Year-end Tax Settlement and Taxes for Foreign Workers

At a glance

• The employer carries out the settlement when it pays the February wages of the following year. For those who leave the job, it is done when wages for the month of leaving are paid.
• Foreign workers go through the same year-end settlement procedure as Korean nationals. The National Tax Service (NTS) stated that about 700,000 foreign workers were subject to the settlement for income earned in 2025.
• You can choose between the 19% flat rate and the regular settlement. The flat rate applies if you first started working in Korea on or before 31 December 2026.
• If you have global income that the year-end settlement does not cover, you file a final global income tax return between May 1 and May 31 of the following year.

Who needs to do this

• An individual with a domicile in Korea or a residence in Korea for 183 days or more is a resident; others are non-residents.
• A person whose job normally requires living in Korea continuously for 183 days or more, among other cases, is deemed to have a domicile in Korea.
• The residence period is counted from the day after entry to the day of departure. If it continues for 183 days or more within 1 tax period or across 2 tax periods, you are deemed to have had a residence for 183 days or more.
• Non-residents get almost no deductions other than the personal deduction (self), contributions to an employee stock ownership association and labor-union-related deductions (NTS guidance).
• Eligible for the 19% flat rate: foreign executives and employees, excluding daily workers, who first started working in Korea on or before 31 December 2026. Work provided to a company with a special relationship is excluded.

Where to apply

• Year-end settlement: carried out by the company you work for (the withholding agent).
• The English helpline for foreigners is 1588-0560.
• General national tax consultation: 126 with no area code (weekdays 9:00–18:00, closed Saturdays, Sundays and public holidays). From abroad, dial your international carrier code + 82 + 126.
• The NTS English website has the Easy Guide for Foreigners Year-end Tax Settlement 2025 and the year-end settlement manual for foreigners (Korean, English, Chinese and Vietnamese).
• The NTS Taxpayer Service center inside Incheon International Airport provides support such as help with filing for foreigners.
• Residents with global income file the final return with the head of the tax office with jurisdiction over their place of tax payment.

What to bring

• Applying for the flat rate (year-end settlement): attach the application for the flat rate for foreign workers to the wage earner’s income and tax deduction report and submit it to the company, a taxpayers’ association or the head of the competent tax office. This applies only to people who do not hold Korean nationality on the last day of the tax year.
• To have 19% withheld from each monthly salary, submit the application for flat-rate withholding to the head of the competent tax office via the company by the 10th of the month after the month in which you started working.
• If you do not submit a deduction report, the company applies only the basic deduction for yourself and the standard tax credit.
• The company registers its list of workers by January 10, and the simplified data on Hometax becomes available from January 15 (for income earned in 2025, NTS guidance).

Cost

• The basic tax rates on residents’ global income are progressive in 8 brackets, from 6% to 45% depending on the tax base.
• If you choose the flat-rate special rule, the tax can be 19% of the wage income concerned.
• Under the flat rate, rules on non-taxable income (except some welfare benefits), deductions, reductions and tax credits do not apply, and the wage income is not added to the global income tax base.
• If the additional tax from the settlement exceeds KRW 100,000, the company can withhold it in instalments from the February to April wages.
• If the tax withheld and credits together exceed the calculated tax, the company refunds the excess to the worker.

Procedure

• Step 1: in mid-January, check the simplified year-end settlement data on Hometax (for income earned in 2025, available from January 15).
• Step 2: choose between the 19% flat rate and the regular settlement. If you want the flat rate, attach the application to the deduction report and give it to the company.
• Step 3: the company settles when it pays the February wages, collecting additional tax or making a refund.
• Step 4: if you have global income that the settlement does not cover, file the final global income tax return between May 1 and May 31 of the following year.
• If you leave the job (including leaving Korea), the company settles when it pays the wages for the month you leave.

Common sticking points

• The flat rate applies only if you first started working in Korea on or before 31 December 2026.
• If you apply for flat-rate withholding and then submit a waiver, it stops applying from the tax period after the one that includes the submission date.
• Resident foreign workers who are the spouse of a householder without a home can claim the housing fund deduction, and special rules such as the reduction for foreign engineers (up to 70% for 3 years) or the tax treaty exemption for foreign teachers may apply (NTS guidance).
• National tax arrears are checked when you extend your visa, and if unpaid, the extension of stay can in principle be limited to 6 months or less (Ministry of Justice guidance).
• Since 25 August 2023, payment statements for workers who leave mid-year can be submitted through Hometax at any time (NTS guidance).

This guide is general information and does not decide individual eligibility. Laws and fees can change, so check the original text through the official links and with the competent authority.