It's February. Your Korean coworker glances at your desk with a knowing look and asks if you've submitted your 연말정산 documents yet. You smile and nod — and then immediately wonder what you've just agreed to. Sound familiar?
For most foreigners on a regular employment visa in Korea, year-end tax settlement (연말정산, yeon-mal-jeong-san) is the annual ritual where your employer figures out whether the government owes you money or vice versa. The good news: if you're drawing a salary from a Korean company, your employer does most of the heavy lifting. The confusing part: there are still decisions you need to make, documents you need to gather, and at least one obscure tax option that most expats never hear about until someone else gets a bigger February paycheck than them.
Let's break it down properly.
So Who Actually Does This For Me?
If you're employed by a Korean entity — a company registered and operating in Korea — your income is classified as Class A employment income. That means your employer withholds income tax from your monthly paycheck throughout the year based on NTS withholding tables, and then in January and February they run the full reconciliation to calculate what you actually owe.
The employer collects your deduction documents, does the math, compares it to what was already withheld, and then either pads your February paycheck with a refund or quietly shaves a bit off it for the underpayment. The final settlement paperwork is filed with the National Tax Service (NTS) by 10 March.
In most cases, if your entire income comes from that one Korean employer and you have no freelance gigs, foreign dividends, or other income streams, you don't need to file anything yourself. Your employer handles it, you get the result in February, and you carry on with your life.
The exceptions are worth knowing, though. If you're paid by a foreign company that doesn't charge your salary back to a Korean entity — technically Class B income — your employer isn't withholding anything, and you're responsible for filing your own taxes by 31 May. The same applies if you have side income of any kind, or if you left Korea mid-year while still having earned income there.
What Documents Do You Actually Need to Submit?
The documents you hand your HR department typically come from the Hometax Simplified Deduction Service (홈택스 연말정산 간소화서비스), which goes live around January 15 each year at hometax.go.kr. This is the NTS system that auto-aggregates most of your deductible spending for the year — National Pension and health insurance contributions, credit card and debit card spending, medical expenses processed through the cash receipt system, and similar items.
As a foreigner with an Alien Registration Card (ARC), you can access Hometax, though some features require additional authentication steps compared to Korean citizens. Worth trying directly; if it proves difficult, ask your HR department — most companies that employ foreigners have dealt with this before.
Beyond Hometax, you may need to gather insurance premium receipts, education expense documentation, mortgage interest certificates (if applicable), and charitable donation receipts. If you're claiming deductions for family members living abroad, be aware that Korean tax law generally requires Korean-sourced proof; overseas dependant deductions involve additional steps and are not well-documented in English sources, so verify directly with a tax advisor or the NTS.
Your employer will typically send you a document checklist in January. Follow it. Whatever you don't submit by the deadline your company sets, you generally can't claim in that year's settlement — though some items can be recovered in the May self-filing period if you're eligible.
The Residency Question: Are You Even a "Tax Resident"?
Korea distinguishes between resident and non-resident taxpayers, and it matters more than you might think.
You're a Korean tax resident if you've lived in Korea for 183 days or more during the tax year. Most employed expats qualify easily. As a resident, you're entitled to personal deductions, tax credits, and the full deduction calculation — with one important nuance based on how long you've been in Korea.
Foreign residents who've been in Korea for five years or fewer (counted within the past ten years) are taxed only on their Korea-source income. Once you cross that five-year threshold, you technically become subject to taxation on your worldwide income. In practice, Korea has double taxation treaties with many countries, and most people in this situation should speak with a tax advisor before assuming what applies to them.
Non-residents — those who haven't hit the 183-day threshold — are taxed only on Korea-source income and can only claim the basic personal deduction for themselves (not for dependants). If you're a non-resident who earned income in Korea for part of the year, you'll generally need to self-file by 31 May.
What's This Flat 19% Tax Option I Keep Hearing About?
Here's the one that surprises a lot of expats: Korea offers a flat 19% income tax rate (단일세율) as an alternative to the standard progressive tax brackets, specifically for foreign employees.
Korea's standard rates run from 6% to 45% depending on your income bracket. When you add the local income tax (a 10% surcharge on your PIT), the effective top combined rate can reach roughly 49.5%. The flat 19% option — which becomes approximately 20.9% combined once local tax is included — can look very attractive if you're earning enough to be in the upper brackets.
The catch is significant: if you elect the flat 19% rate, you forfeit all deductions and tax credits. No personal exemption, no credit card spending deductions, no insurance credits, no child credits — nothing. The 19% applies to gross employment income (with certain non-taxable items like employer-provided housing generally remaining excluded).
The flat rate is available to foreign employees who started working in Korea no later than 31 December 2026, and it can be applied for up to 20 years from your first day of work. You can't elect it if you work for a related party — meaning a company you personally control or own.
Whether it actually saves you money depends entirely on your income level. For lower earners, the standard progressive rates with deductions will almost certainly be better. For higher earners facing the 38%–45% bracket, the flat 19% can mean substantial savings. There's no universal crossover point, but rough estimates suggest the flat rate starts making mathematical sense somewhere in the higher income ranges — check directly with a Korean tax advisor to run the numbers for your specific situation.
To elect the flat rate, you submit an application to the NTS at the time of your annual filing, or to your employer for monthly withholding or year-end settlement purposes.
What About Social Insurance on Top of All This?
A quick heads-up that often catches new arrivals off guard: beyond income tax, most employed foreigners in Korea also contribute to social insurance programs. National Pension runs at 4.75% of salary (employee share), and National Health Insurance at approximately 4.07%. Employment Insurance applies to some visa types but not others.
The employee portions of National Pension and Health Insurance contributions are fully tax-deductible — they automatically reduce your taxable income, so they'll show up as deductible items in your year-end settlement documents. If your home country has a social security totalization agreement with Korea, you may be exempt from National Pension — check the NPS list directly, as eligibility varies by nationality.
The May Filing: When You Do Have to Do It Yourself
If you have income beyond your regular Korean salary — freelance work, rental income, dividends, or Class B income from a foreign employer — you'll need to file a comprehensive income tax return (종합소득세 신고) between 1 May and 31 May of the following year via Hometax.
The same deadline applies if you're leaving Korea mid-year with outstanding tax obligations: you must file before you depart, covering 1 January through your departure date. Don't leave this until you're packing boxes.
The NTS English portal at nts.go.kr has general information, though English support is limited. For complex situations — multiple income sources, the flat rate decision, overseas income, or a first year with partial residency — consulting a licensed Korean tax advisor (세무사) is worth the cost.
The bottom line: most expats with standard Korean employment have very little to worry about beyond gathering documents in January and handing them to HR. The 연말정산 system exists to make that process as employer-driven as possible. Know where your income comes from, understand the flat rate option if you're a higher earner, and when in doubt, ask someone who knows Korean tax law rather than relying on what your coworker thinks they remember from last year.
