Tax Planning
How South Korea’s Exit Tax (국외전출세) Impacts High Net Worth Individuals Leaving the Country
South Korea treats outbound movers who own large amounts of domestic assets as having realised gains for tax when they depart – this is the ‘exit tax’ or 국외전출세.
By NomadicTax Research Team • 5-8 min read • August 31, 2026
## What is the Exit Tax (국외전출세)?
The **exit tax** under Korean law (소득세법 제118조의9) is a deemed disposal tax applied when a **resident** who qualifies as a **대주주** (major shareholder) leaves the country, becoming a **non-resident**. It treats certain domestic assets—primarily shares—as if they were sold on the day of departure. ([g.nts.go.kr](https://g.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=7821&mi=2515&utm_source=openai))
### Key Conditions to Trigger Exit Tax
1. **Residence duration**: The departure precedes after having had an address or domicile in Korea for at least **5 of the previous 10 years**. ([g.nts.go.kr](https://g.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=7821&mi=2515&utm_source=openai))
2. **Major shareholder status** (대주주): Under relevant definitions, you must meet shareholding thresholds by quantity or value, or have large ownership in special types of securities. ([g.nts.go.kr](https://g.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=7821&mi=2515&utm_source=openai))
3. **Asset type**: Domestic shares and other “stock-type” assets held at the time of departure. Other asset classes may be outside the rule. ([g.nts.go.kr](https://g.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=7821&mi=2515&utm_source=openai))
### How the Tax is Calculated & Timed
- The unrealised gain = **fair market value on exit date minus acquisition cost**.
- **Tax rates**: Exiting major shareholders owe capital gains tax—20% on gains up to KRW 300 million, and **25% on amounts exceeding** that. ([g.nts.go.kr](https://g.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=7821&mi=2515&utm_source=openai))
- **Filing deadline**: You must file within **three months after the end of the month in which you depart**. ([g.nts.go.kr](https://g.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=7821&mi=2515&utm_source=openai))
- **Payment**: Default is payment upon deemed disposal; but in some cases, you may apply for **deferred payment** (납세 유예) if you provide guarantee or appoint a tax agent. Deferred period often limited to 5-years (longer in specific cases like overseas study). ([g.nts.go.kr](https://g.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=7821&mi=2515&utm_source=openai))
## Who is Affected & Example
**Example**: Mr. Lee owns 10% of a Korean tech company, qualifies as a major shareholder, and has lived in Korea continuously for 10 years. He plans to emigrate on **September 30, 2026**. He holds these shares which cost him **₩200 million**, but are valued at **₩1 billion** at exit. Under exit tax rules:
- He is deemed to sell them on that date; gain = **₩800 million**
- Apply 20% on first ₩300 million (₩60 million), **25% on remaining ₩500 million** (₩125 million) = **₩185 million** total tax liability
- File by end of **December 2026** (3 months after September), pay unless deferred under guarantee.
## Planning Opportunities & Risks
- **Assess whether you meet major shareholder thresholds**—in some cases share sales before exit or restructuring ownership may avoid or reduce tax.
- **Valuation matters**: Have objective and defensible valuation at exit date, especially if the shares aren’t publicly traded.
- **Consider deferral if needed**: If staying abroad for studies or maintaining certain ties, deferral with guarantee may reduce cashflow stress.
- **Treat exit tax in your overall international tax strategy**: For example, consider cross-border tax credits in your new country if applicable.
## Caveats & Ongoing Uncertainties
- **What counts as a major shareholder** can be legally complex—look at share percentage, market cap, type of shares.
- **Asset categories** other than shares are less clearly covered; there’s ambiguity in regulation for non-stock asset unrealised gains.
- **International treaty effects**: Some tax treaties may reduce double taxation or offer relief; but exit tax is a domestic legal construct and may not be fully covered.
For high net worth individuals, the exit tax is a major consideration when planning to leave Korea. Structuring ownership, planning timing, and ensuring valuations are prepared can make a big difference.