# Stock Capital Gains Tax Calculator

> Calculate capital gains tax on domestic (major shareholder) or overseas stock trades.

## What is this calculator?

The Stock Capital Gains Tax Calculator computes the tax liability arising from the sale of stocks in two specific scenarios where Korean tax law imposes capital gains tax: domestic stocks held by major shareholders (대주주) and overseas (foreign) stocks held by any Korean tax resident. Under the Korean Income Tax Act, most retail investors trading Korean-listed stocks are exempt from capital gains tax. However, major shareholders — defined as those holding 1 billion KRW or more in value or 1% or more of total shares (2% or more for KOSDAQ-listed companies) in a single stock — are subject to capital gains tax on their profits. For overseas stocks, all Korean tax residents must file and pay capital gains tax on profits from selling foreign stocks listed on any international exchange (US, Chinese, Japanese, European, etc.), regardless of the amount invested. This calculator handles both scenarios, applying the correct tax rates, basic deductions, and local income tax surcharges. Understanding stock capital gains tax obligations is increasingly important as Korean investors' participation in overseas markets has grown dramatically, with overseas stock investment accounts exceeding 100 trillion KRW.

## How to use

Step 1: Select the appropriate tab based on your situation — 'Domestic (Major Shareholder)' if you are selling Korean-listed stocks and meet the major shareholder criteria, or 'Overseas Stocks' if you are selling stocks listed on a foreign exchange.

Step 2: Enter the purchase amount (취득금액) — the total cost you paid to acquire the stocks, including the purchase price and any associated fees at the time of purchase. If you purchased the same stock in multiple tranches, enter the total cost basis.

Step 3: Enter the sale amount (양도금액) — the total proceeds received from selling the stocks. This is the gross sale amount before deducting fees.

Step 4: Enter expenses (필요경비) — this includes brokerage commissions on both purchase and sale transactions, securities transaction tax (for domestic stocks), and any other directly attributable transaction costs.

Step 5: Review the comprehensive results panel which displays: capital gain (or loss), basic deduction amount, taxable base, capital gains tax, local income tax, total tax, net profit after tax, and effective tax rate. The effective tax rate shows the actual percentage of your profit consumed by taxes, providing a clear picture of your real investment return.

For overseas stocks, remember that gains and losses from different foreign stocks traded within the same calendar year can be netted against each other before applying the basic deduction and tax rate. This calculator computes tax for a single transaction — if you have multiple overseas stock transactions, sum up all gains and losses first, then enter the net figures.

## Formula

Step 1 — Capital Gain:
Capital Gain = Sale Amount - Purchase Amount - Expenses
(If negative, no tax is due; this represents a capital loss)

Step 2 — Basic Deduction:
Overseas Stocks: 2,500,000 KRW per year (applied once to the aggregate of all overseas stock gains in the same calendar year)
Domestic Major Shareholders: 2,500,000 KRW per year

Step 3 — Taxable Base:
Taxable Base = Capital Gain - Basic Deduction
(If zero or negative, no tax is due)

Step 4 — Tax Rates:
Domestic Major Shareholders (Korean listed stocks):
• Taxable base up to 300,000,000 KRW: 20%
• Taxable base exceeding 300,000,000 KRW: 25%
• SME (중소기업) stocks: flat 10% regardless of amount

Overseas Stocks:
• Flat rate: 20% on the entire taxable base

Step 5 — Local Income Tax:
• 10% of the calculated capital gains tax (added as a surcharge)

Step 6 — Total Tax:
Total Tax = Capital Gains Tax + Local Income Tax

Step 7 — Net Profit:
Net Profit = Capital Gain - Total Tax

Step 8 — Effective Tax Rate:
Effective Rate = Total Tax / Capital Gain × 100%

Example (Overseas): Buy at 50M, sell at 70M, expenses 100K.
Gain = 70M - 50M - 0.1M = 19.9M
Taxable Base = 19.9M - 2.5M = 17.4M
CGT = 17.4M × 20% = 3.48M
Local Tax = 3.48M × 10% = 0.348M
Total Tax = 3.828M
Net Profit = 19.9M - 3.828M = 16.072M
Effective Rate = 3.828M / 19.9M ≈ 19.2%

## Useful tips

1. Annual Tax-Loss Harvesting for Overseas Stocks: Since overseas stock gains and losses within the same calendar year are netted before tax is calculated, you can strategically sell losing positions before December 31 to offset gains from winning positions. For example, if you have 10M KRW in gains from US tech stocks and 3M KRW in unrealized losses in Japanese stocks, selling the Japanese stocks before year-end reduces your taxable gain to 7M KRW, saving approximately 660,000 KRW in tax. You can repurchase the sold stocks in the new year if you still believe in the investment thesis (note: Korea does not have a wash-sale rule like the US).

2. Timing Your Sales: Overseas stock capital gains tax is calculated on a calendar-year basis (January 1 to December 31). If you have large gains and are approaching the year-end, consider whether it is better to realize the gain this year or wait until January to spread the tax obligation. Also, the 2.5M KRW basic deduction resets each calendar year, so splitting sales across two years can utilize two deductions.

3. Currency Considerations: For overseas stocks, capital gains must be calculated in Korean Won. This means that exchange rate movements between the purchase date and sale date affect your taxable gain. Even if your stock went up by 10% in USD, if the KRW strengthened against the USD during the same period, your KRW-denominated gain could be less than 10%. Conversely, a weakening KRW amplifies your gain. The National Tax Service uses the base exchange rate on the transaction settlement date.

4. Filing Requirements: Overseas stock capital gains tax must be reported and paid during the May tax filing period (May 1-31) for gains realized in the previous calendar year. Failure to file incurs penalties: 20% of the unpaid tax as a penalty, plus daily late payment interest. Use the National Tax Service's Hometax system for filing.

5. Major Shareholder Threshold Warning: If you hold close to 1 billion KRW in a single Korean stock, be aware that crossing this threshold (even temporarily) can trigger major shareholder status, subjecting all future gains on that stock to capital gains tax until your holdings drop below the threshold. Monitor your portfolio value carefully.

6. Record Keeping: Maintain detailed records of all overseas stock transactions, including purchase dates, amounts in foreign currency, exchange rates, brokerage statements, and fee receipts. Korean brokerage firms for overseas trading typically provide annual transaction summaries that simplify tax filing.

## FAQ

### Q. Do retail investors pay CGT on Korean stocks?

No, ordinary retail investors (소액주주, non-major shareholders) are completely exempt from capital gains tax on Korean-listed stocks (both KOSPI and KOSDAQ). This exemption applies regardless of the profit amount. However, you must still pay the securities transaction tax (증권거래세) of 0.18% (KOSPI) or 0.18% (KOSDAQ) on the sale amount, which is automatically deducted by your brokerage. Capital gains tax only applies to major shareholders, defined as individuals holding 1 billion KRW or more in market value OR 1% or more of total shares (2% for KOSDAQ) in a single company. Unlisted stock transactions are always subject to capital gains tax regardless of holding amount.

### Q. Is the 2.5M KRW deduction per stock?

No, the 2,500,000 KRW basic deduction is applied once per calendar year to your aggregate net overseas stock capital gains — not per individual stock. This means if you sold five different overseas stocks during the year with total combined gains of 15,000,000 KRW and total losses of 3,000,000 KRW, your net gain is 12,000,000 KRW, and the 2,500,000 KRW deduction is applied once to arrive at a taxable base of 9,500,000 KRW. The same annual deduction applies to domestic major shareholder gains. This makes it important to aggregate all your stock transactions before calculating tax.

### Q. Can overseas stock losses be carried forward?

No, under current Korean tax law, capital losses from overseas stock sales cannot be carried forward to future years. Losses can only offset gains from other overseas stock sales realized within the same calendar year (January 1 to December 31). This is a significant limitation compared to tax systems in countries like the United States, where capital losses can be carried forward indefinitely. Therefore, strategic tax-loss harvesting — selling losing positions before year-end to offset gains — is especially important in the Korean tax system. If you have no gains in a given year, your overseas stock losses essentially have no tax benefit and cannot be used in the future.

### Q. How are gains from US stocks calculated in Korean Won?

Capital gains from US stocks (and all overseas stocks) must be calculated in Korean Won for tax purposes. The calculation uses the base exchange rate (기준환율) published by the Seoul Foreign Exchange Market on the settlement date of each transaction. Purchase amount in KRW = USD purchase price × exchange rate on purchase settlement date. Sale amount in KRW = USD sale price × exchange rate on sale settlement date. This means exchange rate fluctuations directly impact your taxable gain. If you bought a US stock at $100 when USD/KRW was 1,200 (cost: 120,000 KRW) and sold at $110 when USD/KRW was 1,350 (proceeds: 148,500 KRW), your KRW gain is 28,500 KRW — much larger than the 10% USD price increase due to the weaker Won.

### Q. What happens if I forget to file overseas stock capital gains tax?

Failing to file overseas stock capital gains tax by the May 31 deadline results in significant penalties. The National Tax Service imposes: (1) a non-filing penalty of 20% of the unpaid tax amount (reduced to 10% if you file late but voluntarily before being audited); (2) a daily late payment interest charge of approximately 0.022% per day (about 8% annualized) on the unpaid tax from the filing deadline until payment; and (3) potential additional penalties if the NTS determines the non-filing was intentional tax evasion rather than an oversight. Korean brokerages are required to report overseas trading activity to the NTS, so the tax authority has access to your transaction records. If you realize you missed a filing, it is strongly advisable to file a voluntary late return as soon as possible to minimize penalties.