Mandatory filing in Korea for foreign-invested companies: Stock options and other stock-based compensation

Starting from 2024, foreign-invested companies operating in Korea are subject to a new tax reporting obligation for stock-based compensation, such as Stock Options, RSUs, and ESPPs, granted by their overseas headquarters. Many multinational companies are now asking, “Does this apply to us as well?”

Which companies must file?

• Korean subsidiaries of foreign corporations
• Korean branches of foreign corporations

When must the report be filed?

The filing requirement applies when stock-based compensation granted by a foreign parent company (a foreign controlling shareholder owning 50% or more) is exercised, vested, and paid in cash.

What is the filing deadline?

• 10 March of the year following the exercise/vesting.
• Effective date: Applies to all compensation exercised or vested on or after 1 January 2024

What are the risks of late or incorrect filing?

If the report is not submitted or submitted incorrectly, the tax office may request correction, and the company must file the corrected report within 60 days of the request.

Repeated delays or omissions may result in:

Increased tax audit risk, additional review of related obligations such as withholding tax, and other tax compliance obligations.

Common mistakes

• Overseas HQ is failing to provide the necessary data on time
• Misunderstanding of vesting/exercise dates
• Errors in calculating taxable income
•  Omissions of reportable compensation or employees

This reporting requirement applies starting from the 2024 tax year. The first filing was due on March 10, 2025 (for 2024 events).

Once the initial framework and data flow are properly established, companies can maintain a stable annual reporting process going forward.