Korea Financial Investment Income Tax

South Korea's financial investment income tax regime (금융투자소득세, geumyung tuja soduk-se) has had a complex and evolving history. The comprehensive financial investment income tax that was originally planned to take effect from 2023 — which would have taxed domestic stock gains above KRW 50 million at 20% and above KRW 300 million at 25% — has been repeatedly deferred due to political concerns about market impact and retail investor sentiment. As of 2024-2025, the planned domestic stock CGT has been postponed again, meaning resident individuals currently generally do not pay capital gains tax on profits from selling domestic listed stocks. For foreign stocks, however, capital gains tax of 22% (20% tax + 2% local income tax) applies to annual gains exceeding KRW 2.5 million, calculated on a per-person basis. Cryptocurrency capital gains tax was also scheduled to begin in 2023 but has been repeatedly deferred and was announced to begin from 2025 with KRW 2.5 million annual exemption and 20% tax rate on gains above this amount. Dividend income from domestic stocks is subject to withholding tax at 15.4% (14% tax + 1.4% local income tax). Interest income is similarly taxed at 15.4% withholding. The Individual Savings Account (ISA) regime and Individual Retirement Pension (IRP) accounts provide tax advantages — ISA gains up to KRW 2 million annually (KRW 4 million for farmers and fishermen) are tax-free, with any excess subject to a reduced 9.9% rate rather than the standard 15.4%. Korea's tax treatment of investments therefore varies significantly by asset class and account type.

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1. 1Identify the investment type: domestic stocks (effectively no CGT currently), foreign stocks (22% CGT above KRW 2.5M annual exemption), or crypto (22% CGT from 2025).
2. 2For dividends received (domestic or foreign), withholding tax at 15.4% is typically deducted at source by the financial institution.
3. 3For foreign stock gains, sum all gains and losses for the calendar year across all foreign stocks; apply the KRW 2.5 million annual exemption; calculate 22% tax on the net.
4. 4If total interest and dividend income exceeds KRW 20 million per year, it is subject to comprehensive income tax filing rather than the flat withholding rate.
5. 5Maintain records of foreign stock purchase prices and foreign exchange rates for accurate gain calculation.
6. 6Consider using an ISA account to shelter up to KRW 2 million in gains annually at zero tax, or at 9.9% for amounts above.
7. 7File the annual comprehensive income tax return (종합소득세 신고) by May 31 if total financial income exceeds KRW 20 million.

• !Assuming all Korean investment income is treated the same — the tax treatment varies significantly between domestic stocks (no CGT currently), foreign stocks (22% CGT), and dividends (15.4% withholding).
• !Forgetting to report foreign stock capital gains in the annual comprehensive income tax return by May 31.
• !Not using ISA accounts to shelter investment gains — many Korean investors pay 15.4% unnecessarily when ISA accounts would reduce this to 0% or 9.9%.
• !Not deducting foreign stock losses against gains in the same year, paying more CGT than necessary.
• !Exceeding the KRW 20 million financial income threshold without filing a comprehensive income tax return.
• !Assuming crypto gains are still deferred indefinitely — the 2025 implementation announced means investors must track acquisition costs and gains from January 2025.