Market Taxation Guide – South Korea
This Market Taxation Guide (South Korea) provides the following details:
- Reference information about all taxes applied at source to securities deposited in Clearstream Banking1; and
- Instructions for obtaining relief at source or a refund of withholding tax, where these are available, through Clearstream Banking.
New and improved tax information and procedures that become available will be included on an ongoing basis.
Important note:
This Market Taxation Guide (including any attachments and other links) is for informational purposes only and is not intended and should not be considered to be legal advice on any subject matter. Readers of this Market Taxation Guide, whether clients or otherwise, should not act or refrain from acting on the basis of any information included in this Market Taxation Guide without seeking appropriate legal or other professional advice.
Withholding tax
Debt securities | Holding | Trading prerequisite | Withholding | Relief | Quick | Standard |
Yes | Yes | 15.4%a | ||||
Residents of a Double Taxation Treaty (DTT) country | Yes | No | No | |||
Overseas Investment Vehicle “OIV” (non-public) and Overseas Public Collective Investment Vehicle “OPCIV” (public OIV) with beneficial owners residents in DTT countries and/or tax exempt | Yes | No | No | |||
Overseas Investment Vehicle “OIV” (non-public) and Overseas Public Collective Investment Vehicle “OPCIV” (public OIV) considered as the beneficiary (substantive owner) of domestic source income under the DTT | Yes | No | No | |||
Foreign investors who purchased KTB/MSB on or before 12 November 2010 | Yes | No | No | |||
Non-residents and foreign investors who purchased KTB/MSB on or after 1 January 2023 | Yes | No | No | |||
Equities | Holding | Trading prerequisite | Withholding | Relief | Quick | Standard |
Yes | Yes | 22% | ||||
Residents of a Double Taxation Treaty (DTT) country | Yes | No | No | |||
Overseas Investment Vehicle “OIV” (non-public) and Overseas Public Collective Investment Vehicle “OPCIV” (public OIV) with beneficial owners residents in DTT countries and/or tax exempt | Yes | No | No | |||
Overseas Investment Vehicle “OIV” (non-public) and Overseas Public Collective Investment Vehicle “OPCIV” (public OIV) considered as the beneficiary (substantive owner) of domestic source income under the DTT | Yes | No | No | |||
a. The standard rate of withholding tax is 15.4% for debt securities.
The withholding tax “amount” (total tax) is calculated based on the actual holding period in reference to Article 98-3 (Special Cases concerning Withholding from Bonds, etc. subject to Withholding Tax of Foreign Corporations) of the “Corporate Tax Act”.
Capital gains tax
Generally, non-residents of South Korea are liable to capital gains tax on South Korean securities at the lower of the following rates:
- 10% of the gross proceeds realised from the sale (11%, including the 10% surtax); or
- 20% of the net capital gain (22%, including the 10% surtax).
Residents of countries that have concluded a Double Taxation Treaty (DTT) with South Korea, or countries with reciprocity rules, will, based on their Investment Registration Certificate (IRC) or Legal Entity Identifier (LEI), either be exempted or be taxed, depending on the DTT.
Note: The selling broker is responsible for the calculation and withholding of the capital gains tax and for the payment of it to the South Korean Tax Authorities.
Clearstream Banking does not assist in this regard. Please consult your tax advisor for further information.
Note: For equities, non-residents are exempt from capital gains tax if they hold less than a 25% stake in a listed company during the year of sale and the 5 years immediately preceding the sale. However, if listed securities are traded outside the Stock Exchange, that is, in the over-the-counter (OTC) market, then, regardless of the stake in the company, capital gains tax will be applied.
In addition, the application of capital gains tax depends on where the foreign investor resides.
Clearstream Banking does not assist in this regard. Please consult your tax advisor for further information.
Stamp duty
There is no stamp duty withheld through Clearstream Banking on securities held in Clearstream Banking. Stamp duty may however be payable on specific transactions. Clearstream Banking does not assist in this regard. Please consult your tax advisor for further information.
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1. Clearstream Banking refers collectively to Clearstream Banking S.A. and Clearstream Banking AG (for Clearstream Banking AG clients using Creation accounts).