South Korea's year-end tax settlement, known as yeonmaljeongsan, is the process by which employers reconcile the income tax withheld from an employee's monthly salary against the actual tax owed for the year. Workers submit supporting documents, and through the employer the National Tax Service (NTS) issues a refund or collects any shortfall.
Who goes through year-end tax settlement?
Year-end settlement applies to employees who earn wage and salary income in Korea, including many foreign workers employed by a Korean company. Throughout the year, employers withhold income tax from each paycheck using a simplified withholding schedule published by the NTS. Because that schedule is an estimate, the withheld total rarely matches the precise annual liability, so a reconciliation is required after the year closes.
Self-employed individuals and freelancers generally do not use year-end settlement. Instead, they file a separate annual return, the global income tax return (jonghap sodeukse), in May of the following year. Some workers with both employment and side income must file that return as well.
What documents and deductions are involved?
The settlement determines final tax by applying income deductions and tax credits to gross salary. Employees gather evidence for the deductions and credits they qualify for and provide it to their employer. Commonly relevant categories include:
- Insurance premiums for national pension, health, and employment insurance
- Credit card, debit card, and cash-receipt spending above a threshold set by the NTS
- Medical and education expenses for the worker and dependents
- Housing rent or mortgage interest, within published limits
- Donations to qualifying organizations
The NTS sets the rules, ceilings, and rates for each category every year, so the exact figures are confirmed in official guidance rather than fixed in advance.
How does the Hometax simplified service work?
To reduce paperwork, the NTS operates a year-end settlement simplified service through its Hometax portal. It aggregates much of an employee's deduction data — such as insurance, card spending, and medical costs — directly from reporting institutions. Workers download the consolidated statement and submit it to their employer, adding any items the service did not capture.
| Term | Meaning |
|---|---|
| Yeonmaljeongsan | The year-end settlement reconciling withheld tax with actual liability |
| Hometax | The NTS online portal hosting the simplified settlement service |
| Jonghap sodeukse | The global income tax return filed in May for non-wage income |
What if you change jobs or have other income?
A worker who held more than one job during the year generally combines the income from all employers in a single settlement carried out by the final employer, using withholding receipts from previous ones. Someone who leaves employment mid-year, or who has additional business, rental, or financial income, may need to file the global income return in May to settle everything. Foreign residents should also check whether a tax treaty or a flat-rate election affects their position.
Timing matters because a refund or additional charge from year-end settlement is usually reflected in an employee's February or March payroll, after the employer submits the reconciliation to the NTS. Workers who miss a deduction during the settlement window are not necessarily out of options: the NTS allows amended filing to claim overlooked deductions for prior years within the statutory period. Keeping receipts, donation certificates, and proof of qualifying expenses through the year is what makes both the original settlement and any later amendment straightforward, since the simplified service does not capture every category on its own.
Where to get help
For help with Korean year-end settlement, treaty questions, or the global income return, consult the recognized professional bodies for South Korea. Certified tax accountants (semusa) and licensed firms can assist foreign and dual-status workers. This page is informational and does not replace guidance from a qualified professional.
Sources
- National Tax Service (NTS), Republic of Korea — official guidance on year-end tax settlement (yeonmaljeongsan), the Hometax simplified service, and global income tax filing.