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Banks & Taxes in South Korea
A Comprehensive Guide about Opening a Bank Account and Managing Your Taxes
Whether you are moving to South Korea for only a few months or a few years, you will want to know how to manage your finances. South Korea is a popular relocation destination among expats, due in large part to its attractive salaries and great potential for savings. However, given this reputation, expats may be surprised to learn that, dependent on salary, the country’s income tax bracket can go up all the way to 42%.
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Expats relocating to South Korea will need to know the ins and outs of Korean bank accounts and the tax system before they move. For example, one important thing to know is that not only do banks have limited hours—more limited than what expats from Western countries may be used to—but so do ATMs. Although ATMs are easily available throughout the country, you will want to note your own personal bank’s ATM hours. Vestibules are often locked at midnight. At smaller banks, they may be locked even earlier.
Banking hours throughout the country are Monday to Friday 9:00-16:00. Be advised that some banks may close for an hour during lunch. Banks are generally not open on weekends.
Because South Korea has become such a hotspot for expats, banks operate much in the same way as they do in Europe and North America. Likewise, financial institutions are very used to dealing with foreigners, and you should not run into too many problems simply by being a non-resident. Some banks even offer services specifically tailored to expats.
How to Open a Bank Account in South Korea
So how do you open a bank account in South Korea as a non-resident? Because South Korea is such a popular destination with expats, especially young expats looking to move abroad for a few years to teach English, the process of opening a bank account as a foreigner is fairly simple.
How Can I Open a Bank Account in South Korea?
To open a bank account in Korea, you must visit the bank in-person. Opening an account online is not possible. The only way to have a bank account in Korea without visiting a bank in person is by already having an account with an international bank that has branches in Korea.
No appointment is needed to open a bank account. You simply need to arrive at the bank with all of your required documents, select a queue ticket, and wait for your turn. In the larger cities like Seoul and Busan, banks will have multiple staff members who speak English. If you are living in a more rural setting in Korea, you may have to wait until an English-speaking staff member is available. Depending on the size of the town and bank branch, there may only be one, so be flexible in case you arrive on a day when that person is not at work.
Requirements to Open a Bank Account as Non-Resident
One of the most necessary required documents for setting up a bank account in South Korea as a non-resident is also one of the greatest hindrances for expats: the Alien Residence Card (ARC/oegugin deungnok kadeu/외국인 등록 카드). As a non-resident, you must have this card in order to open up a Korean bank account. However, when you first arrive in South Korea, it can take up to a month to receive your ARC. Banks are aware of this, and the majority should still let you open an account, but with restrictions. For example, you may only be able to withdraw money from a bank tell in person.
In addition to your ARC, you will need to provide the following documents to open an account:
- passport (yeogwon/bija/여권/비자)
- Korean visa
- Korean phone number (hangungnaejeonhwabeonho/한국내 전화번호)
Depending on your reason for moving to Korea, you may also be asked to submit a certificate of employment (jaejikjeungmyeongseo/재직증명서), or university documents if you are a student.
Keep in mind that while it is not common to have your bank application rejected, it is possible. If a bank has had bad experiences with foreigners in the past, they may make you wait several months before giving you access to a fully functional account (sort of like a probationary period) or they may deny your application. Luckily, there are plenty of domestic and international banks to choose from in Korea, so should this happen to you, you can easily choose another.
Bank Fees and Minimum Deposits
Although policies vary from bank to bank, the majority of Korean financial institutions offer no-fee bank accounts. It should be easy to find banks that do not require a minimum deposit, nor have monthly service fees. However, you will most likely have to pay a small fee for your ATM card and, unless you opt for a special account, you will pay a withdrawal fee anytime you use another bank’s ATM.
Anything that involves labor will incur a fee. For example, going to the teller to make a transaction will typically incur some sort of service charge. Likewise, making transactions online may also incur a small fee, although it will be lower than the fee to use a teller.
Receiving Your Card
When you open your bank account, you should receive your bank card on the same day (even before you leave the bank). You will also create your PIN code for your card, and be given a passbook to record all of your banking transactions. Although English is becoming more widely used throughout Korea, English translations in mobile apps are still limited. You will most likely be able to use an app for your bank transactions, but the services will be limited.
Best Banks in South Korea for Expats
As a rapidly growing and cosmopolitan country, South Korea has many banks for people to choose from. The following are some of the more popular options with expats due to their widespread presence in the country, account offerings, and English availability:
- Kookmin Bank (KB)
- Standard Chartered Bank Korea
- Hana Bank
- Woori Bank
- Shinhan Bank
It is also possible to find branches of international banks in South Korea. Some of the top international banks in South Korea include:
- Deutsche Bank
- DBS Bank
Online Banking in South Korea
As stated before, online banking is an option in Korea and you should be given online access on the same day that you open your account (the teller should be able to help you sign in and register). Banking services in English may be limited, so some of the best online banks in South Korea for expats will be international banks.
Keep in mind, it is not possible to open a bank account online in South Korea no matter if you are a resident or non-resident. Unless you already have an account with an international institution before arriving in Korea, you will need to visit the Korean bank in person in order to open an account.
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What is the Tax System in South Korea?
If you are one of the thousands of expats thinking of relocating to South Korea, you may be wondering what the tax system is like. As a foreigner, you will be happy to know that, unlike Korean nationals, you will only be taxed on the money that you earn within the country. Korea also has treaties in place with several countries, preventing citizens of those countries from facing double taxation.
It used to be that foreigners living in Korea were taxed as a standard Korean resident after just one year of living in Korea. Now, Korean taxation laws stipulate that non-residents are taxed like a resident only after living in the country for five out of ten years. This primarily relates to being taxed on money not earned in Korea (i.e. worldwide).
Types of Taxes in South Korea
As a highly developed country with a prosperous economy, there are many different types of taxes in South Korea. As a foreigner, you are likely to only deal with the following:
- income tax (see below);
- resident tax (around 10%);
- corporate tax;
- value added tax (VAT) (around 10%).
The vast majority of expats entering the South Korean tax system have the option between a flat tax rate or a progressive tax rate that is based on your income. The flat tax rate will be between 19-21% of your salary earned in Korea. As an expat, you will only be taxed on what you make within Korea (at least, for the first five years of your residency in Korea). A person is considered a taxpayer in Korean after one of the following residency requirements is met:
- The individual has registered their primary residence as being in Korea.
- The individual has lived in Korea for 183 days or more.
- The individual has an occupation that requires them to reside in Korea.
- The individual has accompanied family members to Korea, in a way that will require them to reside in the country for 183 days or more.
Your residency may also be determined by your individual circumstances.
If you opt for the more progressive rate, it will fall between 6 to 44% depending on your salary. Some 9% of your gross salary will also go towards the national pension scheme (i.e. social security), but half of this will be paid by your employer. Depending on your nationality, you may be able to claim some of these taxes back at the end of each tax year, or you can claim it back at the end of your stay in South Korea.
As teaching is a popular career for expats relocating to South Korea, those working in this profession may be exempt from paying income taxes for the first few years of employment. This benefit only applies to nationals of select countries, so it is best to call your embassy to see if it applies to you.
Sound complicated? Feeling confused and hesitant to relocate? If you are having problems navigating the tax system in Korea, contact the relocation experts at InterNations GO! We will set you up with professionals who will ensure you pay the taxes required.
Income Tax Bracket
Here is a look at what the average income tax bracket is, and the salary ranges, for South Korea.
|Income KRW||Income USD||Tax Percentage|
Taxes for Self-Employed People in South Korea
Self-employed expats in South Korea are responsible for paying into the country’s social security scheme as well as income and resident taxes. Just like with employees who are employed by a company, freelancing expats have the option to choose between the flat tax rate or the progressive rate that is based on your income.
Again, navigating the tax system of any country is tricky, and South Korea is no exception. Take the stress out of your relocation and contact the relocation experts at InterNations GO! to handle all Korean tax and bank related requirements for you.
Do you want to relocate? If you have never moved abroad, the process will be overwhelming, and if you have, you know the burden that lies ahead. Whatever stage you are at, InterNations GO! can help you with a complete set of relocation services, such as home finding, school search, visa solutions, and even pet relocation. Our expert expat team is ready to get your relocation going, so why not jump-start your move abroad and contact us today? Best to start early!