Tax Guide for Expats in Korea

Korean income tax basics for expats

Korea has a progressive income tax system with rates from 6% to 45%. Foreigners working in Korea are generally subject to the same tax rules as Korean nationals, with some important exceptions and options that can reduce your tax burden.

Tax residency: You are a Korean tax resident if you've been in Korea for 183 days or more in a calendar year. Residents are taxed on worldwide income. Non-residents are taxed only on Korea-source income.

Korean income tax rates (verify current brackets at www.nts.go.kr):

Local income surtax (지방소득세) adds an additional 10% of income tax liability.

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The foreigner flat rate: 19%

This is one of the most important tax provisions for expats in Korea.

Eligible foreign employees can elect to pay a flat 19% tax rate on employment income instead of the progressive rates above. This is advantageous when your income is high enough that the progressive rate would exceed 19% (roughly above ₩55M/year).

The flat rate provision (조세특례제한법 Article 18-2) has been extended and amended several times by the National Assembly. Verify your current eligibility period with your employer's HR department or a Korean tax accountant (세무사), do not rely solely on this guide for this detail, as the rules change.

How to elect the flat rate:

• At year-end settlement (연말정산), your employer's payroll department will ask if you want to use the flat rate
• If your income is above approximately ₩55M/year, the flat rate is likely beneficial
• If you're unsure, ask your employer's HR or accounting team

Important: The flat rate applies to employment income only. Other income (freelance, rental, investments) is taxed at progressive rates.

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Year-end tax settlement (연말정산)

If you're employed by a Korean company, your employer handles most of your tax administration through 연말정산 (year-end settlement) in January–February for the previous calendar year. This is separate from the comprehensive income tax filing (종합소득세), see below.

What happens:

1. Your employer compiles all your salary payments and tax withholdings for the year
2. They calculate whether too much or too little tax was withheld
3. You receive a refund or pay additional tax in February/March

What you need to provide:

• Receipts for deductible expenses (medical bills, education, donations)
• Proof of dependents if applicable
• Your choice of flat rate vs. progressive rate

Most employers' HR departments will guide foreign employees through this. Ask your HR team in December if you're unsure what to expect.

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Filing your own tax return

If you have income beyond employment (freelance work, rental income, crypto gains, dividends), you must file a comprehensive income tax return (종합소득세 신고) by May 31 for the previous calendar year.

How to file:

1. Visit Hometax (www.hometax.go.kr), the NTS online filing portal
2. Log in with your ARC number and digital certificate
3. Enter all income and deductions
4. Submit and pay any balance due

Hometax has an English language option, though it's incomplete. Korean is clearer for navigation. Consider hiring a Korean accountant (세무사) for your first year if your situation is complex.

NTS foreigner services: The National Tax Service has dedicated foreigner assistance. Call 126 and ask for English support.

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Double taxation treaties

Korea has tax treaties with over 90 countries. Key countries with treaties:

• United States, United Kingdom, Canada, Australia
• Germany, France, Netherlands, all major EU countries
• Japan, China, Singapore

What treaties typically do:

• Prevent the same income from being taxed twice (once in Korea, once in your home country)
• Specify which country has taxing rights on different types of income
• Allow foreign tax credits, taxes paid in Korea reduce your home country tax liability

US citizens and green card holders: The US taxes worldwide income regardless of where you live, which means you must file US taxes every year even while in Korea. However, the Foreign Earned Income Exclusion (FEIE) and Foreign Tax Credit (FTC) typically prevent actual double taxation. US expats in Korea should use a US-Korea cross-border tax specialist.

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Before leaving Korea: what to do

If you're leaving Korea permanently or for an extended period:

1. File a departure tax return if required If you have taxable income for the year you're leaving and you're leaving mid-year, settle your taxes before departure. Your employer will handle your employment income; report any other income to the NTS.

2. Cancel NHIS Notify NHIS of your departure, otherwise premiums continue to accrue.

3. Claim your pension refund If you worked in Korea and paid into the National Pension (국민연금), you can claim a lump-sum refund when leaving, depending on your home country's pension treaty with Korea. See our pension refund guide.

4. Close Korean bank accounts or leave open You can keep a Korean bank account open while abroad. Some expats keep it for managing remaining Korean income or assets. Close it if there's no further use.

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Useful resources

• National Tax Service (NTS): 126 (English available)
• NTS Hometax (English): www.hometax.go.kr
• Tax treaty search: www.moef.go.kr → Tax information → Tax treaties
• US expat tax specialist firms in Seoul: Korea Tax & Finance (KTF), H&R Block Korea, Greenback Tax Services