Foreign Worker Tax Guide in Korea | 19% Flat Tax & Year-End Settlement

Q: Should I choose the 19% flat tax or the regular progressive rate?

The flat rate tends to work better when your pay is higher and you have few deductions to claim; the progressive rate tends to work better when you have dependents, medical expenses, or other deductions, or lower pay. You can re-choose the better option every year at year-end settlement, so it's worth reviewing annually.

Q: If I choose the flat rate, do I lose all deductions?

Yes. Choosing the 19% flat rate means you cannot claim the wage income deduction, personal deductions, special income deductions, tax credits, or most other tax-free benefits. Your tax is simply 19% (20.9% including local tax) of your total gross pay.

Q: How long can I use this flat-tax option?

Your first day of work in Korea must fall on or before December 31, 2026, and you can then use the flat rate for 20 years starting from that tax year. There are some exceptions, such as being employed by a related company.

Q: If I change jobs, does the flat-tax eligibility end?

The eligibility period runs for 20 years from your first day of work in Korea, so simply changing jobs does not end it on its own. That said, a new employment relationship or a change in work arrangement can raise questions worth reviewing, so it's a good idea to check in when you switch jobs.

Q: My company handles year-end settlement for me — do I still need to check it myself?

Yes. Even when your employer handles withholding and year-end settlement, it's safer to confirm yourself whether the flat rate was applied correctly and whether dependent deductions were reflected properly. If something was applied incorrectly, you can fix it during the May comprehensive income tax filing through a request for reassessment or supplementary filing.

The 19% Flat Tax Isn't Always the Better Deal

If your first day of work in Korea falls on or before December 31, 2026, you can choose a flat 19% income tax rate (20.9% including local income tax) for 20 years starting from that tax year. But choosing the flat rate means giving up all tax-free allowances, income deductions, and tax credits — so depending on your pay level and family situation, the regular progressive rate (6-45%) with year-end settlement can actually work out better.

How Income Reporting Works for Foreign Workers

Monthly wage income tax withheld from your pay (flat rate or simplified withholding table)

Year-end settlement the following February reconciles the full year's tax (handled by your employer)

You can re-choose between the flat rate and progressive rate every year at settlement time

Dependents living abroad can still qualify for personal deductions if requirements are met (under the progressive rate)

If the settlement result is incomplete, you can correct it during the May comprehensive income tax filing

Flat Tax vs. Progressive Rate

	19% Flat Tax	Progressive Rate
Rate	Fixed 19% (20.9% incl. local tax)	6-45% progressive
Deductions	Not available	Wage income deduction, personal deduction, etc. apply
Better for	Higher pay, few deductions	Many deductions or lower pay
Duration	20 years from first day of work	No limit

Tax Advantages for Foreign Workers

You can re-choose the better rate every year

The flat rate and progressive rate can be compared and re-selected at each year's settlement, so it's worth reviewing which one wins as your pay or family situation changes.

Foreign tax credit reduces double taxation

If you also paid tax on the same income in your home country, a tax treaty and foreign tax credit can reduce the burden of being taxed twice.

Missed something at year-end settlement? May filing can fix it

Even if your employer's year-end settlement didn't match your actual situation, you can correct it during the May comprehensive income tax filing period through a request for reassessment or supplementary filing.

The Most Common Mistake We See

Payroll staff often apply the flat rate as a matter of habit, even when an employee has enough dependents that the progressive rate would actually be cheaper. It's also common to lose track of the exact first day of work, leading to miscalculated eligibility periods for the flat-tax option.

Frequently Asked Questions

Should I choose the 19% flat tax or the regular progressive rate?

If I choose the flat rate, do I lose all deductions?

How long can I use this flat-tax option?

If I change jobs, does the flat-tax eligibility end?

My company handles year-end settlement for me — do I still need to check it myself?

Related Reference

Special Tax Treatment Control Act Article 18-2 — Full Text of the Foreign Worker Tax Exemption

Read the original legal text behind the 19% flat-tax option (in Korean).

Related Situations

Foreign Engineers & Specialists

If you have a technology-transfer contract or research background, check the 50% income tax reduction too

Business Registration for Foreigners

Thinking about starting a business after leaving your job? Learn the registration process in advance

Back to the Foreigner Tax Hub

Tax Guide for Foreign Workers in Korea