Tax in Korea for Foreign Nationals: Residency, the 19% Flat Rate and Unpaid Tax

Quick answer: A person with a domicile in Korea, or a place of residence here for 183 days or more, is a tax resident and is taxed on worldwide income. Everyone else is a non-resident and is taxed only on income from Korean sources. Domicile is judged on real ties such as family, assets and work, not on nationality. If another country also treats you as resident, the tax treaty between the two countries decides which one prevails. Foreign employees who start working in Korea on or before 31 December 2026 can choose a flat 19% rate on their salary instead of the progressive rates, until the end of the tax year in which 20 years from their first day of work ends, plus local income tax, but then give up almost all exemptions, deductions and credits. That date is a cut-off for the first day of work, not the end of the rule for people already using it.

Resident or non-resident: why it matters

The Income Tax Act divides individuals into two groups. Which group you are in decides how much of your income Korea can tax.

Domicile is not a matter of counting days alone. It is judged by the objective facts of a person’s life: whether family who share their living expenses are in Korea, whether they hold assets here, their work and similar ties (Supreme Court, 23 September 2026, 2026Du30835). A foreign national is also treated as a resident where family sharing their living expenses are in Korea and, in light of their work and assets, they are expected to live here for 183 days or more.

When two countries both say you are resident

A person can be a resident under Korean law and, at the same time, a resident under another country’s law. To prevent double taxation, the tax treaty between Korea and that country decides which country the person is treated as resident in (Supreme Court, 14 March 2019, 2018Du60847). The wording of the specific treaty matters.

Under the treaty between Korea and China, as applied by the Seoul Administrative Court, the questions are asked in this order:

The centre of vital interests is judged on family and social relations, occupation, political and cultural activities, place of business and where property is managed (Seoul Administrative Court 2019Guhap71387; 2022Guhap90203).

How non-residents are taxed

A non-resident is taxed only on the Korean-source income listed in Article 119 of the Income Tax Act. The list includes interest, dividends, income from real estate, employment income, retirement income, gains from transferring real estate or securities, and other income. How that income is taxed depends on whether the non-resident has a place of business in Korea.

When tax should have been withheldSupreme Court, 28 January 2016, 2015Du52050Withholding is final

Where a non-resident without a domestic place of business earns income that is taxed separately, such as a gain on transferring shares, the payer must withhold the tax and that withholding settles it.

If the payer fails to withhold, the tax office cannot instead assess the non-resident directly for that income tax.

In plain EnglishFor this kind of income, the Korean payer is responsible for getting the withholding right. It is worth checking what was withheld before assuming you owe more.

Foreign employees

In a 1983 decision under the enforcement decree then in force, the Supreme Court held that extra amounts paid to a foreign employee on top of their normal home country salary, paid under the company’s pay rules and not giving a real benefit once differences in prices, living standards and exchange rates were taken into account, were non-taxable overseas service allowances. Examples included a child education allowance that would not have been needed under the home country’s compulsory education system, and a relocation allowance for buying new furniture (Supreme Court 82Nu556). Whether a particular allowance is non-taxable today depends on the current rules.

Separately from tax, foreign employees are covered by the same severance pay and minimum wage rules as Korean employees (Supreme Court 2006Da53627).

The 19% flat rate for foreign employees

Article 18-2(2) of the Restriction of Special Taxation Act gives foreign employees a choice. A foreign executive or employee, other than a daily worker, whose first day of work in Korea is on or before 31 December 2026 can elect to have their employment income taxed at a flat 19%, instead of the progressive rates in Article 55(1) of the Income Tax Act. The election covers employment income received up to the end of the tax year in which the 20-year period from that first day of work ends.

Because the flat rate gives up almost every exemption, deduction and credit, whether it lowers your tax depends on your income and on what you would otherwise claim. It is a calculation to run before choosing, not a rule that always helps. Remember to compare the totals including local income tax.

The 20-year period does not reach back before 2023Seoul High Court, 21 January 2026, 2025Nu7793; Seoul Administrative Court, 17 July 2025, 2024Guhap75734; Supreme Court, 11 June 2026, 2026Du30395Not retroactive

The flat rate period used to be 5 years. An amendment made on 31 December 2022, in force from 1 January 2023, extended it to 20 years.

Foreign employees asked for refunds for tax years before 2023, arguing the 20-year period should apply to them. The Seoul Administrative Court (2024Guhap75734) and the Seoul High Court (2025Nu7793) refused: under the addendum, the amended rule applies only to tax years starting on or after 1 January 2023. The transitional provision covering employees who had not yet reached 20 years defines who can benefit from then on; it does not make the rule retroactive.

On further appeal, the Supreme Court dismissed the appeal (2026Du30395, 11 June 2026), so the lower court ruling stands. The Tax Tribunal took the same view in 2025Seo1904 (23 June 2025) and 2025Seo2373 (30 July 2025).

What it means for youIf an earlier year fell outside the old 5-year period, the 20-year rule will not reopen it.

Year-end tax settlement

Employers in Korea settle each employee’s income tax for the year when they pay the February salary of the following year, or the final salary when the employee leaves. They calculate the tax due on the year’s taxable income after deductions and credit the tax already withheld from monthly pay (Income Tax Act, Article 137). To claim deductions and credits, the employee submits a deduction claim form to the employer before receiving the February salary (Article 140).

For an employee who has chosen the 19% flat rate, the usual deductions and credits do not apply, so there is far less to claim and the settlement is simpler. The flat rate application itself is one of the documents that can be submitted at this stage.

Unpaid tax and your visa

Tax arrears can affect a foreign national’s stay in Korea. Under the immigration authorities’ internal guidelines on managing the stay of foreign nationals in tax arrears, a person who receives an order to pay three times in a row and still does not pay can have their stay restricted, for example by having a visa extension refused (Jeonju District Court 2022Guhap1361).

Not knowing the rules is not an excuse

Penalty tax can be waived only where there is a justifiable reason for the failure. A non-resident who did not pay income tax because they did not know or misunderstood the law was held not to have a justifiable reason, so the penalty for late payment was imposed (Seoul High Court 2015Nu44525).

Documents that usually matter

• Your passport and a record of your entries into and exits from Korea
• Where your family lives, and your lease or property documents
• Employment contracts, payslips and withholding receipts
• A certificate of tax residence from the other country, if you claim treaty residence
• Notices from the tax office, and any orders to pay

When a lawyer becomes useful

Tax returns and bookkeeping are usually a matter for a tax accountant. A lawyer is most useful when your residency is disputed, when you want to challenge a tax assessment or penalty, or when unpaid tax is putting your visa at risk.

Frequently asked questions

I have lived in Korea for less than 183 days. Am I automatically a non-resident?

Not necessarily. You are a resident if you have a domicile in Korea, and domicile depends on ties such as family, assets and work, not only on the number of days.

Both Korea and my home country treat me as a tax resident. What happens?

The tax treaty between the two countries decides which country you are treated as resident in, usually by looking at your permanent home, the centre of your vital interests, your habitual residence and your nationality, in the order the treaty sets out.

Should I choose the 19% flat rate?

It depends on your figures. The flat rate gives up almost all exemptions, deductions and credits, and local income tax is added on top, so compare the total under both methods first. It is open to foreign employees whose first day of work in Korea is on or before 31 December 2026, until the end of the tax year in which 20 years from that day ends.

Can unpaid tax stop me from extending my visa?

It can. Under the immigration authorities’ guidelines, a foreign national who receives three consecutive orders to pay and still does not pay can have their stay restricted.

This article is general information about Korean income tax rules for foreign nationals, and is not tax or legal advice. Outcomes depend on the facts and on the applicable tax treaty, and statutory provisions are subject to amendment.

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