South Korea Foreign Income Tax: What Residents Pay and How Credit Works

Are residents taxed on foreign income?

Yes. Under the Income Tax Act, a resident is taxed on all income — Korean and foreign-source alike. A non-resident, in contrast, is taxed only on income from Korean sources.

So the key question for expats is your residency status. A resident is someone with a domicile in Korea or a place of residence maintained for 183 days or more in a tax year. Once you are a resident, your foreign earnings, foreign interest, dividends and rental income generally enter the Korean tax base.

The 5-year remittance basis for non-permanent residents

The Income Tax Act includes an important relief for foreign residents — meaning residents who are not Korean nationals.

If your total period of domicile or residence in Korea during the 10 years before the end of the tax period is 5 years or less, you are taxed on foreign-source income only to the extent it is paid in Korea or remitted into Korea. Income that stays abroad is outside the Korean tax base for that year.

This is the practical relief most short-stay expats rely on: keep the foreign income abroad and it is not taxed here. Once you pass 5 years of residence in the 10-year lookback, you are subject to full worldwide taxation.

The foreign tax credit

When foreign-source income is taxed in Korea and you also paid tax on it in the country where it arose, you can avoid double taxation through the foreign tax credit (Income Tax Act Article 57).

• You may choose to credit the foreign income tax against your Korean tax, up to a limit calculated as: Korean computed tax × (foreign-source income ÷ total global income).
• Alternatively, you may treat the foreign tax as a deduction (an expense) in computing the income.
• If the foreign tax in one year exceeds the credit limit, the unused portion can be carried forward against the same class of income for the following 5 tax years.
• Where a tax treaty reduces or exempts foreign tax, the forgone amount is generally treated as foreign tax paid (deemed credit), which keeps the credit working.

The credit is claimed on the global income tax return with the supporting statement of foreign taxes paid.

Reporting foreign income

A resident who must be assessed on other income files a global income tax return (종합소득세) for the previous year from May 1 to May 31.

• If your salary was fully covered by withholding and year-end settlement and you have nothing else to report, you are generally not required to file.
• Foreign-source income is different because there is no domestic withholding, so it is reported and taxed on the return — this is why foreign-income earners usually need to file even if their Korean employer settled their salary.
• The foreign tax credit application is attached to this same return.

Separately, residents with overseas financial accounts whose month-end balances exceed 500 million KRW must report them to the tax office between June 1 and June 30 of the following year, under the overseas-account reporting rule.

Treaties and withholding on Korean pay

Korea has income tax treaties with most major economies. Under the Constitution treaties generally carry the effect of domestic law, and the Act itself defers to treaties in specific rules (Article 57(3) on deemed credit, and Article 156-2 relief from withholding for non-residents).

Where a treaty lowers or removes Korean tax on your Korean-source income (for example under a non-resident clause), you apply on the standard treaty-relief form. Your foreign income tax position remains governed by your country of residence and its treaty with Korea, so the two sides should be reviewed together.

Note the local angle: individual local income tax is 10% of your national income tax, and a portion of the foreign tax credit (10% of the credited amount) can also be credited against it under the relevant local rules.

Doing it correctly

A few things expats most often get wrong:

• Assuming a foreign account means no tax — as a resident you owe tax on the income; the remittance basis only shelters income kept abroad, and only while your residence is within the 5-year window.
• Filing only in the year you leave — the return is annual; foreign income arises to you every year you are a resident.
• Skipping the foreign tax credit paperwork — the credit needs the foreign tax statement attached to the return, so keep the foreign tax assessments.
• Missing the overseas-account report — a 500 million KRW threshold triggers a separate June report.

This article reflects the law as published for the 2026 tax year. Residency is fact-specific and treaty positions differ by country, so confirm your situation with the National Tax Service or a tax adviser.