Global Mobility Tax

Republic of Korea | Finalized income tax law and enforcement decree on the Exit Tax

Summary

In December 2025, it was finalized and announced that deemed capital gains from foreign shares, regardless of ‘major shareholder’ status, will be subject to the exit tax effective January 1, 2027. However, new provisions in the Enforcement Decree of the Income Tax Law, announced in February 2026, introduced the scope of foreign shares that are excluded from the exit tax. Thanks to these new provisions, foreign national employees on long-term assignments in Korea will likely not be subject to the exit tax upon departure from Korea, provided they stay in Korea only for their determined assignment period and depart within 6 months of their assignment end date, even if they have worked in Korea for over 5 years.

The detail

As proposed by the Ministry of Economy and Finance of Korea, the scope of deemed capital gains subject to the exit tax has been expanded to include foreign shares issued by foreign corporation or listed on a market in a foreign country. For these foreign shares, the ‘major shareholder’ criteria do not apply. For the information purpose, historically, a foreign individual permanently leaving Korea, who has had his/her domicile or place of residence for over 5 years during the recent 10 years from the departure date and is major shareholders of a Korean company, is subject to the exit tax on his/her deemed capital gain on stocks.

Individuals subject to the exit tax are required to report the details of shares one day before the departure date and file the capital gains tax return on the “deemed capital gain” – the difference between the market value at the date of departure and the acquisition value – and pay the relevant taxes within three months from the end of the month of departure.

The applicable tax rates (excluding local income tax) on the deemed capital gains are as follows:

• Domestic shares: 20% on the tax base of KRW 300 million or less; 25% on the tax base exceeding KRW 300 million
• Foreign shares: A flat 20% on the tax base

However, the updated Enforcement Decree of the Income Tax Law announced in February 2026 introduces three criteria under which foreign shares are excluded from the exit tax, and if any of these three criteria are met, it can be excluded:

• The total value of foreign shares owned by the individual at the time of departure is KRW 500 million or less.
• Foreign shares owned by a foreign employee. This criterion applies specifically to those who have worked in Korea for at least 80% of the period during the last 10 years from the actual departure date.
• Foreign shares acquired by a foreign employee’s spouse or minor children prior to the date the foreign employee started to work in Korea.

For the second and third criteria, the exclusion applies only if the employee departs Korea within 6 months after their employment period ends.

Under the updated Enforcement Decree, foreign employees on long-term assignments (exceeding 5 years) will likely remain exempt from the exit tax on foreign shares, provided they depart Korea within 6 months after the completion of their assignment period in Korea.

This new regulation is applicable to the individuals permanently leaving Korea on or after January 1, 2027.

Contact us

For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:

Danielle Suh
Partner

Na Young Hwang
Director

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