South Korea: personal tax guide

What the tax system covers

Ordinary Korean residents are taxed on worldwide income. Qualifying foreign nationals resident for no more than five of the preceding ten years have a limited foreign-income paid-in or remittance rule. A separate employment-rate election must be evaluated on its own conditions.

When you become tax resident

Korean residence depends on domicile or the applicable 183-day residence test. For a qualifying foreign national whose Korean domicile or residence totals no more than five years in the preceding ten, foreign-source income is generally within the charge when paid in or remitted to Korea. Establish the residence history and source of each category before applying that limitation. Work performed in Korea does not become foreign-source merely because a foreign company pays it to an overseas account. Keep contracts, work-location records and payroll evidence. Separate earned income, dividends and return of previously accumulated capital in transfer records. The 2026 NTS individual guide covers the 2025 return year; the current statute and the relevant year must be checked when preparing a future return.

Rates and the tax base

6%–45% national progressive income tax. These are national comprehensive-income rates. Local income tax is additional, and separate taxation, foreign-worker elections and capital-gains categories can change the calculation.

Private investment gains and business trading

Capital-gains rules cover property and specified share disposals, including foreign shares. Domestic listed-share treatment depends on shareholder and transaction conditions; property, foreign shares and derivatives have separate national schedules, with local tax considered separately. A portfolio should be classified asset by asset rather than assigned one capital-gains rate.

Asset cost basis on arrival

The arrival cost-basis treatment for this country has not yet been established in this comparison. Do not assume either an arrival-value reset or retention of original cost.

• The treatment needs to be checked separately for ordinary shares, funds, property, business interests and assets acquired by gift or inheritance.

Compare the foreign-worker election with normal taxation

Article 18-2 provides the 19% national employment-income election for eligible foreign workers within the statutory commencement window, currently ending 31 December 2026, and the permitted twenty-year period. It is not a general 19% rate for all of a foreign resident’s income. Local taxes and non-tax employment costs must be considered separately.

The calculation sacrifices the ordinary exemptions, deductions and credits covered by the election. Compare both outcomes using the actual remuneration and benefits. Related-party employer restrictions and exceptions are important for owner-managed businesses. A qualifying engineer incentive is another category and should not be combined with the flat-rate election without confirming the statutory interaction. Preserve the election and employer records for later payroll or tax review.

CFC attribution uses ownership, relationships and a low-tax test

Current article 27 deems distributable retained income of specified foreign corporations to be a dividend attributable to the Korean investor. The low-tax condition compares actual foreign tax with income multiplied by 70% of the highest Korean corporate-tax rate. It is a formula tied to the applicable rate, so an old fixed percentage can become misleading.

The company must also satisfy the related-party condition. The investor scope includes direct or indirect holdings of at least 10%, with specified related-person interests included in that calculation. Foreign trusts similar to the statutory corporate-tax trust categories can be treated separately as foreign corporations. Apply the remaining statutory exclusions and computational rules before quantifying an attribution; retaining profits abroad alone does not prevent a charge.

Prepare final employment and residence records

Document the last working day, departure, new home, final salary and deferred benefits. Confirm final payroll settlement, return requirements and the treatment of later payments with the appropriate Korean adviser. Nonresidence and a cancelled immigration permission are related facts, not identical legal conclusions.

Use the statutory shareholder test before assuming no exit charge

Article 118-9 requires both the relevant residence history and major-shareholder condition. Review domicile or residence during the ten years before departure and the shareholding position at the end of the preceding year. A last-minute change should not be assumed to remove a test measured at an earlier date.

Identify the precise shares covered by the cross-referenced capital-gains provisions and apply the decree’s ownership and market-value criteria. Obtain a defensible departure-date value and records of acquisition cost. Review filing, payment and any available relief with the local specialist before leaving. This guide establishes that the statutory charge exists and its principal gateway conditions; it does not substitute an unverified universal shareholding threshold for the detailed test.

Complete payroll and preserve the foreign-income chronology

NTS guidance describes final employment settlement when the final salary is paid for the departure month. Provide the deduction and supporting records in time for the employer’s calculation. Confirm how bonuses, equity awards or other amounts paid later will be handled and whether separate personal returns remain necessary.

Keep travel history, the end of Korean duties, the overseas home and the date each income item arose. The foreign-national five-of-ten-year rule is not a substitute for determining whether residence ends. Retained Korean-source income can remain relevant after moving, while the destination may begin taxing worldwide income. Arrange access to payroll statements and tax certificates before company or local telephone access is cancelled.

Short-term foreign residents still need a source analysis

NTS distinguishes domicile or qualifying residence from nonresidence. A qualifying foreign national with no more than five years of Korean domicile or residence in the preceding ten years has a special limitation for foreign-source income paid or remitted to Korea. That rule does not turn remuneration for work in Korea into foreign-source income because the employer or bank is abroad.

Before moving, catalogue salary, dividends, business interests, pensions and investment income. Record the period to which each receipt relates and the residence history. A transfer may mix old capital and current earnings, so preserve evidence of both. The employer’s payroll settlement cannot be assumed to settle every personal tax obligation involving overseas assets.

Foreign companies and income attribution

Article 27 covers related low-tax foreign entities and investors within the 10% scope; low-tax formula is 70% of the highest corporate rate, with remaining statutory exclusions and computations.

Departure, migration and continuing obligations

Personal article 118-9 deemed disposal applies to specified major shareholders with at least 5 of the prior 10 years of residence. Detailed decree-level asset/ownership tests and corporate consequences remain separate.