Expatriate tax ebook - Korea

What taxes?

Capital gains tax
Inheritance, estate & gift taxes
Investment income
Local taxes
Real estate taxes
Social security taxes
Stock options

Capital gains tax
Gains arising from the disposal of capital assets are taxable but are taxed separately from the aggregate income at a different tax rate. Certain capital gains resulting from certain transfers prescribed by Individual Tax Law, such as the transfer of farmland, are exempt from tax.

Inheritance, estate & gift taxes
Where an inheritee or a donee is a resident in Korea at the time of death or donation, the estate or the gift tax would be imposed on all property whether located inside or outside Korea. Where an inheritee or donee is a non¬-resident, the estate or gift tax would be imposed on his/her property in Korea.

Investment income
Tax liabilities on investment income and dividends are finalised by the manner of withholding tax, unless a combined income of dividend and interest for a year exceeds 40 million won, in which case it is subjected to the aggregate income taxation.

Local taxes
Resident surtax is imposed on the income of individuals in Korea.

Real estate tax
A yearly tax ranging from 0.01% to 4% percent (and surtaxes) is charged on the statutory value of houses, buildings, land, vessels and aircrafts.

Social security taxes
This covers contributions towards Employment Insurance, National Health Insurance, National Pension and Industrial Accident Compensation Insurance. For foreign employees, contribution towards the Employment Insurance and the National Pension is dependent on the type of visa the foreign employee holds and, his nationality. The National Health Insurance and the Industrial Accident Compensation Insurance for foreign employees are compulsory.

Stock options
Expatriate employees, residents for Korean tax purposes, who join the stock option plan of the foreign parent company, should report to the tax office their relevant income of the difference between the fair market value and the purchasing price at the time of exercise thereof.

Information about Korea:

• introduction
• facts and figures
• basis of taxation
• what taxes?
• tax planning opportunities