Calculate capital gains tax for major shareholders / unlisted stocks
Commissions, transaction tax, etc.
Korean domestic stock capital gains tax applies to major shareholders (holding KRW 1 billion or more in a single stock) and unlisted stock traders. Unlike overseas stocks, general retail investors trading listed Korean stocks are exempt from capital gains tax.
Tax rates vary by company type (SME vs. large-cap) and holding period, ranging from 10% to 25%. An annual basic deduction of KRW 2.5 million is applied before calculating taxes.
Capital Gains = Sell Amount - Buy Amount - Expenses
Taxable Base = Capital Gains - Basic Deduction (KRW 2.5M)
Tax Rate = varies by company type & holding period
Capital Gains Tax = Taxable Base x Tax Rate
Local Income Tax = Capital Gains Tax x 10%
Total Tax = Capital Gains Tax + Local Income Tax
For large-cap stocks, a progressive tax rate applies: 20% on the first KRW 300 million and 25% on the amount exceeding KRW 300 million. SME stocks have flat rates of 10% (held 1+ years) or 20% (held under 1 year).
A major shareholder is defined as someone holding KRW 1 billion or more in a single stock. This includes combined holdings of the investor and their family members (spouse, lineal ascendants/descendants).
The determination date is the last trading day of the previous year. If you become a major shareholder on that date, all sales of that stock in the following year are subject to capital gains tax.
Split selling: Spread sales across multiple tax periods to utilize the KRW 2.5 million basic deduction each year and potentially stay within lower tax brackets.
Holding period management: For SME stocks, holding for at least 1 year reduces the tax rate from 20% to 10%, effectively halving your tax burden.
Year-end holdings review: If close to the KRW 1 billion major shareholder threshold, consider reducing holdings before the year-end determination date to avoid triggering major shareholder status.