Taxes & Finance

Are you a tax resident?

Korea uses a 183-day rule: if you have a "domicile or residence" in Korea for 183 days or more in a tax year, you're a tax resident. Residents are taxed on worldwide income; non-residents are only taxed on Korean-source income. Most long-term foreign workers, students, and spouses are residents from day one of their work or study.

Two ways to be taxed

Progressive tax (default)

This is what 95% of foreigners pay. Brackets are the same as for Korean nationals:

• Up to ₩14M — 6%
• ₩14M–₩50M — 15%
• ₩50M–₩88M — 24%
• ₩88M–₩150M — 35%
• ₩150M–₩300M — 38%
• ₩300M–₩500M — 40%
• ₩500M–₩1B — 42%
• Over ₩1B — 45%

Plus a local income tax (10% of the national tax owed). You also get the full range of personal, dependent, medical, education, credit-card, and housing deductions that Koreans get.

19% flat tax (optional, for foreign workers)

Foreign workers can elect a flat 19% rate on Korean earned income — but you forfeit every deduction and credit. This is usually only worth it at higher salaries (rough breakeven is around ₩88M/year). The election is for your first 20 years of working in Korea and is made annually by your employer at year-end settlement.

Year-end settlement (연말정산)

Most foreign workers don't file a separate annual return — your employer reconciles your taxes in February for the prior calendar year. Your job is to provide deduction receipts:

1. In mid-January, log in to Hometax and use the "Year-end Tax Settlement Simplified Service" (연말정산간소화) — it auto-pulls your credit-card spend, medical bills, donations, and more.
2. Submit the bundle of deductions to your employer, usually via your company's HR portal.
3. Refund (or extra payment) appears in your February or March paycheck.

If you have non-employment income (freelance, rental, foreign), you file a separate Global Income Tax Return in May.

Freelancers & remote workers

Working for a foreign client while sitting in Korea? If you're a resident, that income is still taxable here. You file a global income return in May via Hometax. Korea has tax treaties with most major countries to avoid double taxation — keep proof of any foreign tax paid. For English-language help, call the NTS Foreign Taxpayer Helpline (1588-0560).

By home country

Korea has bilateral tax treaties with the US, UK, Australia, and Canada, and US/Canada/Australia (but not the UK) have social security agreements that let you reclaim your NPS contributions on departure. Specifics that matter:

United States

The US taxes its citizens and green-card holders on worldwide income regardless of where they live — Korea is no exception. You file a US 1040 every year in addition to your Korean settlement.

• Foreign Earned Income Exclusion (FEIE) shields up to about $130,000 of earned income from US tax (adjusts annually). Use Form 2555. Most expats with mid-range salaries owe nothing to the IRS once FEIE + foreign tax credit are applied.
• FBAR (FinCEN 114) — required if your aggregate Korean bank balance ever crosses USD $10,000 in the year. Filed separately from the 1040.
• FATCA (Form 8938) — additional reporting if foreign financial assets cross higher thresholds. Korean banks are FATCA-compliant and report US persons to the IRS automatically.
• NPS lump-sum on departure — yes, the US-Korea totalization agreement (in force since 2001) entitles US nationals to the refund. See the NPS page linked below.
• Tax treaty — yes, US-Korea income tax treaty in force (1979, modernized 2006). Allows the foreign tax credit on taxes paid in Korea.

United Kingdom

• UK uses a residence-based system — once you're non-resident under the Statutory Residence Test, you generally owe nothing to HMRC on Korean-source income. Watch the tie-breaker days carefully if you split time.
• NPS lump-sum on departure — no. The UK does not have a totalization agreement with Korea, and the UK is not on the NPS reciprocity list. You can still potentially apply at retirement age, but the lump-sum-on-departure option does not apply to British nationals. Confirm with NPS directly.
• Tax treaty — yes, UK-Korea income tax treaty in force (1996).
• National Insurance — you may want to keep voluntary NI contributions going (Class 2 or 3) to preserve your UK state pension entitlement.

Australia

• Residence-based system — once you're a non-resident under the Australian residency tests, no AU tax on Korean income.
• NPS lump-sum on departure — yes. Australia is on the totalization list (in force 2008). Australian nationals can claim the refund.
• Tax treaty — yes, Australia-Korea income tax treaty in force (1982).
• Superannuation — your Korean NPS contributions are separate; they don't roll into super.

Canada

• Residence-based system — once you sever Canadian tax residency (factual residence ties matter), no CRA tax on Korean income. Be aware of departure tax on appreciated assets when you leave.
• NPS lump-sum on departure — yes. The Canada-Korea social security agreement (in force 1999) covers it.
• Tax treaty — yes, Canada-Korea income tax treaty in force (1980).

Other countries

Other English-speaking nationals — New Zealand, Ireland, South Africa, Singapore — have varying treaty positions. NZ and Ireland are explicitly excluded from the NPS lump-sum refund despite having bilateral agreements. Check the NPS lump-sum refund page for the current country list before relying on this.

Leaving Korea — pension lump-sum refund

Foreign workers who paid into the National Pension Service (NPS) can often reclaim every won on departure, provided their country has reciprocity with Korea (US, Canada, Australia, most EU members, etc.). Apply via the National Pension Service English site before you leave, or have a friend file on your behalf afterward.