Understanding Taxes for Foreigners Living and Working in Korea

Moving to Korea for work or study is an exciting opportunity, but understanding your tax obligations is crucial to ensuring a smooth experience. Korea’s tax system can seem complicated for newcomers, especially when it comes to topics like income tax, social security contributions, tax treaties, and foreign income reporting. This guide outlines key information that foreigners need to remain compliant and manage their finances effectively.

Who Needs to Pay Taxes in Korea?

If you are a foreigner living in Korea for more than 183 days in a year, you are considered a resident for tax purposes. Residents are required to pay taxes on their worldwide income. Non-residents, however, are only taxed on income sourced within Korea.

Popular search terms like Korean tax residency, non-resident taxation in Korea, and expat tax rules often confuse many foreigners. Simply put, your visa type (like E-2, D-8, F-6) does not determine your tax status — your physical presence does.

Income Tax Rates for Foreigners

Korea operates on a progressive income tax system. As of 2025, the basic rates are:

6% on income up to 14 million KRW

15% on income from 14 million to 50 million KRW

24% on income from 50 million to 88 million KRW

35% on income from 88 million to 150 million KRW

38% and higher for greater income

Additionally, local income tax (about 10% of national tax) is levied on top.

Some foreigners can opt for the Flat Tax Rate of 19% for five years under specific conditions (e.g., highly-skilled workers). Searching for terms like flat tax rate Korea foreigners will yield more details, but it’s best to consult a tax professional before applying.

Social Insurance and Pension Contributions

Foreign employees are generally required to contribute to social insurance schemes such as:

National Pension Service (NPS)

Health Insurance

Employment Insurance

Industrial Accident Compensation Insurance

Certain nationalities are exempt from NPS contributions if their home country has a totalization agreement with Korea. You can check the Korean National Pension Service for detailed guidelines.

Popular searches like do foreigners pay pension in Korea or health insurance rules for expats highlight how important this topic is among newcomers.

Tax Treaties and Double Taxation Relief

Korea has signed tax treaties with more than 90 countries to avoid double taxation. These treaties typically ensure that you are not taxed twice on the same income in both Korea and your home country.

For instance, U.S. citizens can refer to the Korea-U.S. tax treaty for specific benefits. Filing the correct forms like the Residency Certificate can prevent unnecessary withholding.

Keywords like double taxation Korea, foreign tax credits, and tax treaty benefits in Korea are often searched by expats dealing with complex tax situations.

Filing Taxes: When and How

The Korean tax year runs from January 1 to December 31. The main individual tax return filing period is May 1–31 of the following year.

Salaried employees often have taxes withheld automatically via year-end tax settlement (연말정산).

Self-employed individuals and freelancers must file a comprehensive income tax return (종합소득세) manually.

You can file your tax return online through the HomeTax system (https://www.hometax.go.kr). Filing early and accurately helps avoid penalties and allows you to claim eligible deductions like education expenses, donations, and medical costs.

Search phrases like how to file taxes in Korea or Korean HomeTax guide are popular among first-time filers.

Tax Deductions and Credits

Understanding available deductions can significantly reduce your tax liability. Common deductions include:

Basic personal deduction

Spouse and dependent deductions

Pension savings deduction

Insurance premiums

Medical expenses exceeding 3% of income

Make sure to keep all relevant receipts and certificates ready when filing.

Reporting Foreign Income

If you are classified as a resident, you must report your foreign income to the Korean tax authorities. Failing to do so can result in hefty penalties. If your foreign financial assets exceed 500 million KRW, you must also file a Report on Foreign Financial Accounts.

Relevant searches like foreign account reporting Korea or offshore income Korea show how critical compliance is.

Paying taxes in Korea may seem daunting initially, but understanding the basics can save you from legal troubles and financial losses. Ensure you determine your residency status correctly, explore applicable tax treaties, and leverage allowable deductions.

⚠️ Please note: Tax laws and regulations in Korea are subject to change. It is highly recommended to consult a qualified tax advisor or the official Korean tax authority (NTS) for personalized and up-to-date advice.