, a report by the National Tax Service showed Wednesday, after it added them to the list of assets subject to mandatory registration.

Some 130.8 trillion won ($98.3 billion) in virtual asset holdings were recorded out of 186.4 trillion won in the total registered external financial assets.

Tax residents or corporations in Korea with foreign financial accounts are required to file a report if the aggregate balance of the accounts exceed 500 million won on the last day of any month of the previous year.

Virtual assets were subject to reporting for the first time this year, following a revision to the related tax law in 2021. The NTS said virtual assets refer to electronic certificates that have economic value and that can be traded or transferred electronically, quoting the Act On Reporting And Using Specified Financial Transaction Information.

With the new inclusion, the total value of the reported assets nearly tripled from the 64 trillion won in 2022 to 186.4 trillion won this year, marking the highest ever since the registration of foreign financial assets was enforced in 2011.

This year, 73 corporations reported owning foreign virtual assets worth 120.4 trillion won. The NTS explained that most of the corporate reports were filed by cryptocurrency publishers which reported on their retained crypto assets held overseas.

The rest 10.4 trillion won was registered to be held by 1,359 individuals, which translates to an average holding of 7.66 billion won per person. Those in their 30s or younger were reported to hold an average of around 10 billion won worth of virtual assets per person, taking up 51.8 percent of the registered foreign virtual assets.

Virtual assets took up the largest portion of the reported total assets owned through overseas financial accounts, followed by equities at 12.6 percent (23.4 trillion won) and deposits, savings at 12.3 percent (22.9 trillion won).

This year, a total of 5,419 residents and companies reported assets owned through overseas financial accounts. Among them, 4,565 were individuals owning a combined 24.3 trillion won. This shows a 1.9 trillion won increase from the 22.4 trillion won reported last year.

For corporations, 854 firms reported owning foreign financial assets worth 162.1 trillion won, marking a 289.7 percent increase in value on-year from the 41.6 trillion won reported last year.

If excluding virtual assets, the value of other types of assets owned through overseas financial accounts dropped by 8.4 trillion won, as equity holdings dipped by 11.6 trillion won due to the slump in the global stock market in 2022.

Apart from virtual assets -- which the NTS explained it is difficult to identify the exact whereabouts of the accounts -- most of the foreign financial assets were reported to be held in the US, with the largest amount of savings and equity held being held there.

But for derivatives, the largest amount was reported from the UK. Other top countries were Singapore, Hong Kong and Japan for both individual and corporate holdings.

In Korea, the authorities have not yet levied tax on gains from virtual assets, as the taxation has been deferred until January 2025, though it was slated to kick in earlier this year.