Calculate capital gains tax for major shareholders / unlisted stocks
Commissions, transaction tax, etc.
Dividend income tax is levied on dividends from stocks and financial products. It is automatically withheld at the source, so you receive the net amount. However, if your total financial income exceeds KRW 20 million annually, comprehensive income tax applies.
The withholding tax rate for both interest and dividend income is 14% (15.4% including local income tax). This is automatically applied when companies distribute dividends.
Dividend Tax = Dividend × 14%
Local Income Tax = Dividend Tax × 10% (= Dividend × 1.4%)
Total Withholding = Dividend × 15.4%
Net Dividend = Dividend × (1 - 15.4%)
(If financial income > 20M KRW) Additional Tax on Excess = (Excess Amount × Comprehensive Tax Rate) - (Excess Amount × 14%)
Effective Tax Rate = Total Tax Paid ÷ Total Dividends × 100
When financial income exceeds KRW 20 million, comprehensive taxation applies. Tax obligations can increase significantly, making advance planning essential.
Beyond financial income comprehensive tax, health insurance premiums must also be carefully considered.
Dependant status: Financial income exceeding KRW 10 million may result in loss of dependant status, triggering additional health insurance premiums as a locally-insured member.
Base your investment decisions on after-tax dividend yield. The pre-tax yield may look attractive but actual proceeds can differ significantly.
Use ISA (Individual Savings Account): Dividends from domestic stocks held in an ISA are tax-free (up to limits) or taxed at a reduced rate of 9.9%.
Distribute financial income: Spreading investments across family members allows each person their own KRW 20 million threshold, providing significant tax savings.
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