Last Updated: April 2026
South Korea has a sophisticated and heavily enforced tax system. For the growing community of foreign nationals working in Korea's tech, finance, and manufacturing sectors, departure requires careful planning around the NPS pension system, the unique jeonse rental deposit system, and — for high-value shareholders — Korea's exit tax on equity holdings. Korea also applies an unusual flat tax option for foreign workers that may affect departure year tax calculations.
Key issues for Koreans moving to the US or European countries:
Korea-USA DTA: Under the Korea-USA tax treaty, Korean pension income paid to US residents is taxable in the USA; Korea may also withhold (check the applicable article). NPS lump sums received in the US are reportable on Form 1040 as foreign pension income. FTC available for Korean withholding via Form 1116.
Korean equity and US taxation: If you held Korean company shares and paid Korean exit tax: the US gives credit for Korean CGT via Form 1116. However, the tax year timing must match — ensure the Korean exit tax is paid in the same US tax year as the deemed US taxable event.
FBAR: Korean bank accounts, brokerage accounts, and NPS accounts (if individual accounts) reportable on FinCEN 114 if aggregate >$10,000.
Korean inheritance: Korea imposes a significant inheritance tax (상속세, Sangsokse) — up to 50% on inheritances above KRW 3B — that can affect estates with Korean-sited assets even after the beneficiary has emigrated. The Korea-USA DTA has limited inheritance tax provisions; check the specific DTA of your destination country.
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International Health Insurance After Leaving Korea →Yes — but only if you have been a Korean tax resident for 5 or more consecutive years AND meet the qualifying equity threshold (3%+ shareholding or ₩1B market value in Korean domestic company shares). For most foreign nationals working in Korea for fewer than 5 years: the exit tax does not apply. For long-term expatriates (5+ years in Korea) who have invested significantly in Korean equities or hold stakes in Korean startups: the exit tax can be significant. Example: a foreign tech executive holds 4% of a Korean startup valued at ₩5B — on departure after 7 years: exit tax on unrealised gain = (₩5B × 4% − cost basis) × 20%/25% rate. Important: the threshold applies to domestic (Korean) shares only — foreign-listed shares held by Korean residents are NOT subject to the Korean exit tax. Foreign shares are generally subject to Korean CGT only when actually sold.
To claim your NPS lump sum refund: (1) Confirm eligibility: are you a foreign national? Are you permanently leaving Korea (not just temporarily)? Check whether your home country has a totalization agreement with Korea — if so, you contributed under the agreement rules and may have different withdrawal rights. (2) Apply at NPS: visit an NPS branch office, or apply online via the NPS foreign workers' portal (goo.nps.or.kr). Korean fluency or a Korean-speaking helper is useful. (3) Documentation needed: alien registration card (or proof of cancellation); passport; departure confirmation (visa cancellation or airline ticket); bank account details for deposit. (4) Processing: approximately 2–4 weeks. The NPS will send a payment notice (지급결정 통보) before transferring the funds. (5) International transfer: the NPS can transfer to your foreign bank account — provide SWIFT/IBAN details. Alternatively, receive in Korea and transfer via Wise (competitive KRW transfer rates). (6) Tax withholding: the NPS withholds 20% on the earnings portion. The principal (your own contributions without growth) is returned without tax.
Korean workplace pensions (퇴직연금 Toejik Yeongeum) — Defined Benefit (DB) or Defined Contribution (DC) plans — are managed separately from the NPS. On termination of employment: Defined Contribution (DC) plan: your individual DC account (personal retirement account — IRP) holds the accumulated amount. You can withdraw the IRP balance or roll it to another IRP. For departing foreigners: withdraw from the IRP account — 16.5% withholding tax applies on the total withdrawal amount (퇴직소득세). The withholding rate is calculated using a specific formula based on years of service. Defined Benefit (DB) plan: the employer calculates a severance payment based on final average salary × years of service; tax withheld at the same 16.5% rate using the retirement income formula. IRP to international transfer: after receiving the withdrawal net of withholding, transfer via your Korean bank to your international account. Korean banks support SWIFT transfers for this purpose. Withholding tax credit: the Korean severance/retirement income tax withheld is creditable against your home country's tax on the same income via the applicable DTA's pension article.
Once you have ceased Korean tax residency, Korea taxes only Korean-source income — not your worldwide income. Korean-source income as a non-resident: employment income for work physically performed in Korea; business profits from Korean PE; Korean real estate rental income and capital gains; dividends from Korean companies (withholding: 22% — 20% + 10% LIT surcharge; reduced under DTA); interest from Korean bank accounts (15.4% withholding — 14% + 10% LIT); Korean company share sales above small shareholder threshold. Non-resident withholding is typically the final Korean tax — no annual Korean tax return required if all income is subject to correct withholding at source. If you sell Korean real estate as a non-resident: Korean CGT withheld by the buyer/notary; annual return may be required to account for actual deductible costs. Korea's DTA network (currently 90+ treaties): most investment income rates are further reduced under applicable DTAs to 10%–15% for dividends and 0%–10% for interest. Check the specific treaty between Korea and your new country of residence.