South Korea surges children's cryptocurrency gifts ahead of 2027 tax rules

Cryptocurrency gifts under South Korean minors surge, tax regulations are about to be tightened.

Data shows that the total amount of cryptocurrency gifts received by South Korean minors in 2025 will reach 4.03 billion won (approximately 2.8 million US dollars), an increase of 2.7 times over the previous year. At the same time, the number of reported gift cases also almost doubled to 103.

This trend is particularly significant among younger children. The number of cryptocurrency donations to children aged 11 and under has surged from 28 in 2024 to 65, and the total value of donations has nearly tripled, climbing from 774 million won to 2.35 billion won.

Overall data and background

According to data from the National Taxation Service (NTS) obtained by Democratic MP Jung Tae-ho from the media, there were 53 virtual asset gift declarations involving minors in 2024. By 2025, this number will increase to 103, and the amount will also jump significantly from 1.47 billion won to 4.03 billion won.

Among statistics for all age groups, the Korean tax department recorded a total of 423 cases of cryptocurrency inheritance and gift in 2025, with a total value of 45.86 billion won. The number of cases was 2.4 times that of the previous year, and the total value increased 3.4 times. Of the 423 cases, 360 were clearly classified as "gifts", and nearly one-third of them involved minors.

Strengthen tax inspections: Crypto service providers will be included in the investigation

The release of the above data comes as the South Korean government prepares to give tax authorities more tools to identify digital assets involved in inheritance and gift tax cases. According to the 2026 tax reform plan announced by the government, starting from January 1, 2027, virtual asset service providers such as Upbit and Bithumb will be included in the financial asset inquiry system.

Currently, the State Taxation Service Administration has the right to inquire about financial assets through banks, securities companies, insurance companies and other institutions. As crypto service providers join the system, tax officials will gain access to another important source of data when reviewing the assets of deceased persons or donors. In addition, the power of tax authorities to request information and conduct inquiries in inheritance and gift tax cases will also be extended to enterprises related to virtual assets.

A tax official said the agency plans to conduct more systematic and strict management and verification of inheritance and gift taxes involving virtual assets. These new measures aim to increase the visibility of cryptocurrencies held outside traditional financial accounts. Previous reports pointed out that the IRS plans to introduce commercial wallet tracking software used by South Korean and overseas investigative agencies to monitor transaction activity in private wallets.

Councilman Cheng Tai Fok pointed out that the current tax information system still needs to be improved to cover point-to-point transfers, overseas transactions and private wallets. "As intergenerational wealth transfers through virtual assets continue to increase, we need to accurately understand the actual status of gifts and strengthen infrastructure to ensure appropriate tax collection."

New Regulations on Cryptocurrency Income Tax in 2027

In addition to strengthening monitoring of donations, South Korea is also preparing a separate tax system on digital asset transfers or borrowing gains. The South Korean government confirmed in August 2025 that it would implement a long-delayed cryptocurrency income tax in 2027.

According to the current Income Tax Law, starting from January 1, 2027, the portion of annual virtual asset income exceeding 2.5 million won will be classified as "other income." Investors are required to pay a national tax of 20% on income exceeding the exemption amount. After adding local income tax, the comprehensive tax rate will reach 22%.

For example, if an investor receives 12.5 million won in qualified cryptocurrency income, a tax exemption of 2.5 million won can be deducted, and only 22% of the tax will be paid on the remaining 10 million won, that is, the tax payable is 2.2 million won.

It is worth noting that this regulation is not limited to assets held on domestic exchanges. The government's response to disclosures confirmed that taxable income generated through private wallets and foreign transactions will also be included in this tax framework. Authorities stressed that where virtual assets are stored or how they are managed does not determine whether transfer or borrowing proceeds are taxable. As of August, rules governing revenue generated through pledges, airdrops, loans and hard forks are still under review.

Despite continuing political opposition-the ruling People's Power Party proposed legislation last month to delay the tax until 2030, and even proposals to completely eliminate the tax-the new rules will still apply to revenue generated in 2027 until the law is not changed, and the first batch of related tax returns are expected to be made in May 2028.

Valuation of cryptocurrencies under existing gift tax rules

In fact, cryptocurrencies do not have to wait for the new income tax system in 2027 and are currently included in South Korea's inheritance and gift tax system. Virtual assets transferred as gifts must be declared like other taxable assets. The valuation depends on the trading venue:

• Assets traded by designated service providers: For assets traded on virtual asset service providers designated by the IRS (including major cryptocurrencies such as Bitcoin), the taxable value is calculated using the average daily price for one month before and after the grant date.
• Low-activity or unlisted assets: For assets that are not actively traded or are not listed on a qualified exchange, the average price on the grant date is used for valuation.

Family gift deductions follow the same framework as other types of property. Within 10 years, gifts to spouses can enjoy a maximum deduction of 600 million won, the limit to adult children is 50 million won, and the 10-year deduction limit to minor children is 20 million won. Gifts within the deduction limit do not generate gift tax, but are still subject to valuation and reporting rules.

Since taxable transaction assets are valued over a two-month valuation period, the value used for tax purposes may differ from the market price at the date of transfer. Given that prices may fluctuate significantly during this period, the final assessed value may be higher than the amount originally expected by the donor.

In addition, South Korea is preparing to receive more information about holding cryptocurrencies overseas. The government's tax reform plan includes measures related to the OECD's crypto asset reporting framework, which is expected to give authorities access to transaction information exchanged by participating jurisdictions. For assets not provided through these reporting channels, Zheng Tae-ho called for further improvements to the system used to obtain tax information covering overseas transactions, private wallets and direct transfers between individuals.