South Korea's NTS: Overseas Exchange Bankruptcy Does Not Waive Crypto Account Reporting Obligations

South Korea's National Tax Service (NTS) issued its latest official interpretation on August 28, clarifying that even if an overseas virtual asset exchange has declared bankruptcy, domestic residents holding accounts on that exchange are still legally required to fulfill their overseas financial account reporting obligations.

Previously, a petitioner who held an account on an overseas exchange that went bankrupt in November 2022 questioned whether reporting was still necessary, and the NTS provided a clear response. Under Article 53 of the Law on International Tax Adjustment, anyone with overseas financial account balances exceeding 500 million KRW at the end of any month during a given year must report to the tax office by June of the following year, with virtual assets included in the reporting scope starting from 2023.

[TechFlow]