l 2022 individual income tax return filing due by
May 31, 2023
Residents, regardless of
their nationalities, are subject to Korean income tax based on worldwide income
including global income (employment income, business profits, dividend,
pension, interest, rental, and other miscellaneous income), severance pay, and
However, under the revised Individual Income Tax Law (IITL), in the case
where the period that a foreigner, who is a tax resident of Korea, has his
address or abode in Korea does not exceed 5 years in aggregate during the past
10 years from the end of the concerned tax year, his/her foreign source income
earned from January 1, 2009 shall be taxed in Korea only if such income is
paid in Korea or such income is remitted into Korea.
Taxpayers making monthly tax
payments and having only one source of worldwide income (i.e., either Class A
or Class B) are generally not required to file a global income tax return since
the employer (for Class A income earners) or the Class B taxpayers' association
(for Class B income earners) finalizes the individual's tax liability at the end
of the year for and on behalf of the employee concerned. Taxpayers having more
than one source of income, however, are required to file a global income tax
return for the year and pay taxes due on such income on or before May 31 of the
following year, or prior to permanently leaving Korea.
The filing of 2022 annual individual income tax
return is coming due by May 31, 2023 together with necessary tax payments.
l RSU tax reporting requirements of employer and
its employees in Korea
Restricted Stock Unit (RSU) related tax
treatment at company level as well as individual employee level can be
summarized as below.
Employees of Korean company
If the RSU satisfies all 4
conditions listed below, such RSU costs shall be deductible
for corporate income tax purpose in accordance with Article 10-2 of the
Enforcement Decree of the Korean Corporate Income Tax Law:
The parent/affiliate company provides
such RSU within 10% of its total issued and outstanding shares;
There is a written agreement on
charge-back of RSU costs between the parent/affiliate company and the Korean
The parent or an affiliate company is
defined as a foreign(non-Korean) company listed on a domestic or foreign
securities exchange, which holds not less than 90% of the shares in the
Korean subsidiary company directly or indirectly; and
individual employee level
Where employees receive RSU granted
from the parent company/affiliated company and the RSU costs are charged
back to the Korean subsidiary company, the related RSU income of
employees shall be subject to monthly Korean payroll income taxes and payment
obligations at the time of vesting (not at the time of grant). The
employer as the withholding agent shall be obligated to withhold payroll
taxes and report to the tax authorities together with regular payroll.
If RSU costs are not charged back
to the Korean company or do not qualify for deduction for Korean
corporate income tax purposes, the employees concerned shall be required to
report such RSU income and pay income taxes thereon to the Korean tax
authorities voluntarily either:
In the case where a RSU recipient is a
board member or a statutory auditor of the Korean subsidiary, their total
annual compensation shall not exceed the ceiling amount as approved at the
shareholders’ meeting or at the board of directors’ meeting.
If RSU does not satisfy all 4
conditions above, such RSU costs shall be treated non-deductible for
corporate income tax purpose in Korea.
through a taxpayers’ association by
the 10th day of following month of RSU vesting) (in which case 5% income tax
credit with annual maximum cap of KRW 1.0 Million will be allowed) OR
alternatively through filing annual
global income tax return (종합소득신고
in Korean) which is due by May 31 of the following year (in
this case, a 5% tax credit shall not be allowed).
In this case, the employer shall not
be obligated to withhold/report payroll taxes.
To be deducted when RSU is
To be taxed when RSU is vested.