Date: Aug 28, 2020

I. Introduction

This post will be about filing transfer tax ofa non-resident when he or she has transfer income in domestic source income.

II. Transfer income of a non-resident

1. The scope of transfer income in domestic source income of a non-resident

1) Rights of land, building, and real-estate property and other assets (real-estate transfer income)

2) Stocks, investment shares or other securities issued by a domestic corporation

3) Stocks or investment shares issued by a foreign corporation (only applicable to those listed on the securities market) and other securities issued by a domestic place of business of a foreign corporation

2. Withholding tax

Any person who pays, to a nonresident, domestic source income which is neither substantially related to any domestic place of business nor attributed to such domestic place of business (including the amount paid to a nonresident who has no domestic place of business), shall withhold each of the following amounts as income tax on domestic source income of the nonresident when he/she pays such income, and pay such income tax to the competent tax office, the Bank of Korea, or a postal service office by no later than the tenth day of the month following the month in which the date of such withholding falls: Provided, That income on which a tax may be levied as domestic source business income in accordance with a tax treaty among income shall be excluded.

1) With respect to income 2/100 of the amount paid;

2) With respect to income, 20/100 of the amount paid: Provided, That the rate shall be 3/100 of the amount paid where an income generated by providing any of the services, among personal services provided in a foreign country, is deemed an income generated within the Republic of Korea under a tax treaty;

3. Place for tax payment

The place for payment of income tax of a resident shall be the place of his/her domicile: Provided that where he/she has no place of domicile, it shall be the place of his/her residence.

The place for payment of income tax of a nonresident shall be the seat of his/her place of business in the Republic of Korea: Provided, That where he/she has two or more domestic places of business,the place for tax payment shall be the principal place of business in the Republic of Korea, and where he/she has no place of business in the Republic of Korea, it shall be the place where income is generated from a source in the Republic of Korea.

Where the place for tax payment is obscure, it shall be determined as prescribed by Presidential Decree.

4. Method of taxation on non-resident

☞ Income tax on a nonresident shall be calculated by separating cases where it is imposed bya ggregating relevant domestic source income, from cases where it is imposed by separating such domestic source income

☞ For a nonresident having a domestic place of business and a nonresident with income,tax shall be imposed by aggregating income

☞ For a nonresident having no domestic place of business, income tax shall be imposed separately by each type of income

☞ For domestic income of a nonresident having a domestic place of business, income tax shall be imposed separately by each type of income.

☞ In cases of imposing taxes where a nonresident with income among income subject to withholding files a final return on the tax base of global income by applying mutatis mutandis Article 70, income tax may be imposed on the aggregate of income

☞ In cases of a joint business where the nonresidents having a domestic place of business jointly manage their business and share the profit and loss of withheld tax amount.

5. Payment in installments: Possible

6. Non-residents are still have obligation of local income tax

Learn more about Korean tax system by visiting our website

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