Foreign employees get Korea's 19% flat tax rate only if they apply

Foreign employees in Korea can have their wage income taxed at a flat 19% instead of progressive rates. The rate is not automatic. The employee must apply, and there are two applications with different forms and deadlines. This guide is for foreign employees and the HR and payroll staff who run their pay.

The 19% rate applies only on application

Article 18-2 of the Restriction of Special Taxation Act (조세특례제한법, "the Act") says the tax on a foreign worker's wage income "may" be 19% of that income. Paragraph 5 says a foreign worker who wants this must apply. Without an application, tax is calculated at the progressive rates used for Korean employees.

One route applies 19% to the tax withheld (원천징수) from each month's pay. The other applies 19% at year-end tax settlement (연말정산), when the employer closes each employee's wage tax for the year. Each route has its own form under the Enforcement Rule of the Act (조세특례제한법 시행규칙): Form No. 8-2 (별지 제8호의2서식) and Form No. 8 (별지 제8호서식).

Check eligibility first

Before taking an application, check five conditions.

• The employee is a foreign executive or employee.
• Daily workers (일용근로자) are excluded.
• The first day of work in Korea is on or before December 31, 2026.
• The rate covers tax periods that end within 20 years of that first day of work.
• Work for a related company (특수관계기업) is excluded.

Article 16-2(2) of the Enforcement Decree of the Act (조세특례제한법 시행령) defines a related company. It is a company in a kinship relationship (Article 1-2(1)) or a management-control relationship (Article 1-2(3)) with the foreign worker under the Enforcement Decree of the Framework Act on National Taxes (국세기본법 시행령). Put simply, pay from a company that the employee or a relative controls cannot use 19%. A foreign-invested company that receives reductions of corporate tax, income tax, acquisition tax and property tax under Article 121-2 of the Act is taken back out of this exclusion.

One more exception applies to an employee at a regional headquarters (지역본부) under the Enforcement Decree of the Foreign Investment Promotion Act (외국인투자 촉진법 시행령). The December 31, 2026 start deadline does not apply. Only the 20-year period does.

Many websites still say "5 years from the first day of work". The current law says 20 years. Record the first day of work in Korea when you collect onboarding documents. The test uses that date, not the visa issue date or the date of entry.

Monthly withholding: Form No. 8-2 by the 10th of the next month

If a new hire wants 19% withheld, the clock starts in the first month.

1. In the first month, check eligibility.
2. Collect Form No. 8-2 from the employee, with "apply single tax rate" (단일세율적용 신청) ticked in the category field.
3. By the 10th of the month after the month worked, submit it through the company to the tax office in charge of the withholding.
4. From that month, withhold 19% of each month's wage income. Article 18-2(4) of the Act takes priority over the simplified withholding tax table (간이세액표) method in Article 134(1) of the Income Tax Act (소득세법).
5. Do not calculate local income tax (지방소득세) separately. Withhold 10% of the income tax amount (Local Tax Act (지방세법), Article 103-13). See Local income tax withholding on Wetax.

The 10th is also the withholding tax filing deadline. Have the application in hand before you prepare the monthly withholding tax return (원천징수이행상황신고서), so the first month comes out at 19%.

Opting out. The employee ticks "waive single tax rate" (단일세율적용 포기) on the same Form No. 8-2 and submits it through the company. Under Article 16-2(7) of the Enforcement Decree, the waiver takes effect from the tax period after the one that includes the filing date. A waiver filed in March still leaves 19% withholding through that year's December pay. Tell employees who want to switch mid-year about this delay.

Year-end settlement: Form No. 8

At year-end settlement, the 19% rate is claimed on Form No. 8.

• Attach it to the income and tax deduction declaration for wage earners (근로소득자 소득·세액공제신고서) under Article 198(1) of the Enforcement Decree of the Income Tax Act.
• Submit it to the withholding agent, a taxpayers' association or the head of the tax office for the place of tax payment.
• The employee must not hold Korean nationality on the last day of the tax year.
• An employee who became a Korean national during the year cannot apply for that year.

For the rest of the process, see Year-end tax settlement for mid-year hires.

What the 19% rate takes away

The flat rate is simple, but Article 18-2(3) of the Act takes four things away.

• Income tax exemptions do not apply. Normally tax-free pay, such as meal allowances (식대) and self-driving allowances (자가운전보조금), becomes taxable.
• Income deductions (소득공제) do not apply.
• Tax reductions (감면) and tax credits (세액공제) do not apply.
• The wage income is not added to the global income tax base.

One exemption survives. Article 16-2(5) of the Enforcement Decree keeps Article 17-4, item 1 of the Enforcement Decree of the Income Tax Act out of the exclusion. That item is the benefit certain executives and employees get from company housing (사택). If the company provides housing, that benefit stays non-taxable under 19%.

So 19% is not always better. An employee with a modest salary and many deductions for dependants or tax credits may pay less under the regular calculation. The principle is to calculate both ways at year-end settlement and choose.

Proposed change for 2027 (not law yet)

The government's 2026 tax reform proposal (2026년 세제개편안) of August 3, 2026 would raise the rate from 19% to 21% for income earned from 2027 (from 20.9% to 23.1% including local income tax). It would also extend the start deadline to the end of 2029. It is not law. Until the National Assembly (국회) passes an amendment, the rules above apply.

Checklist

• Add a field for the first day of work in Korea to onboarding documents.
• Check that this date is on or before December 31, 2026.
• Record in the HR file the tax period in which the 20-year period ends.
• Check for a kinship or management-control relationship with the CEO (대표이사) or a major shareholder.
• For monthly 19%, collect Form No. 8-2 before the 10th of the month after the first pay month.
• After a waiver, switch back to the simplified withholding tax table from the next January's pay.
• At year-end settlement, collect Form No. 8 and show the employee a calculation comparing 19% with the regular calculation.
• Recheck nationality as of the last day of the tax year.

Employment insurance follows separate rules: see Employment insurance for foreign workers by visa.