Korea’s high court has issued a judgment in a case where a taxpayer received an amount less than the principal investment on the sale of participations in Japanese funds, which was offset to some extent by foreign exchange gains from the strength of the Japanese yen. The taxpayer argued that the foreign exchange profit could not be separately distinguished from the loss on the fund investment. However a High Court has now ruled that the foreign exchange profit is unrelated to the drop in the value of the participation in the fund, as the two events did not occur simultaneously.
The High Court further added that although the loss from the stock price fluctuation exceeds the foreign exchange profit the profit may be taxed as dividend income despite the loss on the investment.
