Capital Gains Tax for Foreign Investors in Korea

Last updated: July 2026

Key Takeaways

• Most foreign investors owe no Korean capital gains tax on listed shares. Sell through the Korea Exchange (KRX) while you and related parties hold under 25% of the company, and the gain generally falls outside Korean tax entirely.
• That 25% test looks back over the year of sale and the five calendar years before it. Cross it once in that window, and the exemption is gone.
• Where tax does apply, Korea withholds on the sale, not the profit: the lower of 11% of gross proceeds or 22% of the net gain. The break-even sits at exactly 50%.
• The gain rate is available only where your acquisition cost is evidenced. Without that evidence, you pay 11% of proceeds—even on a losing trade.
• Under the Korea–US tax treaty, a resident of one country is in principle exempt from the other country’s tax on transfer gains. Real property, permanent establishments, and the 183-day or fixed-base tests are the exceptions.
• New for 2026: the withholding agent must now file treaty applications with the district tax office by the end of February in the year following payment.

Table of Contents

• Start here: most investors owe nothing
• Two rates, and Korea picks one
• The 50% break-even
• Why a loss can still cost you 11%
• When the treaty removes the tax entirely
• What changed for 2026 filings
• When nobody withholds for you
• The securities transaction tax is separate
• Four traps
• FAQ

Start here: most investors owe nothing

Search this topic and you’ll meet two numbers everywhere: 11% and 22%. Both are real. For most people reading this, neither one applies.

A non-resident who sells listed equity securities through the Korea Exchange is generally outside Korean capital gains tax altogether, provided that the seller—together with certain related parties—held less than 25% of the company’s total issued equity securities at every point during the year of sale and the five calendar years before it.

Look at the scale of that threshold before reading on. Twenty-five percent of a KOSPI-listed company is a controlling stake. If you’re buying Samsung Electronics or a Korean ETF through a brokerage account, you’re nowhere near it, and Korea isn’t taxing your gain.

This isn’t a loophole. It’s the design: Korea’s taxes control transactions and let portfolio flows through. English-language guides lead with 11% and 22% because those come from the withholding rules, and the withholding rules are what a broker’s compliance desk documents. The exemption sits one layer above them.

Four situations pull you back inside the net:

• You cross the ownership threshold. The test isn’t a snapshot at all. It aggregates related parties and looks back five calendar years.
• You sell off-exchange. The exemption is written around KRX transfers. Private and negotiated sales sit outside it.
• You sell unlisted shares. Nothing here covers private companies.
• You hold real-property-heavy shares. Korea treats shares in companies whose value is largely Korean real estate as a proxy for the property. Separate rule, separate tests.

If none of those describe you, the rest of this article is background rather than a bill. If one of them does, keep reading — the next section is where your number comes from.

Two rates, and Korea picks one

Start with the thing that trips up almost every foreign investor. Korea does not wait for you to file and settle up. The tax comes off the transaction, and the party paying you is the one who takes it.

Two rates apply to a non-resident’s gain on Korean shares:

• 11% of gross proceeds — 10% national income tax plus 1% local income tax
• 22% of the net capital gain — 20% national plus 2% local

Korea applies the lower of the two. That sounds generous, and sometimes it is. The catch sits in the condition attached to it.

The 22% figure runs on your net gain, which means somebody has to know what you paid for the shares. Where that acquisition cost is established, the two rates get compared, and the smaller number is withheld. Where it is not, there is no gain to calculate—and the 11% proceeds rate applies on its own.

Before any of this is relevant, confirm that Korea treats you as a non-resident. Residents follow a different regime entirely. If you have not run that test, start with the 183-day rule and come back.

The 50% break-even

Set the two formulas against each other, and the arithmetic collapses into one number.

Withholding on proceeds is 0.11 × P. Withholding on the gain is 0.22 × G. The two are equal when G equals half of P — nothing else in the formula matters. So:

• Gain above 50% of the sale price → the proceeds rate (11%) is lower
• Gain below 50% of the sale price → the gain rate (22%) is lower

Here is that comparison on a ₩100,000,000 sale.

Acquisition cost	Net gain	Gain as % of proceeds	11% of proceeds	22% of gain	Withheld
₩80,000,000	₩20,000,000	20%	₩11,000,000	₩4,400,000	₩4,400,000 (gain basis)
₩50,000,000	₩50,000,000	50%	₩11,000,000	₩11,000,000	₩11,000,000 (identical)
₩30,000,000	₩70,000,000	70%	₩11,000,000	₩15,400,000	₩11,000,000 (proceeds basis)
₩120,000,000	Loss of ₩20,000,000	—	₩11,000,000	Not applicable	Depends on your records—see below

An illustrative example built from the statutory rates, not tax advice. ₩100,000,000 is about USD 68,000 at July 2026 exchange rates (roughly ₩1,470 per dollar). Your own numbers, your treaty position, and your broker’s procedures all change the outcome.

Why this matters: the 11% cap protects the long-term holder. Buy at ₩30M, sell at ₩100M, and a straight 22% on your ₩70M gain would take ₩15.4M. The proceeds ceiling holds it to ₩11M. The investor sitting on a decade of appreciation in a Korean blue chip is the one this rule was built for, and the deeper the gain, the more it saves.

The reverse is where people get hurt. A thin gain gets taxed at 22% of very little—fine. A loss gets taxed at 11% of everything if your paperwork doesn’t hold up.

Why a loss can still cost you 11%

Read that last row of the table again. You bought at ₩120M, you sold at ₩100M, you’re down ₩20M, and Korea can still take ₩11M off the proceeds.

The mechanism is not punishment, just procedure. Withholding happens at the moment of payment, and the withholding agent can only calculate a gain from cost data actually in front of them. No verified acquisition cost, no gain figure, no 22% comparison. The default falls back to 11% of the money changing hands.

That produces a tax on an economic loss. It is the single most expensive thing in this article — and it’s entirely avoidable with records.

So keep them from the first purchase:

• Trade confirmations showing purchase price, quantity, and date
• Broker statements covering the full holding period
• Proof of payment — the wire or settlement record
• Corporate action notices for splits, mergers, and stock dividends that moved your cost basis

If your shares moved between brokers, the cost basis often doesn’t travel with them cleanly. That’s the most common gap. Reconstruct it while the old broker still has your history, not five years later when you’re selling.

When the treaty removes the tax entirely

Withholding is the default. A tax treaty can override it.

The Korea–US treaty takes the standard approach: a resident of one country is in principle exempt from tax in the other on gains from the transfer of property. If you’re a US tax resident selling Korean listed shares, the starting point is exemption rather than 11% or 22%.

The exceptions carry real weight:

• Real property and, in many cases shares in companies that mainly hold it
• Gains connected to a permanent establishment or fixed base you maintain in Korea
• Presence in Korea for 183 days or more, or a fixed base available to you there

That last one loops straight back into residency. Spend enough time in Korea, and the exemption you were counting on stops applying, without anything about your portfolio changing.

Treaty relief is not automatic. You claim it, before the payment, by filing an application for treaty benefits with your withholding agent and attaching a certificate of residence from your home tax authority. Miss the timing and you’ll be withheld at the domestic rate and left to chase a refund.

Those certificates take weeks and are generally accepted only if issued within the preceding 12 months. Order one before you plan to sell.

What changed for 2026 filings

For submissions made on or after 1 January 2026, the withholding agent’s job doesn’t end at collecting your treaty application. They must now file that application, with its attachments, to the competent district tax office. The deadline is the end of February in the year following the year the income was paid. The change is written around applications filed by non-resident entities; individual investors should confirm with their withholding agent how it applies to them.

The paperwork itself has not changed. The audit trail has. Your application now sits in a tax office file rather than a broker’s drawer, which raises the cost of a sloppy submission for everyone in the chain.

Expect brokers to get stricter — visibly stricter — about what they accept. A certificate of residence that’s expired, made out to the wrong name, or issued for the wrong tax year used to be the sort of thing that slipped through. Now it’s the sort of thing that comes back to the broker in February. Submit clean documents the first time.

When nobody withholds for you

The whole system assumes there is a withholding agent — a payer inside Korea who takes the tax and remits it. In most listed-share sales through a Korean broker, there is.

Where the withholding mechanism doesn’t apply under the contractual arrangement, the obligation lands on you. The non-resident seller has to report and pay the capital gains tax directly.

This comes up in off-market transfers, private-company share sales, and deals between two parties with no Korean intermediary. If you’re selling shares to a buyer without a Korean payer in the middle, assume you’re the one filing.

Get advice on that before the closing, while the terms can still move. Working out the mechanics on your own during a filing window is the expensive path.

The securities transaction tax is separate

One more line item, and it catches people who budgeted only for the withholding.

Securities transaction tax applies to the sale on its own footing. It’s charged on the transaction whether you made money or lost it, and it sits outside the 11% versus 22% comparison. Your net proceeds absorb both.

Four traps

Assuming the tax follows your profit. It follows the sale. On a bad trade with no cost records, the bill arrives anyway.

Letting the cost basis go stale. Broker transfers, corporate actions, and closed accounts all break the paper chain. Repair it while the records still exist.

Claiming treaty relief after the fact. The application belongs with your withholding agent before payment. Afterward, you’re filing for a refund instead.

Forgetting that the treaty exception points back at your calendar. Days in Korea can undo the exemption. Check your day count against the 183-day rule before you sell, while the answer can still change what you do.

FAQ

Do foreign investors actually pay Korean capital gains tax on listed shares? Usually not. A non-resident selling through the KRX is generally exempt if they and related parties held under 25% of the company throughout the year of sale and the five calendar years before it. Individual portfolio investors sit comfortably below that. The rates below apply when the exemption doesn’t.

What rate does Korea withhold on a non-resident’s stock sale? The lower of 11% of gross proceeds or 22% of the net gain, where your acquisition cost is established. Without that evidence, 11% of gross proceeds applies.

Why would anyone prefer the 11% proceeds rate? Because it caps the bill on a large gain. Once your gain passes 50% of the sale price, 22% of that gain exceeds 11% of the proceeds, so the proceeds figure becomes the lower of the two.

Can Korea really tax me when I sold at a loss? Where you cannot evidence what you paid, yes—11% of proceeds applies with no gain calculation involved. Cost records are what prevent it.

As a US resident, do I owe Korean capital gains tax at all? In principle, no, under the Korea–US treaty, which generally exempts a resident of one country from the other’s tax on transfer gains. Real property, permanent establishment, and 183-day or fixed-base situations are carved out. You still have to claim the relief in advance.

Does the withholding tax cover my home-country obligation? No. Korean withholding settles the Korean side. Your own country’s treatment of the same gain, and any credit for Korean tax paid, is a separate question for a professional in your jurisdiction.

How do I get set up for any of this in the first place? Through a brokerage account that accepts non-residents. Korea abolished foreign-investor pre-registration in December 2023, so there’s no registration certificate to obtain. See how to buy Korean stocks as a foreigner and open a Korean brokerage account as a non-resident.

This article is general educational information about Korean tax law, not personal tax or investment advice. Withholding outcomes turn on your residency status, your treaty position, and your broker’s procedures. Consult a licensed Korean tax professional or the National Tax Service before acting.