Money put into a venture business directly, or into a venture partnership or venture investment trust, earns an income deduction in Korea. Article 16(1) of the Restriction of Special Taxation Act lets a resident deduct 10/100 of what they invest by 31 December 2028; for direct investment under items 3, 4 and 6 it is 100/100 of the first 30 million won, 70/100 of the part above 30 million up to 50 million, and 30/100 above 50 million. The deduction cannot exceed 50/100 of that year’s global income amount. Enter your pay and investments below to see the deduction and the cap.
1. Direct investment (items 3, 4, 6): 100% up to 30 million won, 70% up to 50 million, 30% above.
2. Partnerships, venture investment trusts and venture PEFs (items 1, 2, 5): 10% — trusts count only up to 20 million won per person a year.
3. Capped at 50% of global income; pull out within 3 years and the tax saved is clawed back.
Calculator
Updates as you type. Earned income amount = gross pay minus the earned income deduction (Income Tax Act Art. 47); amounts under 1 won are dropped (our method). For investment through an individual investment partnership (item 3) enter the amount the Decree Art. 14(4) formula gives — we could not read that formula.
Rates and cap — Article 16(1)
| Type | What the source says | Worth noting (ours) |
|---|---|---|
| Base rate | 10/100 of the amount invested | Used for items 1, 2, 5 — that is, 10% |
| Items 3, 4, 6 — up to 30 million won | 100/100 | That is, 100% |
| Items 3, 4, 6 — over 30 million up to 50 million | 70/100 | That is, 70%; 20 million in this band gives 14 million (our arithmetic) |
| Items 3, 4, 6 — over 50 million | 30/100 | That is, 30% |
| Cap | 50/100 of global income for the year | With pay only, half the earned income amount (our reading) |
| Deadline | Invested by 31 December 2028 | Latest amendment mark on para. 1: 23 December 2025 |
| Year of deduction | The year of investment, or one year chosen up to the year in which the 2nd anniversary falls, by applying to change the timing | To claim for 2026, invest by 31 December 2026 (our reading) |
| Excluded | Investing by buying someone else’s stake or units | Second-hand stakes do not count |
Six kinds of investment — Article 16(1) items
| Item | Investment (summary) | Rate |
|---|---|---|
| 1 | Contribution to a venture investment, private fund-of-funds venture, new technology or specialist partnership | 10% |
| 2 | Units of a venture investment trust — Decree Art. 14(2): eligible amount across all such trusts is 20 million won per resident a year | 10% (to 20 million) |
| 3 | Money put into an individual investment partnership that invests in venture businesses or SMEs within 3 years of start-up | 100% / 70% / 30% |
| 4 | Direct investment in venture businesses under the Venture Business Act | 100% / 70% / 30% |
| 5 | A start-up and venture private equity fund | 10% |
| 6 | Shares of an SME within 7 years of start-up offered by online small-sum investment brokerage (crowdfunding) | 100% / 70% / 30% |
The 20 million won figure in Decree Art. 14(2) carries an amendment mark of 27 February 2026; we did not read the earlier amount or the transitional rule.
Four cases — our example
| Case (ours) | Deduction (before → after cap) | Worth noting (ours) |
|---|---|---|
| Pay 60 million won, direct investment 30 million | 30 million → cap 23,625,000 won | Half of earned income amount 47.25 million (deduction 12.75 million); 6,375,000 won unused |
| Pay 120 million, direct 50 million | 30 million + 20 million × 70% = 44 million won | Within the 52,425,000 won cap |
| Pay 120 million, direct 100 million | 30 + 14 + 50 × 30% = 59 million → 52,425,000 won | Cap applies |
| Venture investment trust 30 million | 20 million × 10% = 2 million won | Counted only to 20 million |
The 100% band quickly meets the cap of 50% of global income. A worker on 60 million won has an earned income amount of 60 million minus the earned income deduction of 12.75 million (12 million plus 5% of the 15 million above 45 million) = 47.25 million, so the cap is 23,625,000 won. We found no carry-forward of the unused part; the option in the text is to change the year of deduction (our reading).
When and how to claim — Decree Art. 14(6)–(7)
| Type | What the source says | Worth noting (ours) |
|---|---|---|
| Paper | An investment confirmation from the fund manager or institution, attached to the deduction application | Issued by the partnership, manager or bank |
| Employees | By the day you are paid February’s salary of the following year (or the salary for the month you leave), to the withholding agent | Handed in at year-end settlement |
| Others | By the final return deadline for global income | The May return (our gloss) |
| Change of year | Apply when the confirmation is issued (for trusts, when investing) | Too late to change afterwards |
Pulling out within 3 years — Art. 16(2), Decree Art. 14(10)–(11)
If within 3 years of investing you transfer or recover the stake, or sell or redeem (even partly) trust units, the tax on the deducted amount is collected. Death, emigration of the whole household, major loss from natural disaster, dissolution of the partnership or manager (narrowly for individual partnerships), and recovery after listing of the investee more than 1 year after the first investment are excepted.
For venture investment trusts the bank collects 35/1,000 (3.5%) of the amount sold or redeemed, up to 2 million won a year, and pays it by the 10th of the next month; if the tax actually saved is shown to differ, that amount is collected. Redeeming 20 million gives 20 million × 35/1,000 = 700,000 won (our arithmetic).
The 25 million won overall cap — Art. 132-2
Article 132-2(1)(iii) puts the Art. 16(1) deduction inside the 25 million won overall cap except investment under items 3, 4 and 6. So the 10% fund part counts toward it and the direct 100/70/30% part does not. Which part shrinks when the 50% cap bites is not in the text we read, so the calculator splits only the pre-cap amounts. See the income deduction overall cap calculator.
Checklist
- ☐ Invested by 31 December, if you want it this year
- ☐ New shares, not someone else’s stake
- ☐ Confirmation in hand; change-of-year form filed at that time if wanted
- ☐ Within 50% of your income amount
- ☐ No plan to pull out within 3 years
Questions that remain
With pay only, what is the cap?
Half of the earned income amount — pay minus the earned income deduction, not gross pay (our reading).
Can spouses each claim?
The text works per resident, and the 20 million won trust limit is per resident; each deducts from their own income (our reading).
Does local income tax fall too?
We did not read the Local Tax Act this time.
Sources
- Korean law database (law.go.kr) — Restriction of Special Taxation Act Arts. 16 and 132-2 — source (current text, effective 18 September 2026, Act No. 21467; checked 3 November 2026). Art. 16(1) rates 10/100/70/30%, the 50% cap, 31 December 2028, change of year, purchased stakes excluded, items 1–6; (2) 3-year clawback; (3); Art. 132-2(1)(iii).
- Korean law database — Enforcement Decree Art. 14 — source (current text, effective 18 September 2026, Decree No. 36587; checked 3 November 2026). 20 million won per person for trusts, venture businesses, claim deadlines, change of year, clawback exceptions, 3.5% up to 2 million won.
- Korean law database — Income Tax Act Arts. 20(2) and 47 — source (current text, effective 1 July 2026, Act No. 21221; checked 3 November 2026). Earned income amount for the calculator (pay minus deduction, capped at 20 million won).
- Not read. The Decree Art. 14(4) and (14) formulas (images we could not read), venture certification rules, the rule forms, the transitional rule for the 27 February 2026 Decree change, local income tax.
- What we added. The “worth noting” column and the Korean everyday gloss.
Where to check further
- Your partnership, fund manager or bank — the confirmation and the change-of-year form.
- National Tax Service year-end guidance — how to hand it to your employer.
Written on 3 November 2026. The content is from the source; the glosses are ours.
