Entity Setup
Exit Tax (국외전출세) for Korean High Net-Worth Individuals: What Triggers It & How to Prepare
If you are a major shareholder planning to relocate abroad, Korea’s exit tax on unrealized gains of domestic stocks becomes relevant. Know the tests, report deadlines, and planning options.
By NomadicTax Research Team • 5-8 min read • September 1, 2026
## What is the Exit Tax in Korea? (국외전출세)
When a **resident** who qualifies as a **major shareholder** moves abroad (i.e., becomes nonresident by relocating **address or place of residence overseas**), Korea can trigger an **exit tax**. That means unrealized gains on certain Korean shares are treated as if sold at **the date of departure** and made subject to **capital gains tax**. ([nts.go.kr](https://www.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=7821&mi=2515&utm_source=openai))
## Who is a Major Shareholder & What Assets Count?
**Major shareholder tests** apply based on stock ownership:
- Listed stocks (KOSPI, KOSDAQ, KONEX) or venture / other unlisted stock meet certain **percentage ownership** or **market value thresholds**. ([nts.go.kr](https://www.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=7821&mi=2515&utm_source=openai))
- Must have lived in Korea with address or residence** for at least 5 out of the 10 years before departure. ([nts.go.kr](https://www.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=7821&mi=2515&utm_source=openai))
- The stock portfolio can include both domestic and in some cases foreign holdings, but key is domestic exposure.
## How the Exit Tax Works
- Upon “departure,” the taxpayer must **report shares held** as of the **day before the move**. Those shares are considered to have been “sold” for their fair market value for tax purposes. ([nts.go.kr](https://www.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=7821&mi=2515&utm_source=openai))
- Gains are taxed at either the **standard capital gains tax** applicable to major shareholders or the specific “exit tax” rate.
- Failure to file accurately can lead to **penalties**, including an additional 2% of face value for under-reporting. ([nts.go.kr](https://www.nts.go.kr/comm/ntsFileDown.do?filePath=%2Fupload%2Fnts%2F03%2F0308%2F030801%2F_nts_news_2020%ED%95%9C%EC%9D%BC%EC%84%B8%EA%B8%88%EC%83%81%EC%8B%9D.pdf&utm_source=openai))
## When & How to File
- Under current rules (**effective since January 1, 2018**) the exit tax applies. ([nts.go.kr](https://www.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=7821&mi=2515&utm_source=openai))
- The taxpayer must submit:
* A list of domestic shares held at departure date
* Valuation documents
* Statement to be filed at the local tax office or jurisdiction of residence before exit
- Payable in some cases may be deferred under certain treaty or domestic rules, but you must submit documentation and satisfy conditions.
## Planning & Risk Management
- **Time your exit**: If you anticipate leaving Korea, reduce your shareholdings below threshold or postpone move until you no longer meet criteria (e.g. after a shorter residency period).
- **Accelerate sales** before departure**, to realize gains under more favorable conditions, if your stock market exposure is largely domestic.
- **Claim deductions or losses**: Losses on foreign shares may be usable to offset domestic gains.
- **Residency tie-breakers**: Establishing a longer overseas residence, selling family home, divesting domestic assets can help demonstrate nonresident status post-exit.
## Examples
- A KOSPI shareholder owning 2% of a company worth ₩20 billion plans to move to Singapore. Because they meet major shareholder criteria and have lived in Korea 7 of past 10 years, when they exit, holding is “deemed sold” at market value, gain taxed accordingly.
- A foreigner who has lived in Korea less than 5 years in past 10 does not trigger exit tax—even if owning enough shares to normally qualify—due to the residency rule.
**Bottom line**: Exit tax is real for high-net-worth shareholders relocating abroad. Careful recordkeeping, strategic divestments, and understanding trigger tests are essential to avoid large unwelcome tax bills.