Taxes in South Korea for foreigners in 2026

Tax rates in South Korea in 2026: at a glance

On 1 January 2026 South Korea raised corporate tax for every company by one percentage point, restoring the 2022 rates of 10% to 25%. The personal income tax scale did not move: 6% to 45%. But almost every tax carries a local income tax on top, equal to 10% of the main tax, so the real top rate on a salary is 49.5%.

Korean laws state amounts in won. At 2026 exchange rates USD 1 is about KRW 1,350, so KRW 1 million is roughly USD 740.

The most common error in reference tables and calculators is a corporate rate of 9-24%. Those rates applied in 2023-2025; the amendments passed by the National Assembly (Korea's parliament) on 2 December 2025 apply to fiscal years starting on or after 1 January 2026.

The second trap is the flat rate for foreigners. On 3 August 2026 the government published its tax reform proposal: raise the rate from 19% to 21% (23.1% with local tax) for income from 1 January 2027 and extend the deadline for new employees to 31 December 2029. It is still a proposal: parliament has to approve it, usually in December.

Compare taxes in 146 countries: relocation taxes 2026

Who is a tax resident of South Korea

A foreigner who moves to Korea does not pay tax on worldwide income for the first five years: only on Korean income and on foreign income that is paid in Korea or remitted to Korea. This rule of the Income Tax Act works as a tax holiday for money that stays abroad. Neighbouring Japan has a similar rule for foreigners.

There are three ways to become a Korean tax resident. The first is a domicile in Korea, judged on the facts rather than on a passport stamp: where the family lives, where the main assets are and whether the job requires being in Korea for 183 days or more. The second is residence in the country for 183 days or more within a tax year, which is the calendar year.

From 2026 a third test applies: residency also arises after 183 consecutive days in Korea, even if they fall across two calendar years. Previously, arriving in July and leaving in February could formally avoid 183 days in either year. That arithmetic no longer helps.

The five-year window is counted as a total over a rolling ten years, not from the latest arrival. Earlier years of study or work in Korea within the last decade count, so the window is shorter for anyone returning.

Dual residency is resolved under the tax treaty: first by where the permanent home is, then by the centre of vital interests. How to count 183 days and what happens to Russian tax residency after a move is covered separately: tax residency and the 183-day rule in 2026.

South Korea tax residency rules: how to count days and confirm your status

From 2026 Korea has closed a popular loophole: 183 days in a row across two years also make you resident. Now the New Year fireworks no longer reset the counter.

The main rule of Article 1-2 of the Income Tax Act stays: 183 days in a calendar year or an address in Korea. The law infers an address from facts: family in Korea, property, or a job that requires living in the country 183 days or more. A foreigner who has lived in Korea for no more than 5 of the last 10 years pays tax on foreign income only if it is paid in Korea or brought there. The calculator below checks both rules.

The law does not stop you from confirming the status on your own. But mistakes cost more: moving foreign money into Korea makes it taxable, and tax with the local add-on reaches 49.5%. Murblz support removes these risks: we count days including the year-end stretch, plan transfers, obtain the residency certificate and apply double tax treaties where they are in force. We guarantee professional work and a transparent process, and in most cases a result on the first filing.

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What is the income tax rate in South Korea for foreigners

Korea's top income tax rate including local tax is 49.5%: higher than China's 45% and double Singapore's 24%. But the scale starts at 6.6%, and generous deductions keep the average tax on an ordinary salary far below what the rate table suggests.

The tax is progressive: each rate applies only to the slice of income inside its bracket. The scale has applied since 2023 and did not change in 2026.

The scale applies to global income: salary, business income, pensions, other income, and interest and dividends above KRW 20 million a year. Severance pay and capital gains are taxed separately under their own rules.

The flat 20.9% for foreigners: who gains

A foreign employee may opt out of the scale and pay 19% on the full salary, 20.9% with local tax. The condition is starting work in Korea no later than 31 December 2026; the election lasts up to 20 years from the first working day. No deductions or tax credits are allowed, and all employment income is taxed.

For an average salary it is a bad deal. On our calculation for a single employee with no extra deductions, the flat rate only starts to win at around KRW 160 million a year, about USD 118,000. If the 2026 reform passes and the rate rises to 23.1%, the break-even moves to about KRW 190 million.

Certain categories of foreign engineers and researchers get a 50% income tax reduction for 10 years. The 2026 reform proposal extends it to the end of 2029 but, for contracts from 1 April 2027, requires a doctorate.

Year-end settlement and tax refunds

An employee with salary only usually files nothing. The employer withholds tax monthly under a simplified table and early the following year runs the year-end tax settlement: it applies deductions and credits, recalculates the tax and, with the February payroll, refunds any overpayment or collects the shortfall. The result goes to the tax office by 10 March.

Refunds come from tax credits for education (15%), insurance (12%) and donations (15-30%), plus deductions of KRW 1.5 million for a spouse and each dependant. That is how tax refunds work in Korea: the employer pays back the overpayment, not a separate agency.

How much tax comes out of a salary in South Korea: contributions and a worked example

On a salary of KRW 5 million a month, about USD 3,700, an employee in Korea hands roughly 17% to the state, and more than half of that is social insurance rather than tax. From 2026 the pension contribution rises every year: the 2025 pension reform lifts the combined rate by 0.5 points a year, from 9% in 2025 to 13% by 2033.

The pension contribution is capped: from July 2026 the base is limited to KRW 6,590,000 a month, about USD 4,900 (KRW 6,370,000 until June). The maximum employee contribution is KRW 313,025 a month. Employee pension and health contributions are fully deductible from taxable income.

Worked example: salary of KRW 60 million a year

Assumptions: resident, single, no children, no other income and no extra deductions.

Take-home pay is about USD 3,060 a month. On top, the employer pays about KRW 6 million a year in contributions, roughly 10% of salary, plus accident insurance.

How the burden grows with income and when the flat rate pays off (worked example on the same assumptions):

Contributions for foreigners: the pension question for Russian citizens

Foreigners aged 18 to 60 join the Korean pension system on the same terms as Koreans if their home country also covers Koreans. According to Korea's National Pension Service (NPS), Russia has no social security agreement with Korea, and Russian nationals do not get their contributions refunded on departure. The 4.75% is best treated as a cost with no return.

The exception is the E-8, E-9 and H-2 work visas: contributions are refunded on departure regardless of nationality. Kazakh nationals get a lump-sum refund on reciprocity, Uzbek and Kyrgyz nationals under separate memoranda. Foreigners who live in Korea for 6 months or more must join national health insurance even without a job.

What is the corporate tax rate in South Korea and how dividends are taxed

A small Korean company with a profit of KRW 300 million, about USD 222,000, pays KRW 44 million in tax in 2026, KRW 3.3 million more than a year earlier. The reason is the 2025 amendments: they reversed the one-point cut that applied in 2023-2025 and restored the 2022 rates.

The new rates apply to fiscal years starting on or after 1 January 2026. Local income tax for companies runs from 1% to 2.5% on the same brackets.

Worked example for a profit of KRW 300 million: 10% on the first 200 million is 20 million, 20% on the remaining 100 million is another 20 million, local tax adds 4 million. The total is KRW 44 million, an effective rate of 14.7%. In China the standard corporate rate is 25%, in Singapore 17%.

A Korean company is taxed on worldwide profit, a foreign company only on Korean profit earned through a permanent establishment or branch. For multinational groups with revenue of EUR 750 million or more, the 15% global minimum tax under the rules of the OECD (Organisation for Economic Co-operation and Development) has applied since 2024, and from 2026 Korea also levies its own domestic top-up tax up to that 15%.

How dividends are taxed

Dividends paid to a resident individual are withheld at 14% plus 1.4% local tax, 15.4% in total. If interest and dividends together exceed KRW 20 million a year, all financial income is added to global income and taxed on the scale of up to 49.5%, with a credit for part of the tax the company has already paid.

From 1 January 2026 there is an exception for listed companies with high payouts. If a company has not cut its dividends compared with the year before and pays out at least 40% of profit (or at least 25% while raising cash dividends by 10% or more), its dividends are taxed separately on their own scale: up to KRW 20 million 14%, 20-300 million 20%, 300 million - 5 billion 25%, above 5 billion 30%, plus local tax. The regime is temporary: it covers dividends paid in 2026-2028 and excludes funds and REITs (real estate investment trusts).

Non-residents pay 22% on dividends (20% plus local tax) unless a tax treaty gives a lower rate. So the burden of taking profit out is calculated in two steps: corporate tax plus dividend tax.

Murblz specialists can set up a company in Korea and open its account: company registration in South Korea and business accounts in South Korea.

What is the VAT rate in South Korea in 2026

Korea's VAT is 10%, less than half of Russia's 22% and the same as Japan's consumption tax. There is a single rate with no European-style reduced rates: either 10%, or 0% for exports, or a full exemption for certain goods and services.

Exempt items include unprocessed food, medical and educational services, financial and insurance services and residential rent. Foreign companies selling electronic services (subscriptions, apps, online services) to consumers in Korea register under a simplified procedure and charge the 10% themselves.

Simplified regime for sole proprietors: the KRW 104 million threshold

Small sole proprietors can use the simplified VAT regime (simplified taxpayer). On 1 July 2024 its threshold rose from KRW 80 million to KRW 104 million of annual turnover, about USD 77,000. Companies cannot use it, and for property rental and entertainment venues the threshold stayed at KRW 48 million.

From 2026 the penalty for fictitious tax invoices rose from 3% to 4% of the amount stated on the invoice.

VAT and car taxes in Korea

The price of a new car in Korea includes three taxes. The first is the individual consumption tax, an excise: from 1 July 2026 it returned to the full 5% of the factory price, after a reduced 3.5% that lasted until 30 June 2026. The second is the education tax, 30% of the excise. The third is 10% VAT, charged on the price including the excise. The end of the discount raised car prices by up to KRW 1.43 million, about USD 1,060.

Exports are zero-rated, so a car shipped out of Korea under an export declaration is sold without the Korean 10%. The buyer pays the import duties and taxes of their own country instead.

Tourist VAT refunds and the change for cosmetic surgery

A tourist who has been in Korea for less than 6 months can reclaim part of the VAT on purchases of KRW 15,000 or more per receipt in tax free shops. An instant refund at the till works for receipts up to KRW 1 million and up to KRW 5 million per trip. After relocating for 6 months or longer, that right is lost.

From 1 January 2026 tourists no longer get the 10% VAT back on cosmetic procedures and plastic surgery: the relief, in place since 2016, expired on 31 December 2025 after parliament declined to extend it.

How sole proprietors, freelancers and digital nomads are taxed in Korea

A Korean freelancer receives fees with 3.3% withheld, but that is only an advance: in May the return is filed and the tax topped up to the rate of the relevant bracket, which can reach 49.5%. Korea has no special low-tax regime for IT specialists like some post-Soviet countries; incentives for small and new companies depend on the industry, the region and the founder's age.

Sole proprietor income is taxed on the same scale as salary, but the base is profit, not turnover. Small proprietors without full bookkeeping can use standard expense ratios of turnover: simpler, but the tax is usually higher than with real expense records.

The digital nomad visa and tax

The digital nomad visa (Workation visa, F-1-D) became a permanent programme on 30 June 2026 after two and a half years as a pilot. The maximum stay rose from two to three years: the visa is extended a year at a time while the conditions are met. The income requirement now depends on age and region, from one to two times Korea's gross national income per head, lower for young applicants outside the capital region.

The law creates no special tax regime for nomads. A stay of under 183 days means non-resident status and tax on Korean income only. After 183 days the holder becomes a resident, but for the first five years foreign income is taxed only if paid in Korea or remitted to Korea. Salary from abroad transferred to a Korean account becomes taxable to the extent transferred.

There is an inconvenient truth too: under the general rule of Korean law, pay for work physically performed in Korea counts as Korean-source income even when a foreign employer pays it. How the tax service applies this to F-1-D holders is best checked before the move, not after the first letter from the tax office. For comparison, the Japanese nomad visa is covered here: Japan's digital nomad visa.

Taxes on property, cars, inheritance and crypto in Korea

An apartment in Korea sold 11 months after purchase is taxed at 70% plus local tax, so the state takes up to 77% of the gain. This is how Korea fights housing speculation, and since August 2025 foreign buyers in the capital region also need a permit to buy.

Worked example of the annual tax on a car with a 2,000 cc engine: KRW 200 per cc gives KRW 400,000, plus 30% education tax, KRW 520,000 a year, about USD 385. From the third year of ownership the tax falls by 5% for each year, to a maximum discount of 50%.

The 2026 reform proposal would tie the long-term holding deduction on housing to the owner actually living there. It is still a proposal, but it makes investment apartments less attractive.

Foreigners buying homes in Seoul

On 26 August 2025 Korea's Ministry of Land, Infrastructure and Transport introduced a permit requirement for foreigners buying housing anywhere in Seoul, in 23 cities and counties of Gyeonggi Province and in part of Incheon. The municipality must approve the purchase, the buyer must move in within 4 months and live there for at least 2 years. In August 2026 the regime was extended for a year, to 25 August 2027, so the rules are checked before every deal. Murblz specialists handle property selection: investment property in South Korea.

Inheritance and gift tax

Korea taxes inheritances at one of the highest rates in the world, up to 50%. If the deceased was a resident, worldwide assets are taxed; if a non-resident, only Korean assets. Gifts to heirs within 10 years before death, and to others within 5 years, are added back to the estate.

Crypto: the last tax-free year

The crypto tax was enacted in 2020 and postponed three times, but the reform proposal of 3 August 2026 did not include another delay, so from 1 January 2027 gains above KRW 2.5 million a year are taxed at 20% plus 2% local tax. The first return is due in May 2028. Worked example: a gain of KRW 5 million produces tax of KRW 550,000. The Korean tax service will receive data from foreign crypto exchanges under the OECD Crypto-Asset Reporting Framework (CARF).

Does Korea have a double tax treaty with Russia

The Russia-Korea tax treaty is formally in force, but since 8 August 2023 Russia has suspended almost all of its articles on which country taxes income and at what rate. Russian Presidential Decree No. 585 covered 38 states, including the Republic of Korea.

The convention was signed on 19 November 1992 and has applied since 1996. Under its text, dividends are taxed in the source country at no more than 5% (if the receiving company holds at least 30% of the capital and has invested at least USD 100,000) or 10% in other cases, interest only in the recipient's country, royalties at no more than 5%. Under Article 13, gains on shares and other property, except real estate, are taxed only in the seller's country of residence.

What Decree No. 585 means in practice. Russia suspended the articles on income types, reduced rates and exemptions but kept the article on elimination of double taxation, exchange of information and the mutual agreement procedure. A Russian payer applies domestic rates on payments to Korean companies: 15% for dividends and 20% for interest and royalties.

The decree is Russia's unilateral decision. Whether a Korean withholding agent applies the reduced treaty rate on a payment to Russia depends on the recipient's documents and the Korean position at the payment date. From 2026 the agent submits such applications to the Korean tax service by the end of February of the following year.

For a Russian tax resident earning a salary in Korea, the surviving article on elimination of double taxation allows Korean tax to be credited against Russian tax. Russian tax residents who own a Korean company must also follow the controlled foreign company rules, with notifications and reports filed in Russia: see our page on controlled foreign companies (CFC).

A non-resident without a Korean establishment usually files nothing: the payer withholds the tax. A return is required on selling or renting out Korean real estate. The list of Korea's treaties is published by the National Tax Service (NTS).

Filing deadlines and penalties in South Korea

Failing to file a return in Korea costs a penalty of up to 20% of the tax, and 40% for deliberate concealment. On top, every day of late payment adds 0.022% of the unpaid amount, about 8% a year. The tax year is the calendar year, and almost everything is filed through Hometax (hometax.go.kr), the National Tax Service's online portal.

The least pleasant rule for anyone moving with money is the foreign account report. A Korean resident whose foreign accounts together exceeded KRW 500 million, about USD 370,000, at the end of any single month reports them to the tax office by the end of June. The penalty for not reporting is up to 20% of the unreported amount, and if the unreported amount exceeds KRW 5 billion, criminal prosecution and public naming are possible.

Foreigners who have lived in Korea for no more than 5 of the last 10 years are exempt from this report. That is another reason to count days from year one: when the five-year window closes, worldwide taxation and the duty to disclose foreign accounts arrive at the same time.

Tax can be reassessed for 5 years, for cross-border transactions for 7, and for fraud for 10-15 years. The tax service lists foreign accounts, bloggers' income and crypto among its audit priorities.

Who Korean taxes suit and who they don't

Korea is a high-rate country with a strong tax service. The winners are those who use the first five years well and choose between the scale and the flat rate in advance. Who should do the maths three times:

Highly paid employees starting work after 2026. Under current law the flat rate is available only to those who started work in Korea no later than 31 December 2026. The reform proposal extends that deadline to the end of 2029 but raises the rate to 23.1% for income from 1 January 2027. Until parliament votes, starting work before the end of 2026 is the only way to secure the right to the flat rate, and at a salary of KRW 300 million and a rate of 20.9% it saves about KRW 24 million a year.

Crypto investors. 2026 is the last tax-free year: from 2027 gains above KRW 2.5 million are taxed at 22%.

Owners of capital abroad. After five years out of ten, worldwide income is taxed, including 22% on foreign share gains, the foreign account report kicks in, and inheritance is taxed at up to 50%.

Buyers of rental housing. In Seoul and most of the capital region a foreigner needs a permit to buy and must live in the apartment for 2 years, and resale within two years eats up to 77% of the gain.

Business owners in Russia. The tax treaty with Korea is largely suspended on the Russian side, so reduced rates on dividends and royalties are not assured in either direction, and Russian controlled foreign company rules keep applying.

Digital nomads with Korean clients. The F-1-D visa does not allow work for the Korean market.

Who Korea suits: salaried specialists on average pay (at KRW 60 million a year, income tax with local tax comes to 7.5% in our worked example) and entrepreneurs who need access to the Korean market. Korea can be compared with other countries in our summary table of taxes and tax residency by country, and within the region on the tax pages for Hong Kong and Singapore.

Where to start: Murblz specialists help choose the country and form of a company, open a personal account with a Korean bank and pick a neighbourhood in Seoul or Busan. Representation in a tax dispute is handled by Murblz specialists together with locally licensed partners; see Murblz legal support.

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