Tax treaties set a "limited rate" (reduced rate) capping how much the source country (Korea) can tax a non-resident's interest, dividend, royalty, and similar income. If the domestic statutory rate (mostly 20%) exceeds the treaty's limited rate, the treaty rate applies instead — and it is calculated on the gross payment amount, not net income.
To use the reduced rate, you must submit a "Non-taxation/Exemption Application" or "Limited Rate Application" through the withholding agent to the relevant tax office before the income is paid, along with a certificate of residence issued by your home government.
Steps to apply for the treaty limited rate
Missed the deadline? It's not too late
Even if you didn't submit the application before payment and were withheld at the higher domestic rate, you can later file for a correction (request for reassessment) to recover the difference against the treaty's limited rate. There is a filing deadline for this (typically 5 years), so it's best to act as soon as possible.
Frequently Asked Questions
Related Topics
Withholding Tax Rates on Korean-Source Income
A quick-reference table of statutory withholding rates for a non-resident's interest, dividend, royalty, and personal-service income.
Reporting Foreign Income and Claiming the Foreign Tax Credit
A resident's duty to report worldwide income, and how the foreign tax credit prevents double taxation.