April 15, 2021

Is my Upwork income taxable in Korea?

Q. I am expecting income from Upwork or Fiverr and my clients are not in Korea. Do I still need to report this income for tax in Korea?

A. If you are working as a freelancer in Korea and make income from overseas via global platform, then chances are high that you have to report the income to National Tax Service(NTS).

When your freelancing work volume from overseas gets bigger, you may consider registering yourself as a business incomer at Hometax. (This allows you to get 10% VAT return on your business related purchases in Korea. Downside of registering your business is that you will have VAT filing obligation two times a year)

Whether you have to charge 10% VAT on top of your invoice amount to overseas clients or not, it depends on the service being provided. Korean VAT law stipulates the business types that are valid for 0% VAT.

To apply 0% VAT in your business, you have to meet two conditions.

  1. Your business type is valid for 0% VAT
  2. Prove that your business earns foreign currency by submitting a proof of foreign currency transfer to the tax office.

Be careful, Paypal transfer in KRW does not meet the second condition, hence you have to apply 10% VAT on your sales.

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