Taxes on Korean Stocks for Foreign Investors (2026 Guide)

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Non-resident investors in Korean stocks mainly deal with two Korean taxes. The first is a withholding tax on dividends: 22% by default, but usually 15% (16.5% for US residents) once a tax-treaty rate is claimed. The second is a securities transaction tax of 0.20% of the sale price on both KOSPI and KOSDAQ in 2026. Gains on listed shares sold on the Korea Exchange are generally not taxed in Korea unless you and related parties own 25% or more of the company. This guide explains each tax as it stands in October 2026, how to claim treaty rates and refunds, and which of Korea’s 2026 tax changes apply only to Korean residents.

How much tax do foreigners pay on Korean dividends?

Korea taxes dividends paid to non-residents at 20%, plus a local income tax equal to 10% of that tax, for a total of 22%. The company or its paying agent takes the tax off before the cash reaches you. The same withholding can apply to some stock dividends, such as free shares created from retained earnings or certain reserves.

For comparison, Korean resident individuals normally have 14% withheld on dividends, plus local income tax. Non-residents cannot use the resident rates. Their only route to a lower Korean rate is an income tax treaty between Korea and their country of residence.

Treaty rates for the main investor countries

A treaty rate applies only to the beneficial owner of the dividend, meaning the person who actually keeps the income, and only if that person proves where they are tax resident. The treaties with the main investor countries cap the tax on portfolio dividends at 15%, and a few others, such as those with China and Taiwan, set 10%. Companies holding large stakes get a lower rate.

How do you claim the treaty rate?

1. Get a certificate of tax residence from your home tax authority. For US residents this is IRS Form 6166.
2. Complete the Korean “application for entitlement to reduced tax rate”. This is a National Tax Service form in which you confirm you are the beneficial owner. Treaty exemptions, such as a capital gains exemption, use a separate “application for tax exemption”.
3. Send both to the withholding agent before the payment date. In practice that means your Korean custodian or broker, or your global custodian, which passes them on. If the documents are missing, or the beneficial owner cannot be identified, the agent must withhold at 22%.
4. If you invest through a fund or other overseas investment vehicle, the vehicle collects the investors’ applications and files an “overseas investment vehicle report” listing its beneficial owners. Since 2022, a vehicle that is itself liable to tax in its home country and eligible for treaty benefits can be treated as the beneficial owner.

Two further rules raise the paperwork bar. Corporate investors claiming an exemption worth KRW 1 billion or more must also provide director and shareholder details and three years of audit reports. And for applications submitted from 1 January 2026, withholding agents must send reduced-rate applications to the Korean tax office by the end of February of the following year. Before 2026 they only had to keep them on file. Investors do not file anything new, but their documents are now more likely to be checked.

What if too much tax was withheld?

If 22% was withheld but you qualified for a treaty rate, you can file a refund claim (formally a “request for correction”) with the district tax office that covers the withholding agent. The claim must generally be filed within five years, counted from the 11th day of the month after the tax was withheld. You must prove both beneficial ownership and residence. Refunds are not automatic, and the paperwork usually goes through a custodian or a tax reclaim service, so it is simpler to have the treaty rate applied at source.

Do foreigners pay capital gains tax on Korean stocks?

Usually not, for ordinary portfolio investors. Under Korean domestic law, a non-resident with no permanent establishment in Korea who sells listed shares through the Korea Exchange owes no Korean tax on the gain. The condition is that the seller, together with related parties, did not own 25% or more of the company at any time in the year of sale or in the five calendar years before it.

If that exemption does not apply, the broker or buyer withholds the lower of 11% of the gross sale proceeds or 22% of the net gain. The 22% option requires proof of the purchase cost. Both figures include local income tax. Transfers of listed shares made off the exchange fall outside the exchange exemption, so they can be taxed even on small stakes unless a treaty helps. Korea’s alternative trading venue, Nextrade, also matches orders in listed shares (see our market hours guide). The exemption is written around sales through the Korea Exchange, so confirm with your broker how it treats trades executed on Nextrade.

Korean depositary receipts listed abroad follow their own rules. Gains on ADSs sold outside Korea are generally exempt under Korea’s special tax law, as long as the issue counts as an overseas issuance. Korea treats ADSs like the underlying shares for capital gains purposes, and the exemption falls away if you convert ADSs into local shares first. Our guide to Korean stocks in the US lists the ADRs.

How tax treaties change the answer

• United States: under Article 16 of the treaty, US residents are exempt from Korean tax on share gains. The exemption does not cover individuals present in Korea for 183 days or more in the year, or gains connected with a Korean permanent establishment or fixed base. An anti-abuse article (Article 17) can deny benefits to certain lightly taxed US holding companies owned by non-US persons.
• United Kingdom: gains on shares are generally taxable only in the UK. The exceptions are gains on unlisted shares in companies that get most of their value from Korean property, assets of a Korean permanent establishment, and individuals who were Korean residents within the previous five years.
• Japan and Germany: Korea may tax the gain if the seller and related persons held 25% or more of the company at any time in the tax year and sold at least 5% of its shares in that year. German residents are also taxable on companies made up mainly of Korean real estate.
• Singapore: Korea may tax gains on a “substantial interest”, defined as 25% or more. It may also tax unlisted shares in property-rich companies.
• Hong Kong: the 2014 agreement leaves Korea free to tax Korean-source gains, so the domestic 25% rule above decides.

What is the securities transaction tax in 2026?

The securities transaction tax is charged on the sale price of Korean shares, not on profit. The seller pays it whether they are a resident or not and whether the trade made or lost money. It is normally collected automatically by the settlement agent or broker. From 1 January 2026, the rate on exchange trades went back up, through amendments to the enforcement decree that the Ministry of Economy and Finance announced in December 2025.

As an example, selling KRW 10,000,000 of KOSPI shares costs KRW 20,000 in these taxes (KRW 5,000 transaction tax plus KRW 15,000 special tax), on top of broker commissions. Korean ADRs traded on the NYSE or Nasdaq are exempt from the securities transaction tax. Our KOSPI vs KOSDAQ guide explains which companies trade on which board.

How are Korean-listed ETFs taxed for non-residents?

For Korean residents the rules are well established. Gains on domestic-equity ETFs (at least 60% Korean stocks) are tax-free, and their distributions are taxed at 15.4%. Gains and distributions from other Korean-listed ETFs, such as bond, commodity or overseas-equity funds, are taxed as dividend income.

For non-residents the picture is less clear. ETF distributions are Korean-source investment income, but in May 2026 Korean media reported that the tax rules for foreign investors’ ETF and ETN income were unclear. Local financial firms already withhold tax on foreigners’ share dividends, but the rules for ETF and ETN income had not been set out in the same way. The issue came up as the Financial Services Commission moved to let foreign omnibus accounts trade Korean ETFs and ETNs (leveraged and inverse products excluded). The finance ministry’s 2026 tax reform proposal adds a special withholding rule for these omnibus accounts. It would apply to payments from 1 January 2027 if the National Assembly passes it. Until then, ask your broker what rate it applies. For ETF pricing issues, see our note on ETF premiums, discounts and tracking error.

What changed for Korean residents in 2026, and does it apply to foreigners?

On 2 December 2025, the National Assembly passed a new optional separate taxation of dividends from “high-dividend” listed companies. Resident shareholders can have these dividends taxed apart from their other income at 14% (up to KRW 20 million), 20% (up to KRW 300 million), 25% (up to KRW 5 billion) and 30% above that, before local income tax. A company qualifies if it did not cut its dividend from the prior year and either pays out 40% or more of profit, or pays out at least 25% and raised its dividend by 10% or more. The regime applies to dividends received from 2026 and is temporary.

None of this changes what non-residents pay. A foreign investor’s Korean dividend is still taxed by withholding at 22% or the treaty rate. The reform matters to foreigners indirectly, because it gives controlling shareholders a reason to raise payouts. Our Value-up guide covers the wider push for higher dividends.

How do US and UK investors treat Korean tax at home?

United States. Korean tax withheld on dividends can generally be claimed as a foreign tax credit on the US return. The IRS limits the creditable amount to tax figured at the lower treaty rate. Tax that you could get back from Korea is not creditable. If 22% was withheld when you were entitled to the treaty rate, the excess has to be reclaimed in Korea, not credited in the US.

United Kingdom. UK residents can usually claim Foreign Tax Credit Relief when they report the dividend on their tax return. HMRC says the amount of relief depends on the UK–Korea double taxation agreement, and relief is not available for tax the agreement expects you to recover from the foreign country.

Other countries apply similar credit rules, but details such as limits, carry-forwards and how tax-advantaged accounts are treated vary. Use this section as orientation only, and confirm your position with a tax adviser who knows both your home country’s rules and the Korean treaty.

Summary: Korean stock taxes for non-residents (October 2026)

Frequently asked questions

Last reviewed: October 15, 2026.

Sources

1. KB Financial Group Inc., Annual Report on Form 20-F for fiscal year 2025 (Item 10, Taxation), U.S. SEC, April 28, 2026
2. Republic of Korea: Corporate – Withholding taxes, PwC Worldwide Tax Summaries, accessed October 2026
3. Korea enacts 2026 tax reform bill, EY Global Tax News, January 2026
4. Securities Transaction Tax to Rise from January: KOSPI 0.05%, KOSDAQ 0.20%, Asia Economy, December 1, 2025
5. Synthesised text of the MLI and the 1996 UK–South Korea Double Taxation Convention, GOV.UK (HMRC)
6. Singapore–Korea Agreement for the Avoidance of Double Taxation (2019), IRAS
7. Convention between Japan and the Republic of Korea for the Avoidance of Double Taxation (1998), The World and Japan Database (University of Tokyo)
8. Germany–Korea tax treaty (2000 agreement text), Forvis Mazars Korea
9. Agreement between the Hong Kong SAR and the Republic of Korea for the Avoidance of Double Taxation (signed July 8, 2014), text copy, IRI–UNLP archive
10. Newsletter on the 2025 tax law amendments passed by the National Assembly, Yoon & Yang LLC, December 9, 2025
11. Korea to open ETF, ETN trading to foreign investors, The Korea Times, May 24, 2026
12. 내년부터 해외 개미도 직접 ‘한국 ETF’ 투자 (Foreign retail investors to buy Korean ETFs directly from next year), Money Today, September 25, 2026
13. 국내 상장 ETF도 투자자산별 다른 세금 (Korean-listed ETFs taxed differently by underlying asset), Asia Economy, August 19, 2026
14. Publication 514 (2025), Foreign Tax Credit for Individuals, Internal Revenue Service
15. Tax on foreign income: if you’re taxed twice, GOV.UK

This guide explains how the Korean market works for general information. It is not investment, legal or tax advice; rules change, so check the official sources listed above or a qualified adviser before acting.