Capital Gains Tax and Tax Exemptions on Overseas Stocks for Foreign Residents in Korea

Foreign residents in South Korea frequently trade US equities (such as Apple, Nvidia, and S&P 500 ETFs) through local Korean brokerages or international platforms.

However, understanding when you become subject to Korean capital gains tax on overseas assets is crucial to avoiding severe late-filing penalties.

1. The Crucial 5-Year Residency Rule for Foreigners

Under the Korean Income Tax Act (Article 118-2), foreigners living in South Korea are classified into two tax categories regarding overseas assets:

💡 Short-Term Foreign Resident vs Long-Term Resident Tax Status

Korean Income Tax Act Article 118-2

🏖️ Lived in Korea ≤ 5 Years (in past 10 years)

You are classified as a Short-Term Foreign Resident. Capital gains from overseas stocks traded abroad are NOT taxable in Korea, provided the proceeds are not remitted or paid in Korea.

🏛️ Lived in Korea > 5 Years

You become a Full Tax Resident. Worldwide capital gains from overseas stocks are subject to a flat 22% tax (20% national + 2% local) on net annual gains exceeding 2.5 million KRW.

2. Calculating the 22% Capital Gains Tax

📌 [Example: Annual Net Capital Gain of 10,000,000 KRW]
• Total Net Profit: 10,000,000 KRW
• Annual Basic Exemption: -2,500,000 KRW
• Taxable Base: 7,500,000 KRW
• Final Tax (22%): 7,500,000 × 22% = 1,650,000 KRW

3. Annual Filing Deadline (May 1 ~ May 31)

Foreign residents liable for overseas capital gains tax must file their return through HomeTax or via an authorized Korean brokerage between May 1 and May 31 of the following calendar year.

🔗 Related Financial Guides:

2026 Korea Year-End Tax Settlement Guide for Foreign Workers

S&P500 vs Nasdaq100 Long-Term Strategy

1. The Crucial 5-Year Residency Rule for Foreigners

🏖️ Lived in Korea ≤ 5 Years (in past 10 years)

🏛️ Lived in Korea > 5 Years

2. Calculating the 22% Capital Gains Tax

3. Annual Filing Deadline (May 1 ~ May 31)

MegaMoneyMomentum Global Editorial Team