Once interest and dividends together pass 20 million won a year, all of that financial income goes into comprehensive income in Korea. Dividends from Korean companies are then counted with 11 per cent of the dividend added on top (Income Tax Act Art. 17(3), the “gross-up”), and Article 56 takes the same amount back off the computed tax as the dividend tax credit. Only dividends above the 20 million won line are affected, and Decree Article 116-2 sets what fills that line first. Enter interest, gross-up dividends and other dividends to see what gets added.
1. Above 20 million won of interest and dividends, Korean company dividends get 11% added before going into comprehensive income (Art. 17(3)).
2. The same amount comes off as the dividend tax credit — only for dividends above 20 million won (Art. 56(1), (4)).
3. The 20 million won is filled with interest first, gross-up dividends last (Decree Art. 116-2).
Calculator
Updates as you type. The 20m won threshold is filled in the order interest → other dividends → gross-up dividends (Decree Art. 116-2); the 11% is added only to gross-up dividends left above the threshold. Fractions of a won are dropped (our method). The credit actually allowed can be smaller — see Art. 15(2) below.
The provisions
| Type | What the source says | Worth noting (ours) |
|---|---|---|
| Art. 14(3)6 | Interest and dividends totalling 20 million won or less (the threshold for interest income etc.) that were withheld at source are not added to the comprehensive tax base (dividends of silent partners in joint businesses excepted). | Only above 20 million won does comprehensive taxation start |
| Art. 14(4) | In working out the threshold, dividends do not include the amount added under Art. 17(3). | The 20 million won test uses pre-gross-up amounts |
| Art. 17(3) | Dividend income is total receipts; but for dividends under para. 1 items 1–4 (seven exclusions) and those under item 5 set by decree, 11/100 of the dividend is added to total receipts. | Current text, amended 23 Dec 2025 |
| Art. 56(1), (2) | Where comprehensive income includes dividends to which Art. 17(3) applies, an amount equal to what was added is deducted from the computed tax — the “dividend tax credit”. | What was added comes back off |
| Art. 56(4) | The dividends eligible for the credit are those in the comprehensive tax base above the threshold for interest income etc. | Only the part above 20 million won |
| Decree Art. 116-2 | Dividends above the threshold are found by adding interest income etc. in turn: (1) interest first; (2) where gross-up and other dividends are both present, other dividends first, then dividends under Restriction of Special Taxation Act Art. 104-27(1). | Gross-up dividends sit “on top” |
In short, the 20 million won test uses amounts before the gross-up (Art. 14(4)); the line is filled with interest, then other dividends, then gross-up dividends; and 11% is added to the gross-up dividends left over the line. Applying the 11% only above the threshold is our reading of Art. 17(3) together with Art. 56(4) and Decree Art. 116-2. When filing, follow the National Tax Service’s own calculation.
Which dividends are grossed up
Article 17(3) adds 11% to dividends under items 1–4 of paragraph 1: profit and surplus distributions from Korean companies, distributions from bodies treated as companies, deemed dividends, and amounts treated as dividends under the Corporate Tax Act. Seven kinds are carved out, such as some deemed dividends on capital reduction, deemed dividends from capitalising treasury-share cancellation gains or land revaluation surplus, part of dividends from companies with certain exemptions, and dividends from reducing capital reserves. From item 5 (collective investment income) only decree-specified income counts, and we did not read that decree article.
Dividends from foreign companies (item 6) are not on the paragraph 3 list, so foreign-share dividends go into the “other dividends” box (our reading of the list). Fund and ETF distributions can differ by product; follow the split on your financial institution’s income statement.
Three sums — our example
| Case (our example) | Amount added | Worth noting (ours) |
|---|---|---|
| Interest 5m + gross-up dividends 30m won | 1,650,000 won | Line filled with 5m interest and 15m dividends; the other 15m × 11% |
| Interest 25m + gross-up dividends 10m won | 1,100,000 won | Interest fills the line; all 10m of dividends are over it |
| Interest 10m + gross-up dividends 8m + other dividends 1m won | 0 won | 19m in total — not over 20m, so no comprehensive taxation |
In the first case, financial income going into comprehensive income is 35 million plus 1.65 million won, or 36.65 million won, and the credit before the cap is 1.65 million won. The second case has the same 35 million won total but only 1.1 million won added — interest takes the 20 million won slot first.
The credit may not all go through — Art. 15(2)
Article 15(2) says that where there is a dividend tax credit, you compare “computed tax minus the credit” with “the amount under Art. 62(2)” and take the larger, before other credits. Art. 62(2) is the side that taxes financial income at withholding rates. If tax after the credit falls below that amount, the larger figure stands, so not all of the 1.65 million won necessarily comes off. The comparison is worked through in financial income comprehensive taxation.
The provisions don’t say why 11% is added and then taken off. It is commonly explained as relieving, at the shareholder level, corporate tax already paid by the company — that is our gloss.
Checklist
- ☐ Do interest and dividends exceed 20 million won (before gross-up)?
- ☐ Are the dividends from Korean companies (gross-up) or foreign/other?
- ☐ Fill order: interest → other dividends → gross-up dividends
- ☐ Compare tax after the credit with the Art. 62(2) amount (Art. 15(2))
- ☐ Silent-partner dividends are added regardless of the 20 million won line
Questions that remain
Are large dividends always a loss?
What is added comes back as a credit, so it is not a pure add-on. But combined with other income the progressive rate can rise, and Art. 15(2) can shrink the credit (our gloss).
What about high-dividend company dividends taxed separately from 2026?
Decree Art. 116-2 adds dividends under Restriction of Special Taxation Act Art. 104-27(1) after other dividends. Their own rates are in high-dividend separate taxation calculator; this calculator has no separate box for them.
What if income under 20 million won was not withheld?
Art. 14(3)6 only keeps out income that was withheld at source. Interest or dividends paid without withholding need checking whatever the amount.
Sources
- Korean law database (law.go.kr) — Income Tax Act Arts. 14, 15, 17, 56 — source (current text, effective 1 July 2026, Act No. 21221; checked 22 October 2026). Art. 14(3)6 and (4) (20 million won threshold, gross-up excluded), Art. 15(2) (credit vs Art. 62(2) amount), Art. 17(3) (11/100 added, seven exclusions), Art. 56(1), (4) (the credit and what it covers).
- Korean law database — Income Tax Act Enforcement Decree Art. 116-2 — source (current text, effective 1 October 2026, Presidential Decree No. 36737; checked 22 October 2026). Order for adding income to find dividends above the threshold.
- Not read. The decree article on item 5 dividends, Art. 62 in full, NTS filing guidance.
- What we added. The “worth noting” column and the Korean everyday gloss.
Where to check further
- NTS Hometax comprehensive income tax return — financial income detail and gross-up amount.
- Your financial institution’s income statement — whether dividends are gross-up eligible.
Written on 22 October 2026. The content is from the source; the glosses are ours.
