In One Sentence
Capital gains tax on overseas stocks is 22% on gains exceeding ₩2.5M per year. By strategically choosing when to sell and which account to use, you can legally save hundreds of thousands of won.
Basic Tax Structure
| Item | Details |
|---|---|
| Taxable | Capital gains from overseas-listed stocks and ETFs |
| Tax Rate | 22% (20% capital gains tax + 2% local tax) |
| Basic Deduction | ₩2.5M per year |
| Filing Period | May 1-31 of the following year |
Calculation Example
Annual Profit: KRW 10M
Taxable Amount After Deduction: 10M - 2.5M = KRW 7.5M
Tax Owed: 7.5M x 22% = KRW 1.65M
Strategy 1: Split the ₩2.5M Deduction Across Two Years
The annual basic deduction is ₩2.5M, but by timing sales around year-end, you can apply two years' deductions totaling ₩5M to a single position.
- Sell a portion on December 30→ Apply the current year's ₩2.5M deduction
- Sell the remainder on January 2→ Apply the next year's ₩2.5M deduction
Note: Overseas stock settlement follows T+1 (for U.S. markets). Selling on December 31 may result in next-year settlement, so you must sell by December 30to apply the current year's deduction. Verify settlement dates with your brokerage.
Strategy 2: Reduce Taxable Amount Through Tax-Loss Harvesting
If you sell both winning and losing positions in the same year, you are taxed only on the net profit after offsetting losses.
| Category | Before Offsetting | After Offsetting |
|---|---|---|
| Stock A Gain | +KRW 8M | +KRW 8M |
| Stock B Loss | Not applied | -KRW 3M |
| Taxable Base | KRW 5.5M | KRW 2.5M |
| Tax Owed | KRW 1.21M | KRW 550K |
Tax-loss harvesting alone reduced the tax from KRW 1.21M → KRW 550K, cutting it by more than half. Review losing positions as year-end approaches.
Strategy 3: Use Pension Savings and IRP Accounts
When trading Korea-listed overseas ETFs within pension savings or IRP accounts, no capital gains tax is charged at the time of sale. The tax deferral effect allows compounding to work more powerfully.
- Eligible products: TIGER US NASDAQ 100, KODEX US S&P 500, ACE US Big Tech TOP7, etc.
- Only 3.3-5.5% pension income tax is charged upon withdrawal (a major reduction compared to 22% capital gains tax)
- Additional tax credit: 13.2-16.5% of contributions, up to KRW 1.485M/year
Pension accounts are designed for long-term investment and must be withdrawn as pension after age 55 to maintain tax benefits. Early termination may result in 16.5% miscellaneous income tax.
Strategy 4: Use an ISA Account
An ISA (Individual Savings Account) provides tax-exempt benefits for Korea-listed overseas ETF investments.
- Standard type: Tax-free up to KRW 2M, excess taxed at 9.9% separate taxation
- Low-income / farmers' type: Tax-free up to KRW 4M
- Mandatory holding period: 3 years (tax-exempt benefit lost upon early termination)
The ISA's 9.9% separate taxation rate is roughly half of the 22% capital gains tax rate, reducing the tax burden even on gains exceeding the tax-free limit.
Strategy 5: Consider Exchange Rate Timing
Capital gains tax on overseas stocks is calculated based on the KRW-converted amount at the time of purchase and sale. Exchange rate fluctuations are also included in the taxable amount.
Example
Purchase: Stock price $100, exchange rate KRW 1,400 → KRW cost basis 140,000
Sale: Stock price $110, exchange rate KRW 1,300 → KRW proceeds 143,000
Taxable gain: KRW 3,000 (stock price gain - FX loss)
Selling during a strong KRW (falling exchange rate) period can offset stock gains with FX losses, reducing taxable gains. Conversely, during a weak KRW, FX gains are also added to the taxable amount.
Calculate Your Tax Instantly
Enter your profit and loss amounts to instantly calculate your estimated tax. Check before making your year-end selling plan.