Overseas Financial Bank Account Reporting (FBAR) Requirement: “Form 21” due by July 1, 2019

Under the International Tax Coordination Law of Korea, if Korean resident individuals or domestic companies have financial bank accounts opened with overseas financial institutions and the total value of such accounts exceeds KRW 500 million on any last day of each month of the relevant year, such Korean residents and domestic companies are required to file a report on their overseas financial bank accounts to the tax office during the first day of June to the 30th of June of the following year. As the original filing deadline of June 30, 2019 falls on weekend, the filing for year 2018 is extended to July 1, 2019.

For non-reporting or underreporting, Korean resident individuals or domestic companies concerned shall be subject to penalties ranging between 10 - 20% max depending on non-reported or underreported amount. If the non-reported or underreported amount exceeds KRW 5 billion, Korean resident individuals or domestic companies concerned can be subject to imprisonment of up to 2 years or a fine of up to 20% of the amount in violation.

Individual and legal entities that can be exempt from this FBAR reporting requirement are as follows:

Ø A foreign resident who has/had his/her domicile or place of residence in the Republic of Korea for not more than five years in total from ten years before the end of the relevant year subject to reporting.

Ø A Korean national residing abroad who can be determined as nonresident according to the IITL.

Ø National/local government organizations and public organizations/financial institutions defined under the provisions of the Public Organization Management Law of Korea.

Ø An individual whose overseas financial bank account information is available to the Korean tax authorities for verifications through a FBAR report submitted to the tax authorities by another “related individual of overseas financial bank account”. The related individual of overseas financial bank account is defined as all individuals who hold the joint bank account (공동명의계좌) or the actual beneficial owner of the account opened under the borrowed name (차명계좌).