South Korea global income tax return deadline: 31 May. Korean residents taxed on worldwide income at 6–45% progressive rates plus 10% local income tax. Foreign workers can elect flat 19% rate on employment income instead of progressive rates (flat rate option must be assessed each year). Year-end settlement (연말정산) for employees; May filing for self-employed and those with other income.
At a glance
Key Facts
Tax Year
Calendar year: 1 January to 31 December
Filing Deadline
31 May (global income tax return); extensions rarely granted; year-end settlement by February for employees
National Tax Rates
6%–45% progressive on 8 brackets; plus 10% local income tax on top of national tax (effective combined rates 6.6%–49.5%)
Flat Tax Option for Foreigners
Foreign workers can elect 19% flat national income tax rate on employment income instead of progressive rates (18.7% effective including local); must choose the lower of flat vs progressive
Residency Rule
Korean resident if: domicile in Korea or present 183+ days; worldwide income taxable; partial-year treatment available
Introduction
South Korea's income tax system distinguishes between residents (taxed on worldwide income) and non-residents (taxed only on Korean-source income). For most salaried foreign employees, the year-end settlement (연말정산 — yeonmal jeongsaan) process handled by the employer settles income tax obligations without the need for individual filing. However, expats with additional income sources — or who choose the flat tax option — must file the Global Income Tax Return (종합소득세 신고) in May.
This guide covers Korean tax residency, the flat tax option for foreigners (19% vs progressive rates), year-end settlement vs independent filing, and key deductions and credits available to foreign residents.
Section 01
Korean Tax Residency and Rates
Who is a Korean Tax Resident?
You are a Korean tax resident if you have a domicile (juso) in Korea or have been present in Korea for 183+ days in a tax year. Residency begins from the date of establishing domicile or after 183 days of presence. Korean residents are taxed on worldwide income.
National Income Tax Rates (2024)
Taxable Income (KRW)
Rate
Up to 14 million
6%
14M–50M
15%
50M–88M
24%
88M–150M
35%
150M–300M
38%
300M–500M
40%
500M–1 billion
42%
Above 1 billion
45%
Local income tax adds 10% on top of national tax — if you owe KRW 10M national tax, local tax adds KRW 1M.
Flat Tax Option for Foreign Employees
Foreign workers employed in Korea can elect to pay a flat 19% national income tax rate (plus 10% local = 20.9% combined) instead of the progressive rate structure. The election must be made each year on the global income tax return. The flat tax is advantageous for: high earners (where progressive rates exceed 19%); those in upper tax brackets with limited deductions. Most foreign employees earning above approximately KRW 80–100M/year benefit from the flat tax election. Importantly: the flat tax election means you cannot claim most deductions — you trade deductions for a lower marginal rate. Must be carefully assessed each year.
Section 02
Year-End Settlement vs May Filing
Year-End Settlement (연말정산)
Most salaried employees in Korea have their income tax settled via the year-end settlement process in January–February following the tax year. Employers collect receipts for deductions (insurance premiums, medical expenses, education, card spending) and file on behalf of employees. If settlement shows under-withholding, the employee pays the balance; if over-withheld, a refund is paid via February salary. Most employees do not need to file an individual return after year-end settlement — it is legally final for employment income only.
Who Must File the May Return
You must file the Global Income Tax Return (종합소득세) by 31 May if you have:
Self-employment or business income
Rental income
Pension income above threshold
Foreign income (as a Korean resident)
Multiple employment income sources
Want to elect the flat tax rate option
National Tax Service (NTS) HometaxPortal
The National Tax Service's Hometax system (hometax.go.kr) supports online filing in Korean. Foreign residents often need assistance — the NTS operates taxpayer assistance centres in major cities with English-speaking staff during peak filing season (April–May).
Section 03
Foreign Income and Double Tax Treaty Relief
Korean residents with foreign income must declare it on the global income tax return. Korea has double tax treaties with over 90 countries including USA, UK, Germany, Australia, Japan, China, and most OECD members.
Foreign Tax Credit
Foreign income taxes paid can be credited against Korean income tax liability using the Foreign Tax Credit form. The credit is limited to the Korean tax on the same foreign income. Excess credits cannot be carried forward — use it or lose it.
US Citizens in Korea
US citizens resident in Korea face the standard US worldwide taxation obligation plus Korean worldwide taxation. The US-Korea tax treaty and the US Foreign Tax Credit system generally prevent double taxation for most income types. Korean taxes are higher than US taxes for most income levels — so US citizens in Korea typically owe zero additional US tax (with Korean taxes fully crediting). However, filing both returns correctly (Form 1040 + Korean global income return) and FBAR/FATCA compliance remain required.
Remittance of Foreign Income
Unlike Japan, Korea does not have a remittance-basis option — Korean residents are taxed on worldwide income as it arises, regardless of whether it enters Korea. This means foreign investment income, foreign rental, and foreign pension income must all be declared annually on the Korean return.
US citizens in South Korea must file both a Korean global income return and a US expat return. Greenback's CPAs handle both — flat tax election analysis, Foreign Tax Credit, FBAR, and the US-Korea treaty.
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Paying Korean tax bills from overseas? Wise converts foreign currency to KRW at the real exchange rate — cheaper than international bank wire transfers to the NTS.
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Should I choose the flat 19% tax rate or the progressive rate in Korea?
The flat 19% national income tax rate (20.9% including local income tax) is available as an option to foreign employees. It's typically advantageous if your effective progressive rate would exceed 19%. Under the progressive system, the rate reaches 19%+ (including brackets) somewhere around KRW 60–70M in income. If you earn above approximately KRW 70–80M and have limited deductions, the flat rate is likely better. If you have significant deductions (mortgage interest, insurance premiums, dependants, medical expenses), the progressive system with deductions may produce a lower bill even at higher incomes. The only way to be sure is to calculate both methods: use the flat rate election on your May return only if it results in lower tax. Many expat-focused Korean accountants run both calculations. Note: if you elect the flat rate, you cannot claim most standard deductions — it's a clean substitute, not an add-on.
Q
How are Korean stock market gains taxed for foreign investors?
For non-resident foreign investors in Korean listed stocks: capital gains from Korean stocks are generally exempt from Korean tax under most of Korea's tax treaties (the typical rule: gains on shares are taxed only in the investor's country of residence). However, large shareholders (>25% stake) face a 11% withholding tax even as non-residents. Dividends from Korean listed companies: 22% withholding (14% national + 10% local + 2% surtax) reduced under treaty (USA: 10–15%; UK: 5–15%). For Korean tax residents investing in foreign stocks: capital gains from the sale of foreign listed shares are taxable in Korea at regular income tax rates (as other income, possibly 22% final tax for non-business individuals depending on amount). Crypto gains: Korea introduced a crypto tax delayed multiple times; the latest implementation is a 22% tax on crypto gains above KRW 2.5 million annually — check the current status as this has been repeatedly postponed.
Q
What deductions are available for foreign employees in Korea?
For progressive-rate taxpayers in Korea, standard deductions and credits include: earned income deduction (up to KRW 20M depending on income level); basic personal deduction (KRW 1.5M per person, including dependants); national health insurance and pension contributions (deductible); private insurance premiums (KRW 1M limit); medical expenses (actual costs above 3% of total income, up to KRW 7M); education costs (children's tuition up to KRW 3M/child); credit card and debit card spending exceeding 25% of income (15–30% of excess is deductible as a tax credit); housing-related deductions for qualifying mortgage interest or monthly rent. For flat-rate taxpayers: essentially none of the above — the 19% rate is a complete substitute. This trade-off makes the deductions calculation critical before electing the flat rate.
Q
Do I need to report foreign bank accounts to Korean authorities?
Korea requires Korean residents to report foreign financial accounts with combined balances exceeding KRW 500 million (approximately $375,000) as of December 31 of the prior year. This is the Foreign Financial Account Reporting requirement (해외금융계좌 신고), filed with the NTS by 30 June. Non-compliance carries significant penalties. This is separate from the income tax return — it's an informational disclosure, not a tax payment. Korea has also implemented FATCA-equivalent reporting via the Common Reporting Standard (CRS) — Korean financial institutions report foreign residents' accounts to their home countries, and foreign financial institutions report Korean residents' accounts to the NTS. For most expats with modest foreign savings, the KRW 500M threshold means this reporting requirement doesn't apply. But for HNW individuals, it is an important compliance obligation.
Q
When does a foreign worker become subject to Korean social insurance?
Foreign workers in Korea on employment visas generally become subject to Korean social insurance (four major insurances): National Health Insurance (NHI): mandatory for most visa categories from day one of employment; employee contributes 3.545% of salary; employer matches. National Pension (NPS): mandatory for most expats; 4.5% employee, 4.5% employer; exemptions available if your home country has a social security totalization agreement with Korea (USA, UK, Germany, Canada, Australia have agreements — Korean pension contributions exempt if remaining in home country scheme). Employment Insurance (EI): 0.9% employee contribution; covers unemployment benefits. Industrial Accident Compensation Insurance: employer-paid; no employee contribution. In practice: NHI is the most significant contribution; NPS exemption via totalization agreement is the most important planning issue for expats from treaty countries.
Disclaimer:This guide provides general tax information for educational purposes only. Korean tax law — including the flat tax option, crypto tax implementation, and foreign account reporting — changes frequently. Always consult a qualified Korean tax professional (세무사 — semusa) before filing.