How Interest on Korean Savings Is Taxed (and What You Really Receive)
Putting money in a Korean deposit or installment savings account is simple, but the advertised rate is not what lands in your pocket. Here is how interest and tax work, with numbers you can check.
Standard tax on interest
Banks usually withhold 15.4% of the interest: 14% income tax plus 1.4% local income tax. Some products have reduced or zero tax, so check each product with your bank.
| Deposit | Interest (before tax) | Tax 15.4% | You receive (interest) |
|---|---|---|---|
| ₩10,000,000, 3.5%, 1 year, simple | ₩350,000 | ₩53,900 | ₩296,100 |
Deposit vs monthly savings
With 4% for 12 months, a ₩12,000,000 lump-sum deposit earns ₩480,000 before tax. Saving ₩1,000,000 per month earns only ₩260,000, because each payment stays in the account for a shorter time.
Simple vs compound
With ₩10,000,000 at 3.5% held for 10 years (deposit), after-tax interest is ₩2,961,000 with simple interest and ₩3,539,198 with monthly compounding.
Things to confirm
- If your total interest and dividends in one year exceed ₩20 million, you may be taxed on a comprehensive basis. Check with the tax office.
- Tax treatment for non-residents and for special accounts can differ. This guide does not cover it, so confirmation is needed.
Examples assume payments at the start of each month, interest rounded down to the won, and a 15.4% tax rate. Actual amounts may differ (estimate).
This article is general information, not tax or legal advice.