Stock taxes are not set by profit — three cells: domestic, overseas, major shareholder
Make ₩20M on domestic stocks and the tax is ₩100,000; make ₩10M on overseas stocks and it is ₩1.65M. Half the profit, sixteen times the tax, and on domestic stocks you pay even at a loss. Stock taxes are not set by profit. Three cells decide them: which market you sold in, how much you hold, and whether it is a dividend or a trading gain. Listed domestic shares carry no capital gains tax unless you are a major shareholder, only 0.2% transaction tax on the sale; overseas shares pay 22% on gains after a ₩2.5M deduction; dividends are withheld at 15.4%.
Conditions used in the calculation
- Case
- domestic: ₩50M KOSPI sale · ₩20M gain vs overseas: ₩10M gain
- Step ①
- listed domestic: no capital gains tax unless a major shareholder · transaction tax on the sale · KOSPI 0.05% + 0.15% rural = 0.2% · KOSDAQ 0.2% · KONEX 0.1% · unlisted 0.35%
- Step ②
- overseas: the year's gains − losses → − ₩2.5M → × 22% (20% + 2% local) · file yourself the following May · exchange rates on the buy and sell dates
- Step ③
- dividends 15.4% (14% + 1.4%) · interest + dividends above ₩20M: the excess is combined · major shareholders pay capital gains tax on domestic shares too (judged on year-end holdings)
- Overseas dividends
- withheld locally first, the difference paid in Korea · US 15% · not double
- Timing
- as of 2026-09-05 wider separate taxation of dividends is a government proposal · not yet passed
Results
- Domestic · ₩50M sold (₩20M gain)
- transaction tax ₩100,000 · 0.2% (the same ₩100,000 on a ₩10M loss)
- Overseas · ₩10M gain
- ₩7.5M × 22% = ₩1.65M · effective 16.5%, 16 times the domestic figure
- Overseas · gain ₩2.5M or less
- no tax
- Domestic transaction tax accumulates
- ₩50M sold ten times → ₩1M · none on buying, only on selling
- Dividends
- 15.4% domestic or overseas · interest + dividends above ₩20M → excess combined · loss of dependent status
- ₩2.5M deduction
- once a year per person · several brokers combined in one return · splitting across family names gives one each
- ISA
- partly tax-free inside the account · the rest 9.9% (see the earlier lecture)
At a glance
Domestic ₩50M sale (₩20M gain) ₩100,000; overseas ₩10M gain ₩1.65M; overseas ₩2.5M gain ₩0.
- Domestic · ₩50M sold (₩20M gain)₩100,000
- Overseas · ₩10M gain₩1.65M
- Overseas · ₩2.5M gain₩0
Why it works this way
How much tax on ₩20M made on domestic stocks? ₩100,000. On ₩10M made on overseas stocks? ₩1.65M. Half the profit, sixteen times the tax. And on domestic stocks you pay tax even at a loss. Stock taxes are not set by profit. What sets them is which market you sold in, how much you hold, and whether it is a dividend or a trading gain. Most people believe stocks are tax-free, start trading overseas, and learn otherwise from a filing notice the following May. They are commonly lumped together, but the three cells are computed differently, and as of 2026-09-05 the wider separate taxation of dividends is a government proposal not yet passed.
Securities Transaction Tax Act Article 8 · Enforcement Decree Article 5.
- Capital gains taxnone unless a major shareholder · instead, transaction tax on the sale amount
- RatesKOSPI 0.05% + 0.15% rural special = 0.2% · KOSDAQ 0.2% · KONEX 0.1% · unlisted 0.35%
- ₩50M KOSPI sale₩100,000, the same whether you made ₩20M or lost ₩10M · withheld by the broker at once
'Tax-free' refers to capital gains tax, which is where most people get confused. It accumulates with every sale regardless of profit: ₩50M sold ten times is ₩1M, none on buying, only on selling. Not knowing, you suspect a broker error or miscount your return.
Step ② Overseas shares are where the ₩1.65M comes from. The year's gains less losses, less ₩2.5M, times 22%, that is 20% income tax plus 2% local. A ₩10M gain gives ₩7.5M × 22% = ₩1.65M, an effective 16.5%, and ₩2.5M or less carries no tax. The broker does not withhold, so you file yourself the following May. Losses in the same year are netted, so selling losing positions together reduces it, and won values use the exchange rates on the buy and sell dates. Not knowing, you miss the May filing, pay penalties and lose the chance to reduce it. File on Hometax with the broker's capital gains statement, combine several brokers in one return, and since the ₩2.5M deduction is once a year per person, splitting across family names gives one deduction each.
Income Tax Act Article 129 · Article 14(3)6 · Enforcement Decree Article 157.
- Dividends15.4% domestic or overseas (14% + 1.4% local) · interest + dividends above ₩20M → excess combined (see the financial income lecture)
- Major shareholderholdings per stock by value or share above the decree threshold → capital gains tax on domestic shares too · judged on year-end holdings · rate by holding period and company size
- Overseas dividendswithheld locally first, the difference paid in Korea · US 15% · not double
For the largest shareholder and similar cases family holdings are combined, and one stock at year-end makes you a major shareholder for all of the following year, which confuses people. Not knowing, you lose dependent status in a year you cross ₩20M or sell while classed as a major shareholder.
The three-cell sheet for your account. ① Listed domestic: about 0.2% on every sale, no filing. ② Overseas: does the year's net exceed ₩2.5M, file in May, tidy losses before year-end. ③ Dividends: is interest plus dividends near ₩20M, and what is the year-end holding per stock. With three cells filled, stock tax preparation is done. Dates come before rates: May for overseas, year-end for major shareholders. In an ISA, part is tax-free and the rest 9.9%, covered in an earlier lecture.
All three steps are passed: domestic 0.2%, overseas (gain − ₩2.5M) × 22%, dividends 15.4%, major shareholders separate. What split ₩100,000 on ₩20M domestic from ₩1.65M on ₩10M overseas was the market. Not knowing the May filing brings penalties, not knowing netting loses a saving, not counting holdings makes you a major shareholder. Two things to do now: compare this year's overseas net against the ₩2.5M line, and put a loss-tidying and per-stock holding check on the December calendar. Major-shareholder thresholds and rates are in the decree and dividend separate taxation is a proposal, so consult a tax adviser.
The legal basis
Drawn from government announcements and the statutes themselves as primary sources, covering only the relevant part.
Securities Transaction Tax Act Article 8 · Enforcement Decree Article 5 · Rural Special Tax Act (Rates)
In force Current (checked 2026-09-05)
KOSPI 0.05% (rural special tax 0.15% separately), KOSDAQ 0.2%, KONEX 0.1%, unlisted 0.35%. Imposed on the sale amount.
What this means
Tax on domestic shares attaches to the sale, not the profit. Even at a loss it is 0.2%.
Income Tax Act Article 94(1)3 · Article 104(1)11 · Article 103 (Overseas share gains)
In force Current (checked 2026-09-05)
Gains on foreign shares are taxed at 20% (22% with local income tax) after an annual ₩2.5M deduction, netting gains and losses in the same year. Final return the following May.
What this means
₩2.5M is the overseas threshold and 22% the rate. The broker does not withhold, so file in May.
Income Tax Act Article 129 · Article 14(3)6 · Article 62 (Dividend withholding · Comprehensive taxation of financial income)
In force Current (checked 2026-09-05)
Dividend withholding 14% (local 1.4%). Interest and dividends above ₩20M are taxed comprehensively on the excess (comparative taxation).
What this means
Dividends are 15.4% regardless of border. Above ₩20M the excess is combined and dependent status is at stake.
Income Tax Act Enforcement Decree Article 157 (Scope of major shareholders)
In force Current (checked 2026-09-05)
Shareholders whose holdings per stock by value or share exceed the threshold, and their related parties. Judged on holdings at the end of the previous year.
What this means
One stock at year-end makes you a major shareholder for the whole following year. Count per-stock holdings in December.
Run it on your own numbers
The calculator opens with these conditions already filled in. Change the figures and your own case comes straight out.
Open the Stock Trading Tax Calculator
Frequently asked
Are domestic stocks really tax-free?
Free of capital gains tax. Listed shares carry none unless you are a major shareholder, but transaction tax applies to every sale. KOSPI is 0.2% including rural special tax, so selling ₩50M costs ₩100,000 even at a loss.
Does the broker withhold overseas capital gains tax?
No. You file yourself on Hometax the following May using the broker's capital gains statement. Missing it brings penalties.
What about overseas losses?
Gains and losses in the same year are netted. The ₩2.5M deduction and 22% apply to the net, so tidying losing positions before year-end reduces it.
Is the ₩2.5M deduction per broker?
No. Once a year per person. Trades at several brokers are combined in one return, and splitting across family names gives each person a deduction.
Are US dividends taxed twice?
No. 15% is withheld locally first and only the difference to 15.4% is paid in Korea. If dividends plus interest exceed ₩20M, the excess is combined with other income.
Who is a major shareholder?
Anyone whose holdings per stock by value or share exceed the Income Tax Act decree threshold. It is judged on year-end holdings, with family holdings combined for the largest shareholder and similar cases, and a major shareholder pays capital gains tax on domestic listed shares too.
Results are estimates based on the inputs and on the rules as at the stated date. They may differ from a lender's actual assessment, and the rules change often. Take professional advice before any decision that matters.