The warning clearly states that June 30th has been designated as the reporting date for overseas financial holdings.
As countries try to find a balance in financial and cryptocurrency regulation, South Korea has issued a new warning to cryptocurrency holders that they may face prosecution if they fail to report their holdings on foreign cryptocurrency exchanges. This is part of a plan to create stricter guidelines. According to a recent report, digital assets held on exchanges outside of Korea are considered offshore assets.
Obligation to report overseas financial accounts
A warning posted to MoneyS by Kim Dae-kyung, a tax accountant at Hana Bank’s Asset Management Group, states that June 30 has been designated as the reporting date for overseas financial holdings. According to the Income Tax Act, if the total amount of overseas financial accounts is more than 500 million won at the end of the month, domestic residents must report the accounts to the authorities by June 30 every year.
He also noted that although these regulations are now in effect, authorities still have ways to know residents’ financial information, and this is due to the implementation of the Autonomous Financial Information Exchange Agreement (FATCA) with the United States and the Autonomous Banking Regime. 2014 Organization for Economic Co-operation and Development (OECD) Transnational Information Exchange Agreement (MCAA).
To ensure compliance, the state imposed fines on individuals who failed to report their account holdings. The fine ranges from 10 to 20% of the account balance, and if the unreported cryptocurrency trader’s wallet or account balance is more than 5 billion won (more than 3.6 million dollars), the holder may be subject to criminal punishment.
In fact, joint accounts shared by a couple or family are also subject to reporting if the combined balance is more than 500 million won. However, only one of the account signatories is required to report the entire account to meet everyone’s obligations.
Residency criteria for reporting obligations
The reporting process requires several details, including declaring the highest total month-end balance for the year and converting it to your local currency using the exchange rate on the date the highest balance occurred for reporting purposes.
The obligation to report foreign financial accounts applies to both residents and domestic corporations under the Income Tax Act. Residence standards for foreigners and overseas Koreans vary depending on the period of stay. Professor Kim emphasized:
“According to the International Tax Adjustment Act (National Tax Act), foreigners must reside in Korea for at least 5 years from 10 years prior to the end of the reporting year, and overseas Koreans must reside in Korea from 1 year prior to the end of the reporting year. Reporting year end date. If the period is less than 183 days, the reporting obligation is exempted.”
Moreover, the news reports that the National Tax Service sends a notice every June to those scheduled to submit overseas financial accounts based on various data such as past reporting history, overseas fund transfers, and information collected through international information exchange. contract. However, receipt of such notice does not necessarily confirm the reporting requirement.
Individuals who receive a notification should carefully evaluate whether they meet the mandatory reporting criteria. Even if you do not receive a notification, you must be careful as the National Tax Service may have obtained your account information through cross-border information sharing if you are required to report and have not disclosed your account.
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