2026 Stock Capital Gains Tax Guide — Major Shareholder Criteria and Filing Method

Key Summary 2026 stock capital gains tax: For domestic listed stocks, only major shareholders (KRW 1 billion+ per stock) are taxed. The tax rate is 30% for holdings under 1 year and 20% for holdings of 1 year or more. Foreign stocks are taxed at 22% after a KRW 2.5 million deduction (including local income tax). Filing period: every May. Since gains and losses can be offset, realizing strategic losses near year-end is important.

Key answer: In 2026, the major shareholder threshold is KRW 1 billion or more per stock, and the tax rate is either 30% or 20%. ## Basic Concepts of Stock Capital Gains Tax in 2026

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Major Shareholder Criteria (as of 2026)

Key point: holdings of KRW 1 billion or more per stock

History of tightened major shareholder requirements:

• 2020: Discussion of lowering from KRW 1.5 billion to KRW 1 billion
• 2022: KRW 1 billion maintained (decision to keep the move from KRW 10 billion to KRW 1 billion)
• 2023: KRW 1 billion maintained (lowering discussions failed)
• 2025-2026: KRW 1 billion maintained (current system maintained after abolition of the financial investment income tax)

Tax Rate Structure

!people holding Hangul banners stock capital gains tax major shareholder ### Domestic Listed Stocks (Major Shareholders)

Foreign Stocks

Example of taxation on foreign stocks:

Korean term overseasKorean term Korean term: 1,000ten thousand KRW
baseKorean term: -250ten thousand KRW
Korean term: 750ten thousand KRW
Korean termmetal: 750ten thousand KRW × 22% = 165ten thousand KRW

Domestic Unlisted Stocks

Filing Method and Period

!Street food stall korean text food ### Filing Period

Filing Method (Using Hometax)

Step 1: Access Hometax

Korean term(www.hometax.go.kr) → filing/payment → Korean termmetalfiling
→ capital gains tax → Korean termfiling (overseasKorean term)

Step 2: Prepare transaction records

• Annual foreign stock transaction statement from your brokerage (PDF/Excel)
• Records of each purchase and sale date, amount, and exchange rate
• Foreign currency → KRW conversion: use the basic exchange rate for transactions (exchange rate announced by the Bank of Korea)

Step 3: Enter deduction items

• Acquisition cost (including fees)
• Necessary expenses (transaction fees, foreign currency exchange fees)
• Basic deduction of KRW 2.5 million

Step 4: Calculate and pay tax

• Check calculated tax amount → Pay by May 31 without penalties

Notes When Filing

1. 1Exchange rate application: Apply the standard exchange rate for each purchase and sale date (fixed exchange rates are not allowed)
2. 2Offsetting gains and losses: Loss-making and profitable positions in the same year can be aggregated
3. 3No loss carryforward: Foreign stock losses cannot be carried forward to the following year
4. 4ETF distributions separate: Foreign ETF distributions are subject to dividend income tax (15.4%) separately

5 Tax-Saving Strategies ### Strategy 1: Realize Year-End Losses (Tax Loss Harvesting)

The most powerful tax-saving strategy. Sell losing positions before December 31 to lower your tax base.

Example:

AKorean term waterKorean term: +1,500ten thousand KRW
BKorean term Korean term: -700ten thousand KRW (sale Korean term)

→ BKorean term 12Korean term saleKorean term:  Korean term = 1,500ten thousand KRW - 700ten thousand KRW = 800ten thousand KRW  Korean termmetal = (800ten thousand KRW - 250ten thousand KRW) × 22% = 121ten thousand KRW

→ BKorean term sale Korean term:  Korean term = 1,500ten thousand KRW - 250ten thousand KRW = 1,250ten thousand KRW  Korean termmetal = 1,250ten thousand KRW × 22% = 275ten thousand KRW

Korean term Korean term: 154ten thousand KRW

Strategy 2: Use Gifts Between Family Members

Gift shares to your spouse or children and have each person use their own KRW 2.5 million basic deduction.

• Gift to spouse: KRW 600 million deduction over 10 years
• Adult child: KRW 50 million deduction over 10 years
• Caution: Be aware of rules that may treat an immediate sale after gifting as a canceled gift (holding for at least 3 months is recommended)

Strategy 3: Use an ISA Account

Invest in foreign ETFs through an Individual Savings Account (ISA):

• Profits within an ISA are tax-exempt up to KRW 2 million (KRW 4 million for low-income/general worker type)
• Amounts above the exemption are separately taxed at 9.9% (less than half the ordinary 22% rate)
• However, ISAs are subject to a mandatory 3-year holding period

Strategy 4: Avoid Domestic Major Shareholder Status

Keep holdings below KRW 1 billion as of December 31:

• Sell part of the position in November-December and repurchase in January
• However, you must accept the risk of price fluctuations during this period

Strategy 5: Use Long-Term Holding Rate Benefits

For domestic major shareholders, holding for at least 1 year reduces the tax rate from 30% to 20%. From a tax perspective, holding for at least 1 year is more advantageous than short-term trading.

Top 5 Mistakes in Foreign Stock Filing

Tax Support Services by Brokerage

💡 Is tax calculation complicated? When you need currency conversion, the Global Exchange Rate Calculator is convenient.

📣 Paid disclosure: This post is intended to provide tax information and may vary depending on an individual's tax situation. For accurate tax handling, consultation with a tax accountant is recommended.

Frequently Asked Questions (FAQ)

Q1. Do minority shareholders also have to pay tax on foreign stocks? A. Yes. Even minority shareholders are taxed at 22% on foreign stock capital gains exceeding KRW 2.5 million. The minority-shareholder tax exemption applies only to domestic listed stocks.

Q2. What taxes apply when investing in U.S. stocks (ETFs)? A. Capital gains tax of 22% applies to gains on sale. However, dividends are handled through 15% U.S. withholding tax plus payment of any difference against the domestic tax rate.

Q3. Do I need to sell foreign stocks by year-end to file taxes? A. Foreign stock capital gains tax is filed in May of the following year based on realized gains and losses from January 1 to December 31 of the relevant year.

Q4. What exactly does aggregated family holdings mean? A. For the same stock, the holding value of you + your spouse + lineal ascendants/descendants (parents and children) is aggregated. Siblings may be included, but requirements for separate households should be checked.

Q5. Can I receive a refund if I incur losses on foreign stocks? A. If profits and losses coexist in the same year, the tax payable is reduced after offsetting gains and losses. If there are only losses, there is no tax payable, so it is not a refund situation.

Q6. How much are penalties for stock capital gains tax? A. If filing is late, a penalty of 20% of the tax payable (non-filing penalty) plus a late payment penalty of 0.022% per day on unpaid tax is imposed.

Q7. What is the tax difference between domestic ETFs and foreign ETFs? A. Domestic ETFs (domestically listed ETFs) are tax-exempt on trading gains (however, distributions are subject to dividend income tax). Foreign ETFs are also taxed at 22% on trading gains.

Q8. What changed after the abolition of the financial investment income tax? A. With the abolition of the financial investment income tax in 2025, the tax-exempt treatment for domestic stocks held by minority shareholders is maintained. The major shareholder threshold (KRW 1 billion) remains unchanged.

Reference: Financial Supervisory Service Electronic Disclosure