Foreign Engineer Income Tax Reduction Guide

Q: Who is eligible for the foreign engineer income tax reduction?

Foreigners who provide technology under an engineering technology-transfer contract, or foreign engineers who worked 5+ years at an overseas research institution before being hired at a Korean in-house R&D center, are eligible. Your first day of work in Korea must fall on or before December 31, 2023.

Q: What is the reduction rate and how long does it last?

You get a 50% income tax reduction for 10 years from your first day of work. Engineers in the materials, parts, and equipment (so-bu-jang) sector get 70% for the first 3 years and 50% for the following 2 years, based on a first work date on or before December 31, 2022.

Q: Can I combine this with the 19% flat-tax option?

These are two separate systems, each with its own requirements and procedures, and whether both can apply depends on your specific work arrangement and contract terms. To compare which is better for you, it's safest to gather your contract and work-history documents and get a consultation.

Q: What documents do I need to apply for the reduction?

You'll need documents proving your eligibility, such as a technology-transfer contract, an overseas research institution work-history certificate, and proof of your degree or qualifications. Your employer typically submits a tax reduction application to the district tax office on your behalf.

Q: What happens after the 10-year (or 5-year) reduction period ends?

Once the reduction period ends, your income afterward is taxed at regular wage income tax rates, or under the 19% flat-tax option if you meet its requirements. It's worth reviewing which system applies next well before your reduction period actually ends.

Requirements and application steps for the 50% (70% for materials/parts/equipment specialists) income tax reduction for foreign engineers with a technology-transfer contract or overseas research background.

Your technology may be cutting-edge, but the reduction requirements still need to be checked carefully.

Book a Consultation WhatsApp KakaoTalk

한국어 · 日本語 · 中文

Half Off Your Income Tax — Only If You Meet the Requirements Exactly

Foreign engineers who provide technology under an engineering technology-transfer contract, or who worked 5+ years at an overseas research institution before being hired at a Korean in-house R&D center, can receive a 50% income tax reduction for 10 years from their first day of work (first day of work on or before December 31, 2023). Engineers in the materials, parts, and equipment sector get an even bigger break: 70% for the first 3 years and 50% for the following 2 years (for first work dates on or before December 31, 2022).

Who Qualifies

Foreigners providing technology under an engineering technology-transfer contract

Foreign engineers hired at a Korean in-house R&D center or R&D department after 5+ years at an overseas research institution

First day of work in Korea within the applicable deadline for your reduction category

Documentation proving your work history, degree, and contract terms

Reduction Rate & Duration Comparison

	General Foreign Engineer	Materials/Parts/Equipment Specialist
Reduction rate	50%	70% (yrs 1-3), 50% (yrs 4-5)
Duration	10 years from first day of work	5 years from first day of work
First-work-day deadline	On or before Dec 31, 2023	On or before Dec 31, 2022

Tax Advantages for Foreign Engineers

Your effective tax burden is roughly cut in half for the whole period

Over a 10-year (or 5-year, for materials/parts/equipment) span, your income tax burden drops substantially — so it matters to meet the requirements precisely and not miss the application step.

Prepare your work-history certificate early to move faster

Documents like an overseas research institution work-history certificate or technology-transfer contract can take time to obtain, so it's worth starting the paperwork before you even enter Korea or accept the job.

Plan ahead for what happens after the reduction ends

As your reduction period nears its end, it's worth reviewing whether the 19% flat-tax option or another system will apply next, so you can prepare for the change in your tax burden.

The Most Common Mistake We See

People often misjudge the first-work-day deadline (December 31, 2023 or December 31, 2022) and try to apply after they've already missed it, or they wait too long to gather supporting documents like work-history certificates and contracts and miss the application window as a result.

Frequently Asked Questions

Who is eligible for the foreign engineer income tax reduction?

What is the reduction rate and how long does it last?

Can I combine this with the 19% flat-tax option?

What documents do I need to apply for the reduction?

What happens after the 10-year (or 5-year) reduction period ends?

Related Reference

Special Tax Treatment Control Act — Full Text on Foreign Worker & Engineer Tax Exemptions

Read the original legal text behind this reduction (in Korean).

Related Situations

Foreign Workers

Once your reduction period ends, check the 19% flat-tax option too

Foreign Investors & FDI Company Reps

Considering a tech startup or setting up a company? Check this too

Back to the Foreigner Tax Hub