Korea, Republic of

Individual - Foreign tax relief and tax treaties

Last reviewed - 28 December 2020

Foreign tax relief

A tax credit for foreign income taxes paid abroad by Korean residents, up to a limit of the amount of Korean income taxes before the foreign tax credit times the ratio of foreign source income to worldwide total taxable income. Any excess over the maximum allowable credit may be carried forward for five years. Alternatively, foreign tax paid can be deducted from taxable income.

Tax treaties

Double taxation avoidance agreements

Korea currently has treaties with the below mentioned countries as of March 2020:

Albania Hungary Papua New Guinea
Algeria Iceland Peru
Australia India Philippines
Austria Indonesia Poland
Azerbaijan, Republic of Iran Portugal
Bahrain Ireland Qatar
Bangladesh Israel, Republic of Romania
Belarus Italy Russia
Belgium Japan Saudi Arabia
Brazil Jordan Serbia
Brunei Kazakhstan Singapore
Bulgaria Kenya Slovakia
Canada Kuwait Slovenia
Chile Kyrgyzstan South Africa, Republic of
China, People's Republic of Laos Spain
Colombia, Republic of Latvia Sri Lanka
Croatia Lithuania Sweden
Czech Republic Luxembourg Switzerland
Denmark Malaysia Tajikistan
Ecuador Malta Thailand
Egypt Mexico Tunisia
Estonia Mongolia Turkey
Ethiopia Morocco Turkmenistan
Fiji Myanmar Ukraine
Finland Nepal United Arab Emirates
France Netherlands United Kingdom
Gabon New Zealand United States
Georgia Norway Uruguay
Germany Oman Uzbekistan
Greece Pakistan Venezuela
Hong Kong Panama Vietnam

Tax information exchange agreements (TIEAs)

Besides income tax treaties to avoid the double taxation, Korea concluded TIEAs with many countries, including certain tax havens and those that provisionally reached such agreements. TIEA coverage extends to Andorra, Bermuda, British Virgin Islands, and Cook Islands, to name a few. TIEAs cover information required for the administration and enforcement of domestic tax laws, including details on taxpayer registration, corporate ownership details, companies’ accounting records and financial statements of a specific transaction, and individual or corporate financial transaction information. TIEAs establish a framework for Korea to curb abusive tax avoidance transactions using tax havens, as well as unveil and levy taxes on offshore tax avoidance transactions. In addition, Korea is one of 136 countries that have joined the Multilateral Convention on Mutual Administrative Assistance in Tax Matters as of March 2020.

Social security (totalisation) agreements

Korea currently has social security agreements in effect with Australia, Austria, Belgium, Brazil, Bulgaria, Canada, Chile, China, Croatia, the Czech Republic, Denmark, Finland, France, Germany, Hungary, India, Iran, Ireland, Italy, Japan, Luxembourg, Mongolia, the Netherlands, Peru, Poland, Quebec, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom, the United States, and Uzbekistan as of March 2020. The social security agreements are intended to help those who have contributed premiums to the national pension plans of two different countries; it allows them to obtain benefit eligibility by combining total periods of coverage in both countries (i.e. totalisation). Nonetheless, the agreement must be reviewed since detailed provisions can vary depending on the respective agreement.