Case Studies
Exit Tax for HNWIs and Non-Residents: What You Need to Know Before Leaving Korea
If you’re a large shareholder or planning to emigrate, exit tax rules may force taxation on “unrealised” gains. Understand thresholds, obligations, and planning techniques.
By NomadicTax Research Team • 5-8 min read • August 15, 2026
## Overview of Korea’s Exit Tax Regime
South Korea imposes an exit tax on **residents with substantial shareholdings** when they emigrate. The regime taxes **unrealised gains** on domestic shares at the time of departure. This is commonly called the “국외전출자 출국세.” ([nts.go.kr](https://www.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=7821&utm_source=openai))
### Who Qualifies as a “국외전출자” (Exiting Resident)?
- A **resident taxpayer** who is moving address or domicile abroad.
- Must have lived in Korea for **5 out of the prior 10 years** before the date of exit. ([nts.go.kr](https://www.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=7821&utm_source=openai))
- Must be a **major shareholder**, defined by thresholds depending on whether shares are listed, bi-listed (KOSDAQ, etc.), venture, or private companies. The criteria include minimum percentage ownership or minimum market value. ([nts.go.kr](https://www.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=7821&utm_source=openai))
### What Happens at Exit?
- Shares held on the **date of exit** are treated as if sold—unrealised gains become subject to **capital gains (양도소득세)**. ([nts.go.kr](https://www.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=7821&utm_source=openai))
- The **tax rate**: If exit occurs on or after **2019-01-01**, gains up to KRW 300 million taxed at 20%; excess taxed at **25%**. If before that, flat 20%. ([nts.go.kr](https://www.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=7821&utm_source=openai))
### Declaration & Payment Obligations
- Exit resident must file a report of domestic shareholdings and appoint a **tax representative (납세관리인)** before departing. Report must be filed with the tax office covering their residence. ([nts.go.kr](https://www.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=7821&utm_source=openai))
- The deadline: within **3 months** from end of the month containing exit date. ([nts.go.kr](https://www.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=7821&utm_source=openai))
- **Payment deferral** is possible if: tax representative is appointed and certain securities not disposed—deferral lasts for 5 years (or 10 years for overseas study). After that, deferred tax becomes payable. ([nts.go.kr](https://www.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=7821&utm_source=openai))
## Comparison with Other Jurisdictions (Brief)
| Country | When Exit Tax Applies | Key Differences from Korea |
|---------|------------------------|----------------------------|
| UK | temporary non-residence rules; only unrealised gains above allowance taxed | Korea’s is broader in share type category |
| USA | expatriation tax applies to long-term residents with net worth over threshold | US imposes net worth/government tax at exit vs Korean share-based triggers |
## Planning Tips for High Net Worth Individuals (HNWIs)
- **Evaluate shareholdings now**: Check if you meet major shareholder thresholds. Selling or restructuring before becoming “exit taxpayer” could reduce exposure.
- **Consider timing of exit**: If large gains expected, delaying exit until after major share disposals may save taxes.
- **Use payment deferral wisely**: If eligible, appoint tax representative and ensure you satisfy conditions to avoid forced sale or immediate tax payment.
- **Trusts, joint ownership, holding companies**: Ownership structure matters—minor adjustments may shift major shareholder status.
## Example Scenario
- Ms. C has been living in Korea for 7 years and holds 3% of voting rights in a private (non-listed) company worth KRW 2 billion. She now moves to another country. She must report her shareholdings and gets exit taxed on fair market valuation gains. Suppose cost base was KRW 1 billion, so gain is KRW 1 billion, taxed at 25% (exceeds 300 million threshold). She could defer tax if appointing a representative and meeting conditions.
## Action-Checklist Before Departure
- Get fair market valuation of all domestic shareholdings.
- Determine if your shareholding qualifies as “major shareholder.”
- File required reporting and appoint representative if needed.
- Consult tax advisor to consider sale before exit, or restructuring ownership.
For HNWIs or frequent expatriates, Korea’s exit tax is material and actionable: prepare early.