Korean Stock Taxes for Non-Residents (2026): 22% Dividend Withholding, Treaty Rates by Country (US 15%, China 10%…), Form 29-12, Capital Gains Rules — Treaty Calculator

If you invest in Korean shares from abroad — through a Korean non-resident account, an omnibus account at your home broker, or even indirectly through a Korea fund — Korea taxes you at source, and the rate depends on a treaty you have to claim. Do nothing and every Korean dividend loses 22%; file one form and it drops to 15% or 10% for most countries. This part gives the treaty table, the form, the capital-gains position, and a calculator for what a treaty claim is worth.

Who is a non-resident

You are a non-resident of Korea for tax if you have neither a domicile in Korea nor 183 days of presence in the tax year (from 2026, a continuous 183-day stay that straddles two calendar years also makes you resident). Non-residents are taxed only on Korean-source income — dividends and interest from Korean payers, Korean rental income, gains on Korean real estate and, in limited cases, gains on Korean shares — and always at source or by a separate return, never through the year-end settlement.

A foreigner who leaves Korea after working here becomes a non-resident from the departure date. Shares kept in a Korean brokerage account after leaving are then taxed under this part's rules, and you must tell the broker to reclassify the account; most will require you to close a resident account and reopen as a non-resident.

Dividends: 22%, or the treaty rate

The statutory withholding on dividends paid to a non-resident individual is 20% plus 2% local = 22%. Korea has tax treaties with about 95 countries, and most limit the rate on portfolio dividends to 15% (the United States, United Kingdom, Japan, Canada, Australia, Germany, France, Singapore, India, Hong Kong, the Netherlands, Switzerland, Italy, Spain, Indonesia, Malaysia, New Zealand) or 10% (China, Vietnam, Taiwan, Thailand). A few are higher: the Philippines treaty allows 25% for portfolio holders. Treaty rates for corporate shareholders above 10–25% ownership are often lower still (5–10%).

The reduced rate is not automatic. Under Article 156-2 of the Income Tax Act, you (or the broker on your behalf) file the Form 29-12 (Application for Entitlement to Reduced Tax Rate) with the withholding agent before payment, attached to a certificate of residence from your home tax authority (IRS Form 6166 for Americans; HMRC's certificate for Britons; the NTA's for Japanese). The certificate is good for three years. Without it, 22% is withheld — and the difference can be reclaimed by a correction claim within five years of the withholding, through the broker or a Korean tax agent. Older guides refer to "Form 72-3"; that was the corporate form and is not the one individuals need.

Omnibus-account investors (via Interactive Brokers and similar) generally get the treaty rate applied by the foreign broker's documentation; check your statements for the Korean withholding line.

Capital gains: usually not Korean-taxable

Domestic law taxes a non-resident's gains on Korean listed shares only where the seller and related parties held 25% or more of the company at any time during the year of sale or the five preceding years, or where the sale was off-exchange. Where tax applies, the broker withholds the lower of 11% of the sale proceeds or 22% of the gain (with local tax), and a return can be filed to settle on the actual gain.

On top of that, most of Korea's treaties assign gains on shares to the residence country — the US, UK, Japan, Germany, Canada, Australia and many others — so a non-resident from those countries pays no Korean tax on share gains at any holding size, except for shares in real-estate-rich companies (more than 50% of assets in Korean property). A handful of treaties (e.g. with some Asian and Latin American countries) let Korea tax large holdings. The securities transaction tax (0.20% on sales) applies to everyone.

The practical result: a foreign individual investor buying Korean shares from abroad pays the treaty rate on dividends and nothing on gains, and never files a Korean return unless reclaiming excess withholding.

Interest, bonds, and REITs

Korean government bonds and Bank of Korea monetary stabilisation bonds have been exempt from withholding for non-residents since January 2023 (part of Korea's push for WGBI index inclusion). Corporate bond interest is withheld at 22% or the treaty interest rate (typically 10–12%). Distributions of Korean-listed REITs and ETFs are dividends for treaty purposes and take the dividend rate above.

The home-country side

Korea's withholding is normally creditable at home: on a US return via the foreign tax credit (Form 1116), in the UK against income tax on foreign dividends, in Australia as a foreign income tax offset. The credit is limited to the treaty rate — so if 22% was withheld and your treaty says 15%, the extra 7% is generally not creditable at home and must be reclaimed from Korea. That is the single most common leak in foreign investors' Korean returns, and the reason to lodge the form before the first dividend.

Whether it is worth being a direct investor at all, versus holding a Korea ETF at home, is a question of fees, withholding and access. The next part runs the numbers on EWY, FLKR and KODEX 200.