Do foreigners pay tax in Korea for selling US stocks?

When you have HongKong passport but work in Korea, where do you pay tax on capital gains you have made last year from selling US stocks?

When it comes to tax, the term of ‘resident’ or ‘non-resident’ is often used rather than nationality or passport country. If you have an address in Korea and have been in Korea for a while, it is much likely that you are a resident of Korea for tax reporting.

• In the US, non-resident aliens are subject to no U.S. capital gains tax. So you are not likely to pay tax on the capital gains from US stocks.
• In Korea, gains from selling local (with certain conditions) and overseas stocks are to be reported and taxed. The tax filing due date is May 31, 2021 for stock selling gains made during the year of 2020.

The taxable income is computed after deducting respective service fees and transaction fees. Basic deduction of KRW 2,500,000 is applied to your taxable income. Therefore, if you have made less than KRW 2,500,000 on overseas stocks last year, then there is no tax. The taxable income is sum of gains and losses on multiple stocks from January 1, 2020 to December 31, 2020.

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There are few important things to remember.

• F/X rate matters much more than you think. You have to apply foreign exchange rates specified by Korean tax law in calculating the taxable income, and any foreign exchange gain is added to your income.
• You have to report your income to NTS, even if you have no tax to pay.
• Your overseas stock selling gains not transferred to Korea are still subject to the tax reporting.
• There are few nations where they can levy tax for selling stocks in their country not in Korea by tax treaty. I recommend you to consult with a tax accountant.

Proper tax filing and making tax payment in time is the easiest way of saving tax.

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