If tax has already been taken abroad from a dividend on foreign shares, does Korea take another 15.4%? Income Tax Act Article 129(4) says a Korean payer works out the 14% withholding and subtracts the foreign income tax already paid, and if the foreign tax is larger the excess is treated as nil. When your financial income goes over 20 million won and is taxed comprehensively, Article 57 lets you credit the foreign tax against the tax computed, but only up to tax computed × foreign-source income ÷ total comprehensive income, carrying the rest forward for 10 years. Enter the dividend and the foreign rate to see what Korea withholds and the credit limit.
1. Korean withholding = 14% of the dividend − the foreign tax — nil if the foreign tax is larger (Art. 129(4)).
2. Credit limit under comprehensive taxation = A × B ÷ C — A tax computed, B foreign-source income, C comprehensive income (Art. 57(1)).
3. Foreign tax above the limit carries forward for 10 years, then may be deducted as an expense (Art. 57(2)).
Calculator
Updates as you type. Korean withholding is 14% of the dividend minus the foreign tax, and zero if the foreign tax is larger (Art. 129(4)); local income tax is 10% of what is withheld. The credit limit uses the Art. 57(1) formula; if B is larger than C we cap it at C (our method). Fractions of a won are dropped (our method). Foreign tax above a tax treaty’s limited rate is not creditable (Decree Art. 117(1)).
The provisions
| Type | What the source says | Worth noting (ours) |
|---|---|---|
| Income Tax Act Art. 129(4) | Where foreign income tax prescribed by decree has been paid abroad on interest or dividends, the withholding tax less that foreign income tax is the amount withheld; if the foreign tax exceeds the withholding tax, the excess is treated as nil. | So at a foreign rate of 14% or more, Korean income tax is nil |
| Income Tax Act Art. 129(1)2(b) | Withholding rate on other dividends: 14/100 | Local income tax is 10% of that (Local Tax Act Art. 103-13) |
| Income Tax Act Art. 57(1) | Where comprehensive income includes foreign-source income on which foreign tax was paid, it may be credited against the tax computed within limit = A × B ÷ C: A the comprehensive income tax computed under Art. 55, B foreign-source income (less reduced or exempt parts), C comprehensive income | A, B and C should come from your return |
| Income Tax Act Art. 57(2) | Foreign tax above the limit may be carried forward to tax years ending within 10 years from the start of the next year; anything still unused may be deducted as an expense in the year after the carry-forward ends | Whether an expense deduction helps someone with only dividends is a separate question (ours) |
| Decree Art. 117(1) | Foreign income tax means tax on an individual’s income paid or payable to a foreign government, with its surtaxes, excluding penalties; tax above what a tax treaty’s exemption or limited rate allows is excluded | If more was withheld than the treaty allows, look at reclaiming it in that country (ours) |
| Decree Art. 117(3)–(4) | The credit is taken in the year the income is in the tax base, filing a foreign tax credit application with the return or year-end settlement; if the foreign assessment is late, within 3 months of receiving it | — |
“Foreign income tax” here is individual income tax paid to a foreign government and its surtaxes, not penalties. If more was withheld than a tax treaty’s limited rate, the excess is not creditable in Korea (Decree Art. 117(1)). We did not read country-by-country treaty rates, so use the foreign tax shown on your broker’s dividend statement.
Three sums — our example
| Case (our example) | Result | Worth noting (ours) |
|---|---|---|
| 1 million won dividend, 10% taken abroad | Foreign tax 100,000 won · Korean income tax 40,000 won (140,000 − 100,000) · local tax 4,000 won · paid to you 856,000 won | Korean tax drops to 40,000 won |
| 1 million won dividend, 15% taken abroad | Foreign tax 150,000 won · Korean income tax nil · paid to you 850,000 won | 150,000 is more than 140,000, so the excess is nil |
| Comprehensive: A 5 million, B 1 million, C 50 million, foreign tax 150,000 | Credit limit 100,000 won · credited this year 100,000 won · carried forward 50,000 won | The 50,000 left can be used within 10 years, inside each year’s limit |
All three drop fractions of a won (our sums). The A, B and C in the third row are picked for illustration; in practice use the tax computed and income amounts on your comprehensive income tax return. How the tax already withheld in Korea is settled on the return is in provisions we did not read, so the calculator leaves it out.
Under 20 million won — withholding is final
If interest and dividends received through a Korean financial institution and withheld under Art. 127 total 20 million won or less in a year, Art. 14(3)6 says they are not added to the comprehensive tax base. Then the first four rows of the calculator (foreign tax → Korean tax → local tax → paid to you) are the whole story and the credit fields can stay empty. Dividends paid straight into an overseas account with nothing withheld in Korea are different — see foreign interest and dividends filing checker.
Whether dividends from foreign companies get the 11% gross-up is in dividend gross-up calculator.
Checklist
- ☐ Find the foreign tax and the Korean withholding on your broker’s dividend statement
- ☐ At a foreign rate of 14% or more, Korean income tax should be nil
- ☐ Check whether the year’s interest and dividends exceed 20 million won
- ☐ If taxed comprehensively, file the foreign tax credit application with the return
- ☐ Carry foreign tax above the limit forward for up to 10 years
Questions that remain
If the foreign tax is more than 14%, do I get the difference back?
Art. 129(4) only says the excess is “treated as nil”; it does not say it is refunded. In a year of comprehensive taxation, the Art. 57 limit and 10-year carry-forward come in.
Is it the same for foreign dividends through an ETF?
Income through collective investment vehicles has its own rules in Art. 129(5) and Art. 57-2. This article covers dividends on foreign shares held directly.
What if there are several countries?
Decree Art. 117(7) says that where business places are in two or more countries the business owner works out the limit country by country. Whether that applies to an individual with only dividends is not stated directly, so the calculator works with one country.
Sources
- Korean law database (law.go.kr) — Income Tax Act Arts. 14, 57, 129 — source (current text, effective 1 July 2026, Act No. 21221; checked 26 October 2026). Art. 14(3)6 (withheld interest and dividends up to 20 million won kept separate), Art. 57(1)–(3) (limit A×B÷C, 10-year carry-forward, treaty relief), Art. 129(1)2(b) (14%) and (4) (foreign tax subtracted, excess nil).
- Korean law database — Income Tax Act Enforcement Decree Art. 117 — source (current text, effective 1 October 2026, Presidential Decree No. 36737; checked 26 October 2026). What counts as foreign income tax (no penalties, treaty excess excluded), when to apply, the 3-month rule, country-by-country limits.
- Korean law database — Local Tax Act Art. 103-13 — source (current text, effective 1 July 2026, Act No. 21308; checked 26 October 2026). 10/100 of the income tax withheld.
- Not read. Art. 57-2 (collective investment vehicles), treaty texts and country rates, the provisions settling tax already withheld, NTS filing guidance.
- What we added. The “worth noting” column and the Korean everyday gloss.
Where to check further
- Your broker’s dividend and withholding statement — foreign tax and Korean withholding.
- Your local tax office — the foreign tax credit application in a comprehensive-taxation year.
Written on 26 October 2026. The content is from the source; the glosses are ours.
