Selling Korean listed shares on the exchange is usually free of capital gains tax — unless you’re a major shareholder. Income Tax Decree Article 157 treats you as one if, at the end of the previous business year, you held 1% of a KOSPI company (2% KOSDAQ, 4% KONEX) or 5 billion won or more of it. Major shareholders’ gains, after a 2.5 million won basic deduction, are taxed at 20% up to 300 million won and 25% above (Act Art. 104). A test-and-tax calculator is included.
1. At last year-end: 1% (KOSDAQ 2%, KONEX 4%) or 5 billion won held makes you a major shareholder.
2. 20% on a base up to 300 million won, 25% above — 30% for non-SME shares held under a year.
3. Family holdings count only for the largest shareholder group; basic deduction 2.5 million won a year.
Who is a major shareholder — Decree Art. 157
| Market | Ownership test | Value test |
|---|---|---|
| KOSPI | 1% or more (para. 1(1)) | 5 billion won or more (para. 1(2)) |
| KOSDAQ | 2% or more (para. 2(1)) | 5 billion won or more |
| KONEX | 4% or more (para. 2(2)) | 5 billion won or more |
The test date is the end of the business year before the sale, valued at that day’s closing price (para. 4). Holdings of a spouse, lineal relatives and similar “other shareholders” are added only where the shareholder and related parties are the company’s largest holder (provisos). Otherwise only your own holding counts (our reading).
Test and tax calculator
Updates as you type. One shareholder’s own holding only — family holdings count only for the largest shareholder group (Decree Art. 157(1) proviso). Assumes holding of 1 year or more (under 1 year in a non-SME: 30%). Local income tax isn’t included.
What you pay — Act Arts. 94, 103, 104
| Type | What the source says | Worth noting (ours) |
|---|---|---|
| Taxable | Listed shares (1) sold by major shareholders, (2) sold by others off the exchange (Art. 94(1)3(a)) | Small holders selling on-exchange aren’t taxed |
| Deduction | 2.5 million won a year on share gains (Art. 103(1)2) | — |
| Major shareholder rate | Base up to 300m: 20%; above: 60m + 25% of the excess (Art. 104(1)11(a)2) | — |
| Major, under 1 year | 30% for non-SME shares (Art. 104(1)11(a)1) | — |
| Others (off-exchange) | SME 10%, other 20% (Art. 104(1)11(b)) | — |
In our example, a major shareholder with a 402.5 million won gain on shares held over a year has a base of 400 million and tax of 60m + 100m × 25% = 85 million won. A 100 million won gain gives 97.5m × 20% = 19.5 million won. Local income tax isn’t included.
Checklist
- ☐ Your stake and value per stock at last year-end
- ☐ KOSPI 1%, KOSDAQ 2%, KONEX 4%, or 5 billion won
- ☐ Largest holder group? Add family holdings
- ☐ Under a year: 30%
- ☐ 2.5m deduction; local income tax extra
Questions that remain
Can selling before year-end avoid the test?
The test uses holdings at the previous business year-end, so holdings below the line then mean you aren’t a major shareholder for next year’s sales (our reading). How same-year trades are taxed depends on the facts; check with the tax office.
Didn’t it change to 1 billion won?
The current Decree we read (effective 1 October 2026) says 5 billion won. Any announced change applies only once it takes effect.
Sources
- Korean law database (law.go.kr) — Income Tax Act Enforcement Decree Art. 157 — source (current text, effective 1 October 2026, No. 36737; checked 19 October 2026). Market ownership tests (1%, 2%, 4%), 5 billion won value, year-end date, family aggregation for the largest group, closing price; taxable sales, 2.5m deduction, 20%, 25% and 30% rates.
- Korean law database — Income Tax Act Arts. 94(1)3, 103, 104(1)11.
- Not read. Unlisted-company details, local income tax, filing deadlines.
- What we added. The “worth noting” column and the Korean everyday gloss.
Where to check further
- NTS Hometax — share capital gains returns.
Written on 19 October 2026. The content is from the source; the glosses are ours.
