Tax & Accounting Office Haeon

1 Property Acquisition Tax for Individuals in Korea

While corporations may face different acquisition tax rates in certain areas like Overconcentration Control Regions, large cities, or industrial complexes, individuals pay the standard acquisition tax rate regardless of location when purchasing non-residential properties. Unlike housing, owning multiple commercial properties does not incur additional acquisition tax surcharges.

How to Check and Verify Overconcentration Control Region When Establishing a Corporation in Korea

2. Real Estate Acquisition Tax, Local Education Tax, and Rural Special Tax

The standard acquisition tax rate (ⓖ) for general buildings and real estate is 4%, with specific rates applying in certain cases. Taxes related to property acquisition include:

① Acquisition tax, ② Local education tax, ③ Rural special tax, ④ 10% value-added tax (VAT) if applicable.

① Standard Real Estate Acquisition Tax Rates:

ⓐ Inheritance: 2.8% (2.3% for farmland)

ⓑ Gift, free acquisition (non-profit): 2.8%

ⓒ Gift, free acquisition (others): 3.5%

ⓓ Original acquisition (post-construction): 2.8%

ⓔ Division of shared property (within own share): 2.3%

ⓕ Division of jointly owned property: 2.3%

ⓖ Other (non-farmland): 4.0%

ⓗ Other (farmland): 3.0%

② Local Education Tax on Real Estate Acquisition:

(Acquisition tax rate - 2%) * 20%

Example: For 4% standard acquisition tax rate

(4% - 2%) * 20% = 0.4% of acquisition value

③ Rural Special Tax on Real Estate Acquisition:

0.2% of acquisition value

3. Why Purchasing Newly Built Offices Are Not Considered as Original Acquisitions

Purchasing Newly Built offices are treated as transferred acquisitions, not original acquisitions in Korea. Developers are considered to have made the original acquisition. Thus, both land and building are subject to 4% acquisition tax.

4. Real Estate Acquisition Tax Filing in Korea

① Filing deadline: Within 60 days of acquisition

② Filing location: Tax department of the local government where the property is located

5. Acquisition Tax Examples

Purchase price: 2,000,000,000 KRW (approximately 1,700,000 USD)

① Small two-story commercial building in Gangnam, Seoul

Total tax rate: 4.6%

Total tax amount: 92,000,000 KRW (approximately 78,000 USD)

VAT on building portion: 20,000,000 KRW (approximately 17,000 USD)

② Land in Seocho-gu, Seoul (non-agricultural)

Total tax rate: 4.6%

Total tax amount: 92,000,000 KRW (approximately 78,000 USD)

No VAT on land

③ New large office space in Guro Digital Complex

Total tax rate: 4.6%

Tax amount: 92,000,000 KRW (approximately 78,000 USD)

VAT on building portion: 70,000,000 KRW (approximately 59,000 USD)

④ Construction of 10-story commercial building on owned land in Gimpo

Total tax rate (building only): 3.16%

Tax amount: 63,200,000 KRW (approximately 53,500 USD)

⑤ Four officetel units in Cheongnyangni (assumed non-residential use)

Total tax rate: 4.6%

Tax amount: 92,000,000 KRW (approximately 78,000 USD)

VAT on building portion: 80,000,000 KRW (approximately 68,000 USD)

6. Why Clients Should Choose Haeon for Korean Corporate Establishment & Management?

① One-Stop Professional Service

Haeon is a Korean legal group with lawyers and accountants working together, providing one-stop services for all aspects of corporate operations, from establishment to subsequent tax filing and accounting. In a rapidly changing business environment, Haeon will work together so that clients can focus solely on their business in Korea.

② Direct Communication with Korean Experts Without International Brokers

In Korea, only licensed attorneys or Beommusa Lawyer can legally represent clients in corporation establishment matters. Similarly, tax representation and accounting audits can only be performed by certified professionals such as certified public accountants(CPA).

Unlicensed brokers for Korean corporation establishment often subcontract the work to Korean professionals after accepting clients. By choosing Tax & Accounting Office Haeon, clients can work directly with Korean experts without paying excessive fees to unlicensed brokers.

③ Easy English Communication

Tax & Accounting Office Haeon has a certified public accountant who served as an English interpreter for the Korean Army, facilitating communication between U.S. and Korean forces. This ensures that even clients who don't speak Korean can receive comprehensive assistance with Korean corporation matters.

For expert consultation on corporate establishment and operation please contact Haeon

• 지방세법LOCAL_TAX_ACT_(1).pdf