Guide · as of 2026-08-16
Year-End Tax Settlement for Foreign Employees: the 19% Flat-Rate Election
Every foreign employee in Korea goes through year-end tax settlement (연말정산) with the February salary, exactly like Korean staff, but with one option Koreans do not have: a 19% flat rate on gross employment income (20.9% including the 10% local income tax surcharge) instead of the progressive 6–45% schedule. Under 조세특례제한법 §18-2 the election is available for tax periods ending within 20 years of the first day of work in Korea (extended from 5 years, effective 2023-01-01) to foreigners who first start working in Korea on or before 2026-12-31 (unverified: whether the 2026 tax bill extends this sunset again). Day laborers and employees of related-party companies (특수관계기업) are excluded.
Flat 19% vs the standard calculation: the trade-off
The flat rate is not a discount on the normal computation; it replaces it entirely.
| Standard (progressive) | Flat-rate election | |
|---|---|---|
| Rates | 6–45% on the tax base | 19% of gross pay (20.9% with local tax) |
| Deductions and credits | All available (insurance, cards, housing, dependents…) | None: every exemption, deduction, reduction, and credit is waived |
| Non-taxable pay items | Excluded from the base | Included in the base, except 대통령령-designated 복리후생 benefits such as employer-provided housing, carved out from the 2024 tax year (조특법 §18-2③) |
Because the flat election forfeits all deductions and pulls most otherwise non-taxable allowances into the base (the housing carve-out aside), it pays off only at high salaries where the effective progressive rate exceeds ~19–21%. The NTS materials tell filers to compute both ways before electing; there is no single break-even salary because it depends on individual deductions. Run both numbers, do not guess.
How to elect
Per 조세특례제한법 시행령 §16-2:
- Monthly withholding route: file the 단일세율적용 원천징수신청서 through the employer to the district tax office by the 10th of the month following the first month worked; salary is then withheld at 19% each month.
- Settlement route: apply the single rate at year-end settlement (or with the May comprehensive income return) by submitting the 단일세율적용신청서 through the employer or to the tax office (unverified: exact current form-name and channel details for the settlement route).
- A withdrawal form (포기신청서) exists; withdrawal takes effect from the following tax period.
Timeline (for 2025 income, settled in 2026)
- By ~Jan 10: employer registers the employee list on Hometax.
- Jan 15: the 간소화 (simplified data) service opened, serving 45 categories of deduction data (NTS, 2026-01-15); employers bulk-download consenting employees’ data from Jan 17/20.
- January–February: employee submits any documents the simplified service missed; foreign employees claiming treaty benefits or the flat rate attach the extra forms.
- February salary: settlement result (refund or additional bill) reflected.
- March 10: employer files the payment statements with the NTS.
NTS English resources
- nts.go.kr/english: dedicated year-end settlement section with the annually updated Easy Guide for Foreigners’ Year-end Tax Settlement; explanatory manuals also exist in Chinese and Vietnamese (NTS, 2026-01-09).
- English helpline 1588-0560, weekdays 09:00–18:00 (closed 11:30–13:00).
- An English automatic-calculation service for comparing outcomes is provided in the NTS English materials (unverified: current availability inside English Hometax).
Leaving Korea mid-year
- Your employer must run the settlement early, when paying the final month’s salary (소득세법 §137), so a worker leaving in July is settled with the July payroll, not the following February.
- If you have a comprehensive-income filing obligation (e.g., other Korean income) and are departing permanently, the return is due by the day before departure (소득세법 §74).
- Refunds are paid into a Korean account; keep one open until the money lands (see the departure checklist in /guides/korea-pension-refund-leaving).
- NHIS premium settlement runs separately through the employer at the same time; arrears follow you into immigration records.