South Korea

{"ftc_utility":"high","fbar_trigger_notes":"US expats in Korea are required to maintain local Korean bank accounts for salary deposits and daily banking. Korean bank accounts denominated in KRW are reportable on FBAR (FinCEN 114) if the aggregate value of all foreign financial accounts exceeds $10,000 at any point during the calendar year. Korean brokerage accounts holding local equities or funds are also reportable. Korean retirement savings accounts (IRP, DC, DB) may require FBAR and Form 8938 reporting as foreign financial accounts. Korean National Pension contributions and accrued benefits should be evaluated for FBAR reporting obligations.","ftc_utility_reason":"Korea has a high statutory income tax rate with a top marginal rate of 45% plus 10% local surtax (effective 49.5%). US expats in Korea who earn employment income above FEIE limits (2025 limit approximately $130,000) benefit from FTC credits against residual US tax. Even below the FEIE limit, FTC is useful for passive income, Korean-source dividends, and capital gains. Korean taxes paid generally exceed US tax liability for high earners, generating excess FTC that can be carried forward 10 years.","presence_day_count_notes":"South Korea does not impose entry or exit restrictions on US citizens that would directly complicate the 330-day physical presence count. However, US military and US government employees stationed in Korea under SOFA are generally excluded from bona fide residence qualification. Long-term residents typically hold an F-series visa (F-2 long-term resident, F-4 overseas Korean, F-5 permanent resident) or E-series work visas. Visa holders must maintain valid status; overstays or status violations do not invalidate days present for IRS purposes but create separate legal issues. Korea's residency rules (183-day threshold for tax resident status) run parallel to but independently from IRS FEIE qualification rules.","typical_qualifying_method":"either","housing_exclusion_available":true,"physical_presence_test_applies":true,"estimated_housing_exclusion_usd":18000,"local_tax_rate_on_earned_income":0.495,"bona_fide_residence_test_applies":true}

{"pension_income":{"notes":"Foreign pension income received by Korean residents is taxed in Korea as pension income at progressive rates of 6%-45% plus 10% local income tax surtax. Korea provides a pension income deduction based on the total amount of pension received annually (deductions range from 40% to 70% of the pension amount depending on the total, capped at KRW 9 million per year for public/private pensions received before age 80). A foreign tax credit is available to offset taxes paid in the source country.","tax_rate":null,"locally_taxed":true},"social_security":{"notes":"The US-Korea tax treaty does not contain a specific Social Security article. US Social Security benefits received by Korean residents are generally subject to Korean income tax as pension income. Korea provides a foreign tax credit for any US tax withheld on Social Security benefits. The US taxes up to 85% of Social Security benefits for higher-income recipients; Korea would then credit US taxes paid against Korean liability.","locally_taxed":true,"treaty_protection":true},"roth_distributions":{"notes":"Qualified Roth IRA distributions that are tax-free in the US may be treated as non-taxable returns of capital in Korea, but this position is not codified in the treaty or Korean domestic law. Korea does not recognize the Roth structure explicitly. A Korean resident receiving Roth distributions should confirm treatment with the National Tax Service. In practice, many tax advisors take the position that qualified Roth distributions are not taxable in Korea given their tax-free character at source, but uncertainty exists.","locally_taxed":false},"us_401k_ira_distributions":{"notes":"The US-Korea tax treaty (Article 20) provides that pensions and annuities paid from the US to a Korean resident may be taxed in Korea. Distributions from US 401(k) and traditional IRA accounts are generally treated as pension income and taxed in Korea at progressive rates (6%-45% plus 10% local surtax). Treaty provisions allow a foreign tax credit for US taxes withheld. In practice, Korean tax authorities may classify 401(k) distributions as pension income subject to Korean pension income deductions, which can reduce effective tax. Advance ruling or professional advice is recommended given ongoing interpretive uncertainty.","tax_rate":null,"locally_taxed":true,"treaty_protection":true}}

{"rate":0.45,"notes":"South Korea does not have a unified capital gains tax. Gains on listed domestic equities held by minor shareholders are generally exempt; gains on real property and unlisted shares are taxed separately at rates ranging from 6% to 45% depending on asset type and holding period.","details":{"tax_type":"Capital Gains Tax","country_name":"South Korea","country_iso_code":"KOR","source_references":["Korea National Tax Service","KPMG Korea Tax Guide 2024","Deloitte International Tax Korea 2024"],"last_verified_date":"2026-06-03","general_description":"Capital gains in South Korea are taxed separately from ordinary income under the Income Tax Act. The applicable rate depends heavily on asset class, holding period, and whether the taxpayer qualifies as a major shareholder. Real property gains are subject to transfer income tax at progressive rates of 6% to 45%, with heavy-handed surcharges of 10% to 30% applied on short-term holdings (under 2 years) and multiple-home ownership in regulated zones. Gains on domestic listed equities are exempt for non-major shareholders. Major shareholders (holding 1% or more, or KRW 1 billion or more in market value) are taxed at 20% on gains up to KRW 300 million and 25% above that threshold. Unlisted shares are taxed at 10% (small/medium enterprise) or 20% (other). Gains on foreign-listed shares held by residents are taxed at 20% (with a 250,000 KRW annual exemption). From 2025, a Financial Investment Income Tax (FIIT) was originally scheduled to apply but has been postponed indefinitely as of early 2025.","corporate_capital_gains":{"rate":0.27,"tax_treatment":"Corporate capital gains are included in ordinary corporate income and taxed at standard CIT rates: 9% up to KRW 200 million, 19% up to KRW 20 billion, 21% up to KRW 300 billion, and 24% above KRW 300 billion. A 10% local income surtax applies to CIT, bringing the effective top rate to approximately 26.4%."},"individual_capital_gains":{"rate":0.45,"tax_treatment":"Individual capital gains are taxed separately at asset-specific rates. Real property transfers are subject to transfer income tax at progressive rates of 6%-45% plus a 10% local income tax surtax. Short-term property holdings (under 1 year) are taxed at 70% (residential) or 50% (other). Major shareholder listed equity gains are taxed at 20% or 25%. Non-major shareholder listed equity gains are currently exempt. Foreign equity gains for residents are taxed at 20%. Unlisted equity gains are taxed at 10%-20%."}}}

{"notes":"Dividends received by Korean residents are included in global income and taxed at progressive rates up to 45% if total financial income (interest plus dividends) exceeds KRW 20 million per year. Below that threshold, dividends are subject to a 15.4% withholding tax (14% base plus 1.4% local income tax) applied as a final tax. Non-residents and foreign corporations are subject to 22% withholding (20% plus 2% local surtax) on dividends from Korean sources, reduced by applicable tax treaty rates - the US-Korea treaty reduces this to 15% (or 10% for substantial ownership of 10% or more).","rates":[{"rate":0.154,"type":"withholding","notes":"Final withholding rate for residents whose total financial income is KRW 20 million or less per year. Rate includes 14% base tax and 1.4% local income tax surtax."},{"rate":0.45,"type":"progressive","notes":"Residents with total financial income exceeding KRW 20 million per year must include dividends in global income and pay at progressive rates up to 45% plus 10% local surtax (effective top 49.5%)."},{"rate":0.22,"type":"withholding","notes":"Standard withholding rate for non-residents and foreign corporations absent a tax treaty, inclusive of 2% local income tax surtax."},{"rate":0.15,"type":"withholding","notes":"US-Korea tax treaty rate for dividends paid to US residents holding less than 10% of the paying company."},{"rate":0.1,"type":"withholding","notes":"US-Korea tax treaty rate for dividends paid to US residents or companies holding 10% or more of the paying Korean company."}]}