Concept of “Non-resident” under the Korean Tax Code

Selim Tax-Accounting Firm

I.                   Non-resident under the Income Tax Act.

1.      Resident: A person who holds his domicile in Korea or has held his temporary domicile in Korea for one year or more. (Income Tax Act Article 1. 2)

2.      Non-resident: A person who is not a resident. That means the person, Foreign Headquarter or non-corporate entity do not have an address or their domicile which are more than one year.

Judgment Criterion of Non-resident

If one of the aboved-questions is marked “Yes”, he/she is resident however none of “Yes”,

The person will be “Non-resident” in Korean Tax Code.

II.                Non-resident under the Double Taxation Convention

1.      A person with dual nationality: It'll apply by the following order

①    Permanent home

②    Central of vital interest

③    Habitual home

④    Nationality

⑤    Mutual agreement

2.      An entity with dual nationality: It'll apply by the following order.

①      Place of effective management

②      Mutual agreement

III.             Timing of the title holding both resident and non-resident( Enforcement Decree of Income Tax Act Article 2. 2)

1.       Timing of Non-resident to resident

①      When a person has an address in Korea

②      When a person has an occupation which requires him/her to continually reside in Korea for one year or longer.

③      When a person has family members living with him/her in Korea, and is deemed to continually reside in Korea for one year or longer in view of his/her occupation or property status

④      When a person have stayed one year and has a domicile in Korea.

2.       Timing of resident to non-resident

①      The next day of the date when a resident leaves Korea to move his/her address or domicile overseas

②      The next day of the date when a reason that it is deemed that a resident has no address in Korea