Year-end tax settlement (연말정산) for foreign workers

4 min read

Korean employers withhold income tax from every paycheque using an estimate. Once a year they reconcile that estimate against what you actually owed. That reconciliation is 연말정산, the year-end settlement, and it happens in January and February for the previous calendar year.

If too much was withheld, the difference comes back to you — usually in your February or March pay. If too little was withheld, you pay the shortfall.

It applies to foreign employees the same as to Korean ones.

The tax year for a foreign worker: tax is withheld monthly, documents are gathered in January, the employer settles in February, and anyone not settled through an employer files in May All year Tax withheld monthly January You hand in documents February Employer settles it May You file, if nobody did Freelance fees, several jobs, or no employer at all — May is where that income gets reconciled, and where over-withheld tax comes back. Plenty of people never file and simply lose it.
Documents from your home country — apostilled family records especially — should be started in autumn, not January.

What your employer needs from you

Your company's HR or payroll team will ask for documents in January. The deadline is theirs, not the tax office's, and it is usually tight.

Most of what you need comes from the National Tax Service's Hometax simplified service (연말정산 간소화), which already holds records of much of your spending — card payments, medical bills, insurance premiums — reported by the institutions themselves. You log in, generate a PDF, and hand it over.

What Hometax will not have, and you must supply yourself:

  • Rent paid, if you are claiming the housing deduction — you generally need a lease in your name and proof of payment
  • Tuition or education costs paid abroad
  • Donations to organisations outside the Korean system
  • Dependants living overseas, which need family documents, often translated and apostilled

That last one is the most commonly missed by foreign workers, and often the most valuable. If you support a spouse, children or parents who do not live in Korea, they may still count. Start gathering those documents in autumn — apostilles from another country do not arrive in a week.

The 19% flat rate

Foreign workers can choose to be taxed at a flat 19% on employment income instead of Korea's progressive rates, which run from 6% to 45%. A 10% local surtax applies on top, so the effective rate is about 20.9%.

The trade-off: choosing the flat rate means giving up essentially all deductions and credits.

Flat 19% (20.9% with the local surtax)

One rate on employment income, whatever you earn. No deductions, no credits — not rent, not insurance, not dependants.

Tends to win for higher earners with little to claim.

Progressive 6–45%

Korea's normal bands, with every deduction available: housing, medical, insurance, education, dependants abroad.

Tends to win for ordinary salaries, and for anyone supporting family.

Two conditions worth knowing:

  • It is available for a 20-year window from when you start working in Korea.
  • Eligibility is tied to starting employment in Korea by 31 December 2026 under the current rule — a date that has been extended repeatedly in the past, but is not something to assume.

You elect it through your employer at year-end settlement, or when filing yourself. You are not locked in permanently; the choice is made for the tax year.

Run both numbers before deciding. Payroll teams can often model it, and for most people on a normal salary the progressive rate with deductions wins.

If your employer does not do it for you

Not everyone is settled through an employer. If you had several jobs, freelance income, or income that was not payroll, you file yourself during the general income tax filing period in May, covering the previous year.

This is also where fee-based income lands — one-off gigs, campaigns, paid events. Tax is typically withheld when the fee is paid, and the May filing is where it gets reconciled against your actual liability. If that withheld amount was more than you owed, filing is how you get it back. Plenty of people never file and simply lose it.

Practical advice

Keep the address on your card current. Deductions such as housing rely on records that match your registered address.

Pay by card where you can. Card spending is automatically reported to Hometax; cash largely is not. If you pay cash, ask for a cash receipt (현금영수증) issued to your registration number.

Do not guess on dependants. Claiming someone who does not qualify is corrected later with interest. Ask payroll, or ask the NTS.

Use the English support. The National Tax Service runs an English helpline on 1588-0560 and publishes an English guide for foreign taxpayers each year. It is written for exactly this situation.

Checked in August 2026. Tax rules, rates and eligibility dates change every year, and individual circumstances vary widely. This is general information, not tax advice — confirm with the National Tax Service or a qualified accountant before acting on it.

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