Cha & Kwon Law Offices advised on domestic reporting obligations and response strategies for requests for information from Korean tax authorities in connection with overseas virtual asset-related activities.

In this matter, the key issue was whether Korean overseas financial account reporting obligations and related document submission requirements could apply where an individual potentially subject to Korean tax residency rules maintained accounts, transactions, or holdings related to virtual assets overseas. In addition, as Korea has been progressively developing its reporting and information exchange framework for virtual assets, it was necessary to review the scope of applicable obligations and practical response measures.

Cha & Kwon Law Offices reviewed the applicable requirements and assessment criteria for overseas financial account reporting obligations, the relationship between domestic and international information exchange systems and voluntary disclosure mechanisms, and the extent to which supporting materials must be provided in response to requests to substantiate the source of funds.

We explained that overseas financial account reporting obligations may arise independently of whether virtual asset taxation applies, and provided practical guidance on how such obligations should be reviewed. We also advised that, in responding to a request to substantiate the source of funds, the scope of materials submitted may be limited to those necessary to directly support the origin, transfer, and use of the relevant funds.

Cha & Kwon Law Offices provides legal advisory services for virtual asset-related activities involving both domestic and cross-border elements by reviewing the interaction between Korean reporting and tax regimes and international information exchange frameworks, thereby helping clients proactively identify and address legal uncertainties.