South Korea

Research notes

South Korea — family-office tax dossier

Last reviewed: 2026-10-16 Tax year: 2026 Reviewer: research agent (Claude), unreviewed by a tax adviser

Summary

South Korea taxes residents on worldwide income. Gains on foreign shares cost 22%, while Korean listed shares are exempt below major-shareholder thresholds. Financial income above KRW 20 million a year is taxed at up to 49.5%. Foreigners resident five years or less in ten are taxed on foreign dividends only if they are remitted to Korea. Inheritance tax is estate-based at 10%-50%, with a KRW 500 million deduction, and covers worldwide assets of a resident. There is no net wealth tax, but a national holding tax on high-value housing applies. An exit tax reaches foreign shares from 2027.

US citizens: US citizens pay US tax on top; the Korea-US treaty (1976) gives credits. Korean inheritance tax applies to a resident's worldwide estate in addition to US estate tax (no estate tax treaty).

Residence and eligibility

Resident if domiciled in Korea, residing 183 days or more in a tax year, or (from tax years beginning 2026) residing 183 consecutive days across two tax years; facts-and-circumstances test (family, assets, occupation). Foreigners: worldwide taxation only after more than five years of residence in the last ten.

• Investor visa (D-8) / immigrant investor (F-2/F-5) and other visas (EU, US, OTHER): Investor and real-estate/public-fund investment immigration schemes exist (thresholds not verified in this pass).

Capital gains

Korean resident (worldwide) (standard)

Capital gains are taxed separately from global income. Gains on Korean listed shares are exempt for shareholders below the 'major shareholder' thresholds (1% stake on KOSPI, or KRW 5 billion market value). Gains on foreign shares are taxed at 20% national plus 10% local income tax (22% in total) after a KRW 2.5 million annual deduction. Major shareholders' Korean shares and unlisted shares are taxed at 22% up to KRW 300 million of gain and 27.5% above (local tax included). Real estate gains are taxed at the progressive rates of 6%-45% plus local tax, with a long-term holding deduction.

• Exemptions and thresholds: KRW 2.5 million basic deduction per category per year. One house per household exempt under conditions (high-value homes partly taxable).
• Important exceptions, statute references and announced changes: The planned financial investment income tax was repealed before taking effect (general knowledge). Exit tax: residents of 5+ years who are major shareholders pay tax on unrealised gains on Korean shares when emigrating; from 1 January 2027 foreign shares are included (above KRW 500 million in total, with carve-outs for foreign employees). Heavier rates for multi-home owners in regulated areas have been suspended by decree (status after May 2026 not verified).
• Tax year / confidence / verification: 2026 / medium / partially_verified (checked 2026-10-15)
• JSON numbers: headline 49.5% (0.495); listed domestic 0% (0.0); listed foreign 22% (0.22); private business sale 27.5% (0.275); local real estate 49.5% (0.495); foreign real estate 49.5% (0.495).
• How derived: Foreign listed shares 20% + 10% local = 22%. Domestic listed 0 for a holding below 1% and KRW 5 billion. Private business (unlisted, major shareholder) 25% + local = 27.5% on gains above KRW 300 million. Real estate: top 45% + local = 49.5% before the long-term holding deduction (up to 30% of the gain for general property held 15 years; more for a qualifying single home). Foreign real estate taxed the same way once resident 5 years.
• Holding period: Major-shareholder shares held under one year: 33%. Real estate held under 1-2 years: higher flat rates (not detailed).
• Trader recharacterisation: Trading as a business is business income at global rates up to 49.5%.
• Foreign assets: Foreign shares are taxed to any resident at 20% national + 2% local (Income Tax Act art. 94(1)(iii)(c), art. 104; NTS guide), after the KRW 2.5 million deduction shared with Korean shares. Gains on foreign assets other than shares are taxable only if the seller has been resident 5 years or more at the time of sale (PwC). Foreign-share gains taxed at 22%.

Short-term foreign resident (5 years or less in 10) (foreign_resident_5y)

A foreign national with 5 years or less of residence in the last 10 is taxed on foreign-source income only if it is paid in Korea or remitted to Korea (Income Tax Act art. 3(1) proviso; the text covers all income, gains included). Gains on foreign shares sold through a foreign broker, with the proceeds kept abroad, are therefore outside the charge; shares sold through a Korean broker, or proceeds remitted to Korea, are taxed as in the standard regime (22%). Korean listed shares and unlisted shares as standard. Gains on foreign assets other than shares are taxable only after 5 years of residence (PwC).

• Conditions: Remittance basis: the 0% rate for foreign shares and foreign real estate ASSUMES the proceeds are paid and kept abroad. Anything remitted to Korea, or paid by a Korean broker or bank, is taxed. The statute has no ordering rule for remittances, so the family's living costs paid from abroad into Korea can pull gains into the charge.
• Tax year / confidence / verification: 2026 / medium / partially_verified (checked 2026-10-16)
• JSON numbers: headline 49.5% (0.495); listed domestic 0% (0.0); listed foreign 0% (0.0); private business sale 27.5% (0.275); local real estate 49.5% (0.495); foreign real estate 0% (0.0).
• How derived: Foreign shares and foreign real estate 0 under the remittance basis (art. 3(1) proviso; PwC for foreign real estate); Korean-source rates as standard: domestic listed 0 below the major-shareholder thresholds, unlisted/major-shareholder shares 27.5%, Korean real estate 49.5% before the holding deduction.
• Foreign assets: Foreign-source gains taxed only if paid in or remitted to Korea during the first 5 years (more than 5 years in the last 10: worldwide).

Dividends

Korean resident (worldwide) (standard)

Dividends are part of financial income: up to KRW 20 million a year is taxed at 15.4% (14% plus local tax) by withholding; above that, financial income is added to global income at progressive rates up to 45% plus 10% local tax (49.5%). Domestic dividends get a gross-up and dividend tax credit. Foreign dividends of residents taxed on worldwide income are included at global rates with a foreign tax credit. From 2026 to 2028, dividends from qualifying high-dividend Korean companies can be taxed separately at 14%-30%.

• Important exceptions, statute references and announced changes: Foreign residents with five years or less of residence in the last ten are taxed on foreign dividends only if paid by a Korean entity or remitted to Korea (special regime).
• Tax year / confidence / verification: 2026 / medium / partially_verified (checked 2026-10-15)
• JSON numbers: headline 49.5% (0.495); domestic 43.45% (0.4345); foreign gross 49.5% (0.495); foreign tax relief: credit.
• How derived: Foreign: 45% + 10% local = 49.5% before credit. Domestic: grossed-up dividend (10% gross-up, Income Tax Act art. 17(3)) taxed at 45% less a credit equal to the gross-up (art. 56) gives 39.5% national + 3.95% local = 43.45%; qualifying high-dividend companies 2026-2028: separate 14%-30% national.
• Outbound withholding: 22% WHT (20% + local) on dividends to non-residents, reducible by treaty (not opened).
• Treaty network: 97 income tax treaties as of January 2026, including the US and EU states (PwC).
• Holding companies: Modelled as the structure regime 'family_holding_company': corporate income tax 10%/20%/22%/25% plus local income tax 1%/2%/2.2%/2.5% (2026), Korean dividends on stakes under 20% 30% excluded, foreign dividends fully taxable with a foreign tax credit.

Short-term foreign resident (5 years or less in 10) (foreign_resident_5y)

Foreign dividends not paid by a Korean entity and not remitted to Korea are not taxed; Korean dividends as standard.

• Tax year / confidence / verification: 2026 / medium / partially_verified (checked 2026-10-15)
• JSON numbers: headline 49.5% (0.495); domestic 43.45% (0.4345); foreign gross 0% (0.0); foreign tax relief: exemption.
• How derived: Foreign dividends 0 if kept abroad (remittance basis, Income Tax Act art. 3(1) proviso, text read 2026-10-16); domestic as standard.
• Conditions: Remittance basis: the 0% foreign_gross_rate ASSUMES foreign dividends are paid and kept abroad. Dividends paid by a Korean company, or foreign dividends paid in Korea or remitted to Korea, are taxed in full (Income Tax Act art. 3(1) proviso).

Inheritance and gifts to children

Korean resident (worldwide) (standard)

Korea levies inheritance tax on the whole estate (estate basis) at 10%-50%: 10% up to KRW 100 million, 20% to 500 million, 30% to 1 billion, 40% to 3 billion and 50% above. A lump-sum deduction of KRW 500 million (or a basic deduction plus personal deductions) and a spouse deduction of at least KRW 500 million (up to 3 billion) apply. Gift tax uses the same rates per recipient, with a deduction for gifts from parents to an adult child of KRW 50 million per 10 years (KRW 20 million for a minor). Gifts within 10 years before death are added back to the estate.

• Exemptions and thresholds: Lump-sum deduction KRW 500 million per estate: the larger of KRW 500 million and the basic deduction (KRW 200 million, art. 18) plus personal deductions (KRW 50 million per child, art. 20), art. 21; for three adult children the second is KRW 350 million, so KRW 500 million applies. Spouse deduction KRW 0.5-3 billion (art. 19). Financial-asset deduction: 20% of net financial assets (at least KRW 20 million, at most KRW 200 million; art. 22), excluding shares held by a largest shareholder; whether a portfolio in foreign custody counts as a financial asset 'handled by a financial company' (Decree art. 19) was not established, so it is not coded. 3% credit on the computed tax for filing on time (art. 69), not coded.
• Important exceptions, statute references and announced changes: Government proposals (heir-based taxation, a higher child deduction, a top rate of 40%) were not enacted: the 2024 bill was rejected in December 2024 and the heir-based system is 'under government review' for about 2028 (koreainheritance.com guide, mid-2026); the Act text current to 2026-01-02 still has the estate-based scale. Business succession deduction for family businesses does not cover a listed portfolio. A controlling shareholder's unlisted shares are valued 20% higher (art. 63(3)).
• Tax year / confidence / verification: 2026 / medium / partially_verified (checked 2026-10-15)
• JSON numbers: basis estate, children taxed, scope worldwide, exemption 500,000,000 KRW, brackets (marginal): 10% (0.1) from 0 KRW, 20% (0.2) from 100,000,000 KRW, 30% (0.3) from 500,000,000 KRW, 40% (0.4) from 1,000,000,000 KRW, 50% (0.5) from 3,000,000,000 KRW; other transfer costs 0% (0.0); deemed disposal 0% (0).
• Gifts: Gift tax 10%-50% on each recipient's gifts (10-year aggregation per donor group); KRW 50 million deduction per 10 years for an adult child from lineal ascendants (KRW 20 million for minors); a separate marriage/childbirth gift deduction was added in 2024 (not verified). (same as inheritance: False; tax-free after years: 10)
• Business relief: Family business succession deduction (up to KRW 60 billion) for qualifying SMEs and mid-sized companies; not for portfolio shares.
• Foreign assets: If the deceased was a Korean resident (domicile or residence of 183 days or more), worldwide assets are taxed; for a non-resident deceased, Korean assets only.
• Residence/domicile rules: Residence of the deceased decides scope; there is no special exclusion for foreign nationals (not verified). Gift tax: a resident recipient is taxed on worldwide gifts.
• Business relief covers listed shares: False

Short-term foreign resident (5 years or less in 10) (foreign_resident_5y)

Same as the standard regime.

Surviving spouse: No exemption: a spouse allowance of at least KRW 500 million and at most KRW 3 billion is deducted (Inheritance and Gift Tax Act art. 19; EY 2026), and the rest of what the spouse inherits is taxed on the 10%-50% scale.

Wealth tax

Korean resident (worldwide) (standard)

No net wealth tax (PwC). Korea does levy a national comprehensive real estate holding tax (CRET, 종합부동산세) on individuals whose total official value of housing exceeds KRW 900 million (KRW 1.2 billion for a one-house household); it is treated here as a property tax, not a wealth tax, because it reaches only Korean real estate and its current rate schedule could not be verified.

• Tax year / confidence / verification: 2026 / medium / partially_verified (checked 2026-10-15)
• JSON type: none
• Property tax (not a wealth tax): Local property tax 0.07%-5% of statutory value (PwC). CRET (national): on (official housing value - KRW 900 million / 1.2 billion) x fair-market-value ratio, progressive rates (top 2.7% for owners of two homes or fewer and up to 5% for three or more under the 2023 law, from general knowledge, not verified), plus 20% rural special tax. A EUR 5 million home would pay CRET. Acquisition tax 1%-12%.

Short-term foreign resident (5 years or less in 10) (foreign_resident_5y)

Same as the standard regime.

Special regimes

Short-term foreign resident (5 years or less in 10) (foreign_resident_5y)

Foreign residents who have lived in Korea for five years or less in the last ten are taxed on foreign-source income only if it is paid by a Korean entity or remitted to Korea.

• Eligible citizenships: EU, US, OTHER
• Eligibility: Foreign national resident in Korea with cumulative residence of five years or less in the preceding ten years.
• Duration (years): 5
• Requires qualifying activity: False
• Metrics that differ from standard: capital_gains (foreign shares and foreign real estate 0% on the remittance basis), dividends.

Family investment company (family_holding_company)

Structure regime (EU, US, OTHER; no duration): see Holding structures below.

Holding structures

Modelled: family investment company (`family_holding_company`, type `structure`). The parents own a Korean stock company that holds the portfolio. A personal corporation is used by families with large financial income (general knowledge, not sourced), because corporate income tax tops out at 22% (20% + 2% local) on profits between KRW 200 million and KRW 20 billion against 49.5% for an individual on financial income above KRW 20 million.

• Company tax (JSON 0.22): corporate income tax 10% to KRW 200 million, 20% to KRW 20 billion, 22% to KRW 300 billion, 25% above, for fiscal years from 1 January 2026 (one point higher in every band than in 2025; EY), plus local income tax of 1%/2%/2.2%/2.5% (PwC).
• No relief for portfolio shares: Korean dividends on stakes under 20% are 30% excluded (70% taxed: JSON domestic 0.154); foreign dividends from stakes under 10% get no 95% exclusion and the foreign tax credit applies (JSON foreign 0.22); gains are ordinary income.
• Foreign tax: credited against the national tax within the limit, with a ten-year carry-forward (PwC); the foreign tax is also deducted from the local-tax base (Local Tax Act art. 103-19(2)).
• Payout (JSON 0.4345): dividends grossed up by 10% with a dividend credit equal to the gross-up (Income Tax Act arts. 17(3), 56): 39.5% national + 3.95% local, as for any Korean dividend above the KRW 20 million threshold.
• Not modelled: the 10%/1% band on the first KRW 200 million, the local-base reduction for foreign tax, withholding on Korean dividends received. These are named in the hand-worked check as the engine's difference.
• Inheritance: inherited from the standard regime. Unlisted shares are valued at net asset value (listed holdings at the two-month average price either side of death) and a controlling shareholder's shares carry a 20% premium unless the company is an SME or mid-sized company (art. 63(3)); whether a family investment company qualifies was not established. The engine has no valuation premium (see open questions).
• Setup: selling existing foreign shares to the company is a taxable disposal (22% on the gain); the model assumes cash or shares at current cost. Running costs were not sourced and are omitted.
• Rejected: a family trust (the beneficiary is taxed on trust income under Income Tax Act art. 2-3, and the settlor-controlled trust is attributed to the settlor), so it changes neither income nor inheritance tax; a public-interest foundation is for charitable purposes with ownership caps and is not a family vehicle.

Company taxation (kept separate from personal tax)

Headline CIT rate: 25% (0.25). CIT for fiscal years from 1 January 2026: 10% to KRW 200 million, 20% to 20 billion, 22% to 300 billion, 25% above, plus local income tax of 10% of CIT (top 27.5%). Additional 20% tax on excess retained earnings of large conglomerate companies to 2028.

Cost of living notes

Not researched in this pass (no quickly verifiable sources).

Open questions

• Inheritance-tax reform (heir-based system) is under discussion; scored on the law in force.
• Investment immigration thresholds not verified.
• Valuation of the family investment company's unlisted shares for inheritance tax (net asset value, +20% for a controlling shareholder unless an SME, art. 63(3)) is not modelled.
• (standard.inheritance) Whether lifetime gifts more than 10 years before death fully escape aggregation (10 years for heirs is the general rule) not re-verified.
• (standard.inheritance) The art. 26 rate table is read on a wiki mirror (korea.legal) and agrees with the rates coded; the official law.go.kr text was not opened.
• (standard.wealth_tax) CRET is arguably a limited wealth tax on Korean housing; it was not modelled because the 2026 brackets were not verified.
• (foreign_resident_5y.capital_gains) How remittances are matched against foreign-share gains (as opposed to dividends) was not found in the Enforcement Decree; the 0% assumes nothing is remitted.
• (family_holding_company.capital_gains) The local income tax rate table (1%/2%/2.2%/2.5%) is from PwC; the Local Tax Act table was not readable in the text mirror.
• (family_holding_company.dividends) The 15.4% withholding on Korean dividends received by the company, creditable against its tax, is not modelled.

Sources

• Korea, Republic of - Individual - Income determination (PwC Worldwide Tax Summaries, professional): https://taxsummaries.pwc.com/republic-of-korea/individual/income-determination
• Korea, Republic of - Individual - Taxes on personal income (PwC Worldwide Tax Summaries, professional): https://taxsummaries.pwc.com/republic-of-korea/individual/taxes-on-personal-income
• National Tax Service - English home (tax guides for foreigners) (National Tax Service of Korea, tax_authority): https://www.nts.go.kr/english/main.do
• Korea, Republic of - Individual - Foreign tax relief and tax treaties (PwC Worldwide Tax Summaries, professional): https://taxsummaries.pwc.com/republic-of-korea/individual/foreign-tax-relief-and-tax-treaties
• Korea, Republic of - Individual - Other taxes (PwC Worldwide Tax Summaries, professional): https://taxsummaries.pwc.com/republic-of-korea/individual/other-taxes
• 상속세 (Inheritance tax in South Korea) - rate table (Wikipedia (Korean), other): https://ko.wikipedia.org/wiki/%EC%83%81%EC%86%8D%EC%84%B8
• 종합부동산세 (Comprehensive real estate holding tax) (Wikipedia (Korean), other): https://ko.wikipedia.org/wiki/%EC%A2%85%ED%95%A9%EB%B6%80%EB%8F%99%EC%82%B0%EC%84%B8
• Korea, Republic of - Individual - Residence (PwC Worldwide Tax Summaries, professional): https://taxsummaries.pwc.com/republic-of-korea/individual/residence
• Korea, Republic of - Corporate - Taxes on corporate income (PwC Worldwide Tax Summaries, professional): https://taxsummaries.pwc.com/republic-of-korea/corporate/taxes-on-corporate-income
• EY Worldwide Personal Tax and Immigration Guide 2025-26 (March 2026 edition): https://www.ey.com/content/dam/ey-unified-site/ey-com/en-gl/technical/tax-guides/documents/ey-gl-worldwide-personal-immigration-tax-guide-03-2026.pdf
• Income Tax Act (소득세법), arts. 3, 17, 56, 57, 94, 104 (text mirror) (Nepla, legislation): https://www.nepla.ai/law/%EC%86%8C%EB%93%9D%EC%84%B8%EB%B2%95
• Inheritance Tax and Gift Tax Act (상속세 및 증여세법), arts. 18-22, 24-27, 63, 69, current to 2026-01-02 (text mirror) (Nepla, legislation): https://www.nepla.ai/law/%EC%83%81%EC%86%8D%EC%84%B8%EB%B0%8F%EC%A6%9D%EC%97%AC%EC%84%B8%EB%B2%95
• Inheritance Tax and Gift Tax Act art. 26 (rates) and art. 22 (Korea.legal wiki, other): https://korea.legal/wiki/%ec%83%81%ec%86%8d%ec%84%b8-%eb%b0%8f-%ec%a6%9d%ec%97%ac%ec%84%b8%eb%b2%95-%ec%a0%9c26%ec%a1%b0/
• Local Tax Act (지방세법), arts. 103-19 to 103-22 (text mirror) (Nepla, legislation): https://www.nepla.ai/law/%EC%A7%80%EB%B0%A9%EC%84%B8%EB%B2%95
• 2025 Overseas stocks and tax (해외주식과 세금) (National Tax Service of Korea, tax_authority): https://taxlaw.nts.go.kr/downloadPDFFile.do?fleId=300000000001047678&fleSn=923559
• Korea, Republic of - Corporate - Income determination (PwC Worldwide Tax Summaries, professional): https://taxsummaries.pwc.com/republic-of-korea/corporate/income-determination
• Korea, Republic of - Corporate - Tax credits and incentives (PwC Worldwide Tax Summaries, professional): https://taxsummaries.pwc.com/republic-of-korea/corporate/tax-credits-and-incentives
• Korea enacts 2026 tax reform bill (EY Tax News, professional): https://taxnews.ey.com/news/2026-0126-korea-enacts-2026-tax-reform-bill

Change log

• 2026-10-15: initial research.
• 2026-10-16: added surviving-spouse treatment.
• 2026-10-16 (recipe pass): short-term foreign resident regime: foreign-share gains and foreign real estate set to 0% on the remittance basis (Income Tax Act art. 3(1) proviso covers all foreign-source income paid abroad and not remitted; PwC for foreign real estate); previously the regime inherited 22% on foreign shares and 49.5% on foreign real estate. The proviso text was read in the statute (the earlier open question is closed).
• 2026-10-16: dividend gross-up verified at 10% (art. 17(3)); inheritance deductions, rate scale, financial-asset deduction (art. 22), 3% filing credit (art. 69) and the 20% controlling-shareholder valuation premium (art. 63(3)) checked against the Act text current to 2026-01-02; the heir-based reform is still not law.
• 2026-10-16: added the structure regime family_holding_company (Korean stock company: 22% at the margin on all income, payout 43.45%) and a Holding structures section.