Korea Dividend Withholding Tax for Non-Residents: Rates and Treaties

Korea withholds 22% of each dividend paid to a shareholder who lives outside the country, unless a tax treaty sets a lower rate and the paperwork is in place. The tax comes off the payout at the moment the dividend is paid, so it directly reduces the cash a foreign investor receives.

The rate combines two taxes. The Income Tax Act sets a 20% national income tax, and the Local Tax Act adds a local income tax equal to 10% of the national tax withheld.

The rule now reaches more people. Foreign individuals can buy Korean shares through brokers at home using omnibus accounts. Trading through those accounts totaled ₩5.8 trillion ($3.8 billion) from April 26 to May 15, 2026, the Korea Times reported, using its own dollar conversion.

How much of the 22% an investor keeps depends on the country of residence, how the shares are held and whether a form reaches the Korean payer in time. Shares held through an omnibus account follow a separate rule, under which the full rate is withheld first and any treaty saving has to be claimed back.

Here's what you need to know.

What Is the Korea Dividend Withholding Tax Rate?

The national tax comes from Article 156 of the Income Tax Act. Anyone paying dividends to a non-resident with no business in Korea must withhold "20/100 of the amount paid," according to the English translation on the Korea Legislation Research Institute's (KLRI) legal database.

The local income tax comes on top. Article 103-18 of the Local Tax Act requires the same payer to collect a further 10% of the income tax it withholds from a non-resident. That adds 2 percentage points and brings the total to 22%.

Out of each dividend, then, a foreign shareholder without a treaty rate receives 78%. The figures here come from the versions of the laws in force on Nov. 7, 2026.

Foreign companies face the same arithmetic. The Corporate Tax Act sets a 20% rate on dividends paid to a foreign corporation without a business in Korea. Article 103-52 of the Local Tax Act then adds 10% of that tax as corporate local income tax.

For a non-resident with no business in the country, Article 121 of the Income Tax Act taxes each type of Korean income separately. Dividends are therefore not pooled with other Korean income into one annual total.

How Do Tax Treaties Lower Korean Dividend Tax?

A tax treaty caps the tax that the country where income arises may charge a resident of the other country. Korea's National Tax Service (NTS) lists 95 treaty partners on its English website, from Albania to Vietnam, including the United States, the United Kingdom, Japan, China and Hong Kong.

Korean law then applies whichever rate is lower. Under Article 156-8 of the Income Tax Act, treaty dividends are taxed at the lower of the treaty rate and Korea's own rate. A treaty can reduce the tax but cannot raise it.

For U.S. residents, the cap comes from the Korea-U.S. tax treaty, signed in Seoul on June 4, 1976, and in force since Oct. 20, 1979. The IRS lists that treaty and its Technical Explanation as the Korea treaty documents, with no later protocol.

Article 12 of the treaty says Korea's tax on dividends paid to U.S. residents "shall not exceed" 15% of the gross amount. A U.S. company qualifies for 10% if it held at least 10% of the Korean company's voting shares throughout the payer's previous tax year and the current year up to the payment date.

The 10% rate has one more condition. No more than 25% of the paying company's gross income in its previous tax year may come from interest and dividends. Interest earned in banking, insurance or financing, and dividends or interest from subsidiaries in which it holds at least half of the voting shares, do not count toward that limit.

The headline treaty rate may not be the whole deduction. Article 156-8 applies a treaty differently depending on whether the treaty also covers Korea's local income tax, so ask your broker for the all-in rate it withholds.

Relief can also come from home. The U.S. treaty commits the United States to give its citizens and residents a credit against U.S. tax for Korean tax, within the limits of U.S. law. This is tax information, not tax advice, so check your own situation with your broker or a tax adviser.

How Do You Claim the Treaty Rate on Korean Dividends?

There are two routes: file a form before the dividend is paid, or claim the difference back afterward. The steps below come from Article 156-6 of the Income Tax Act and Article 207-8 of its Enforcement Decree, the presidential decree that fills in the details.

• Before payment: The beneficial owner, the person who actually owns the income, gives the withholding agent an application for the reduced rate and a document proving beneficial ownership. The decree requires it before the income is paid.
• Through a fund: When the dividend passes through an overseas investment vehicle, such as a foreign fund, the vehicle collects its investors' applications and submits them with a report on itself.
• Renewal: A filed application can be reused for three years from the day it was submitted. If its details change, an update is due before the next payment.
• No form on file: The withholding agent must withhold Korea's full rate.
• After payment: The beneficial owner or the withholding agent can file a claim for rectification, called gyeongjeong cheonggu in Korean, a formal request to correct tax already paid, with the withholding agent's tax office. The window is five years from the 11th day of the month after the month the tax was withheld.
• The answer: The tax office must correct the tax, or explain why no correction is due, within six months of the claim.

An amendment dated Dec. 23, 2025, added a step on the Korean side. The withholding agent must now send the applications it receives to its tax office by the end of February of the year after the payment.

What Changes When Shares Sit in an Omnibus Account?

An omnibus account is a single account that a foreign broker holds in its own name to trade Korean shares for many clients. The Income Tax Act calls it a foreigner consolidated account, opened "for the purpose of placing and settling securities transactions on behalf of multiple foreign investors," in KLRI's translation.

Dividends reach the end investor in two steps. The Korea Securities Depository "allocates dividend rights en masse to the omnibus account holder," the Financial Services Commission (FSC) said on Nov. 27, 2025. The holder then pays its clients in proportion to their holdings.

Tax is taken at the first step. Article 156-9 of the Income Tax Act, added on Dec. 31, 2023, requires the Korean payer to withhold Korea's full domestic rate from the amount paid to the account holder. The local income tax applies on top, as it does to all income tax withheld from non-residents.

The Korea Times described the same practice on May 24, 2026, reporting that dividend income foreign investors earn from Korean stocks "is subject to withholding tax by local financial firms." It added that tax rules for exchange-traded funds (ETFs) and exchange-traded notes (ETNs) remained unclear.

The treaty saving comes later, if at all. A non-resident paid through an omnibus account who wants a treaty exemption or reduced rate may file a claim for rectification with the tax office. The same five-year deadline and procedure apply.

Simply put, an omnibus investor receives the dividend after the full 22% and has to claim any treaty difference back. Ask your broker whether it helps clients file, and see our guide on how to buy Korean stocks from abroad for how omnibus access works.

Are Capital Gains on Korean Stocks Taxed for Non-Residents?

For most small shareholders, no. Under Article 179 of the Enforcement Decree, gains from selling listed shares through the market fall outside Korean tax if the seller and related parties held less than 25% of the company. The holding must have stayed below 25% throughout the year of sale and the five years before.

Larger holders face withholding of 10% of the sale price, or 20% of the gain if the purchase cost is verified, whichever is less, under Article 156 of the Income Tax Act. The local income tax is added on top, and treaties can change the result.

The U.S. treaty exempts U.S. residents from Korean tax on capital gains, with three exceptions. Korea can still tax gains from Korean real property, gains tied to a permanent establishment in Korea, and gains of an individual present in Korea for 183 days or more in the tax year.

What Should Foreign Investors Watch?

ETFs and ETNs. FSC Chairman Lee Eog-weon said at a press conference on May 21, 2026, that omnibus trading would extend beyond stocks. "We will expand the scope of foreign omnibus account trading from stocks to ETFs and ETNs," he said, as translated by the Korea Times.

Analysts said the change could come in the second half of 2026 if the FSC and the finance ministry agreed on withholding tax issues. Yonhap reported their view in an article carried by the Korea Herald on May 24, 2026. How payouts from those products are taxed in omnibus accounts is the detail to follow.

The five-year clock. For an omnibus investor, a claim for rectification is the only route to a treaty rate. It must be filed within five years, counted from the 11th day of the month after the tax was withheld.

Forms that run out. A reduced-rate application can be reused for three years. After that, or after a change in its details, a new form is needed, or the withholding agent applies the full rate.

Together, the rules start every foreign shareholder at 22%, with any treaty saving arriving up front through a timely form or later through a refund claim filed within five years.