Kindly find replies to your inquires:

1. (1)

Residents are obligated to pay taxes on both domestic and foreign source income, and if they have an address within Korea, they are classified as residents. According to the income tax execution standards, if an individual is engaged in an occupation that generally requires residing within Korea for 183 days or more continuously, even without an address within Korea, they are considered to have an address within Korea. If an individual is listed as a representative director of a domestic corporation and receives a salary, it is reasonable to classify them as a resident due to the nature of their occupation, which implies residing within Korea for tax purposes. Therefore, it is likely that they would have an income tax obligation for both domestic and foreign source income.

(2)

For a Korean domestic corporation where an individual is listed as a representative director but does not receive a salary, primarily works overseas, and receives a salary from a foreign affiliated corporation, the key point of contention is whether the mere nominal title of being a representative director requires the application of the domestic address rule.

Numerous legal precedents reflect that while the general principle (considering individuals with an address as residents and those who reside within Korea for 183 days or more as residents) applies, deviations from this principle are judged based on comprehensive consideration of various circumstances. Therefore, if it can be demonstrated that the individual's basis of life, including family and assets, is not within Korea despite holding the title of representative director, they may not be classified as residents.

Furthermore, since the determination of residency as per the tax laws of both countries requires consideration of the residency criteria in each country's domestic tax laws and relevant tax treaties, it's advisable to take this aspect into account.

2. Basis

Income Tax Act Article 3 [Scope of Taxable Income]

① Residents are subject to taxation on all income as defined in this Act. However, for foreign residents who have not had an aggregate period of domestic address or residence exceeding five years in the ten years preceding the end of the relevant tax year, only income derived from abroad that is paid or remitted into Korea during the taxable period is subject to taxation. (Revised as of December 31, 2009)

② Non-residents are subject to taxation only on domestic sourced income as defined in Article 119. (Revised as of December 31, 2009)

Income Tax Act Article 1-2 [Definitions]

① The following terms used in this Act have the meanings indicated below. (Enacted as of December 31, 2009)

1. "Resident" refers to an individual who has an address within Korea or who has resided (stayed) within Korea for 183 days or more. (Revised as of December 23, 2014)

Income Tax Act Enforcement Standard 1-2-1 [Distinction between Residents and Non-Residents]

① "Resident" refers to an individual who has an address within Korea or who has resided (stayed) within Korea for 183 days or more. "Non-resident" refers to an individual who is not a resident, and this distinction is not affected by nationality, possession of foreign permanent residency, but is based on objective facts related to living circumstances such as the duration of residence, occupation, presence of family residing in Korea, and the existence of assets within Korea.

When an individual is considered to have an address within Korea:

- When the individual has an occupation that generally requires residing within Korea for 183 days or more continuously.

- When the individual has family members living in Korea and, based on the occupation and asset status, it is considered that they will reside within Korea for 183 days or more continuously.

When an individual is considered not to have an address within Korea:

- When an individual who has foreign nationality or has obtained foreign permanent residency has no family members residing in Korea and, based on occupation and asset status, it is not considered that they will mainly reside in Korea.

② Even when applying Paragraph 1, if an individual with an occupation that generally requires residing overseas for 183 days or more departs or resides overseas for 183 days or more while working overseas, they can still be classified as a resident if the individual's basis of life, including family and assets within Korea, suggests a connection to Korea.

Supreme Court Decision 2006 Du 3964

When an individual is simultaneously a resident of both Korea and a foreign country, the issue of determining which country's residency rule should apply according to a tax treaty arises. Before determining this, in cases where the individual was a domestic resident during the relevant tax period but also qualifies as a resident of a foreign country, the burden of proof lies with the individual making the assertion (refer to Supreme Court Decision dated December 11, 2008, 2006 Du 3964).