Obligation to submit data regarding overseas local corporations

Overseas financial account reporting

Persons obligated to report overseas financial accounts

If, on any day that is the last day of a month in the relevant year, the aggregate balance of overseas financial accounts held by a resident individual or a domestic corporation exceeds KRW 500 million, the person/entity must report the overseas financial account information to the head of the tax office having jurisdiction over the taxpayer’s place of tax payment between June 1 and June 30 of the following year. Where there are multiple overseas financial accounts, the balance refers to the total amount obtained by summing the balances of all such accounts.

Persons exempt from the reporting obligation

The reporting obligation is exempted in any of the following cases:

• A foreign resident who has maintained an address or place of abode in Korea for a total of five years or less during the ten years preceding the end date of the taxable period
• An overseas Korean national whose total period of abode in Korea is 182 days or less during the one year preceding the end of the reporting target year
• A person prescribed by Presidential Decree among those working for the United Nations and its affiliated organizations
• The State, local governments, and public institutions
• Financial companies
• A person whose overseas financial account information can be confirmed through the reporting filed by another joint account holder, etc.
• Financial investment business–related institutions, collective investment schemes, etc., that are subject to governmental supervision and oversight
• A person who submitted overseas financial account information together with the submission of an overseas trust statement
• A person recognized as a resident of the other contracting state under a tax treaty

Amended reports and late reports of overseas financial accounts

A person who failed to file a report within the reporting period may file the overseas financial account information until the tax authority imposes an administrative fine.
A person who under-reported overseas financial account information within the reporting period may file an amended report until the tax authority imposes an administrative fine.

In case of violation of the reporting obligation

If a reporting obligor fails to file a report within the reporting period or underreports, the head of the competent tax office may request the reporting obligor to explain the source of the amount involved in the violation. The reporting obligor must submit the explanation within 90 days from the date of such request.

If overseas financial account information is not reported or is under-reported within the reporting period, an administrative fine of up to 20% of the following amount will be imposed:

• Non-reporting: the unreported amount
• Under-reporting: the difference between the amount actually reported and the amount that should have been reported

If the source of the amount involved in the violation is not explained or is explained falsely, an administrative fine equal to 20% of the unexplained or falsely explained amount will be imposed.
No administrative fine will be imposed where there is a justifiable reason, such as a natural disaster.

Obligation to submit data regarding overseas local corporations, etc.

Overview

A resident who has made an overseas direct investment (excluding a foreign resident who has maintained an address or place of abode in Korea for a total of five years or less during the ten years preceding the end date of the taxable period) or a domestic corporation must submit overseas direct investment details, etc. to the head of the tax office having jurisdiction over the taxpayer’s place of tax payment within six months from the end of the month in which the taxable period under the Income Tax Act or the business year under the Corporate Tax Act ends. The same applies where, during the relevant taxable period or business year, the shares or equity interests in a foreign enterprise that received the overseas direct investment are transferred, or where the foreign corporation that received the overseas direct investment is liquidated, such that it no longer qualifies as an overseas direct investment.

Documents to be submitted

• Details of overseas direct investments
• Financial status of the foreign corporation that received the overseas direct investment
• Loss transactions of the resident or domestic corporation that made the overseas direct investment (limited to loss transactions arising from transactions with the foreign corporation that received the overseas direct investment)
• Loss transactions of the foreign corporation that received the overseas direct investment (excluding loss transactions arising from transactions with the domestic corporation that made the overseas direct investment)
• Status of establishment of overseas branches/business offices
• Other materials prescribed by Presidential Decree in connection with overseas direct investments

Administrative fines for non-compliance, etc.

Where a resident or domestic corporation obligated to submit data falls under any of the following, an administrative fine of up to KRW 50 million will be imposed. However, no administrative fine will be imposed where there is an unavoidable reason recognized as making submission impossible.

• Failure to submit the required materials by the submission deadline, or submission of false overseas direct investment details, etc.
• Failure to submit the relevant materials within 60 days after being requested to submit or supplement them, or submission of false materials

Obligation to Submit Data Related to Overseas Real Estate

Overview

Where a resident or a domestic corporation acquires, holds, or disposes of overseas real estate and falls under any of the following, they must submit a statement of acquisition, holding, investment operation (leasing), and disposal of overseas real estate, etc. to the head of the tax office having jurisdiction over the taxpayer’s place of tax payment within six months from the end of the month in which the taxable period under the Income Tax Act or the business year under the Corporate Tax Act ends.

• Where the acquisition cost of overseas real estate, etc., is KRW 200 million or more
• Where the acquisition cost of overseas real estate, etc., is less than KRW 200 million, but the disposal price is KRW 200 million or more

Administrative fines for violation of the data submission obligation

Where a resident or a domestic corporation obligated to submit the statement of overseas real estate, etc., falls under any of the following, an administrative fine of up to 10% (capped at KRW 100 million) of the acquisition cost, disposal price, and investment operating income of the overseas real estate, etc. will be imposed. However, no administrative fine will be imposed where there is an unavoidable reason recognized as making submission impossible.

• Failure to submit the statement of overseas real estate, etc., by the submission deadline, or submission of false statements (including false overseas direct investment details, etc.)
• Failure to submit the relevant materials within 60 days after being requested to submit or supplement them, or submission of false materials

Obligation to submit data related to overseas trusts

Overview

A resident or a domestic corporation that establishes an overseas trust (including cases where property is transferred to an overseas trust) must submit an overseas trust statement corresponding to each category under the relevant items within six months from the end of the month in which the taxable period or business year ends, to the head of the tax office having jurisdiction over the taxpayer’s place of tax payment. Where there are multiple settlors (trustors), each settlor must submit an overseas trust statement. However, if the head of the tax office confirms that some of the settlors have submitted an overseas trust statement, the submission obligation of the other settlors is exempted.

Administrative fines for violation of the obligation to submit an overseas trust statement

Where a settlor (trustor) obligated to submit an overseas trust statement falls under any of the following, an administrative fine of up to 10% (capped at KRW 100 million) of the value of overseas trust property will be imposed. However, no administrative fine will be imposed where there is an unavoidable reason recognized as making submission impossible.

• Failure to submit the overseas trust statement by the submission deadline, or submission of a false overseas trust statement
• Failure to submit the relevant materials within 60 days after being requested to submit or supplement them, or submission of false materials