Overseas trusts added to reporting requirements this year; retail investors using domestic brokerages exempt
Anyone who held combined overseas financial account balances exceeding 500 million won (approximately $330,000) at any point last year, or who established or maintained an overseas trust, must report the relevant information to tax authorities by June 30.
According to the National Tax Service on Thursday, the requirement applies to residents and domestic corporations whose combined balances across overseas financial accounts — including savings deposits, shares, bonds, insurance and virtual assets — exceeded 500 million won on even a single day at the end of any month last year.
Retail investors who bought U.S. shares through domestic brokerages, commonly known as "western market ants," are exempt because their holdings are held through domestic securities firms.
Starting this year, overseas trusts must also be reported. Domestic residents who maintained an overseas trust for even one day during last year, and domestic corporations that did so for even one day during the previous fiscal year, must submit trust details.
Unlike overseas financial accounts, overseas trusts carry no minimum balance threshold. All trusts established abroad must be reported regardless of value.
The National Tax Service has identified approximately 27,000 people likely subject to the requirement — 18,000 for overseas financial accounts and 9,000 for overseas trusts — and is sending notification letters by mobile message and post on a rolling basis.
The number of people receiving notifications had remained in the tens of thousands through last year but rose sharply this year after overseas trusts were added to the scope. Those who receive a notification can file through the NTS's Hometax or Sontax platforms. Even those who do not receive a notification are responsible for checking their own obligations and filing before the deadline.
The NTS plans to post a guidance booklet on its website to help taxpayers fulfill their reporting obligations accurately.
Violations carry a penalty of 10 percent of the unreported or underreported amount. For overseas financial accounts, unreported or underreported amounts exceeding 5 billion won may result in criminal charges and public disclosure of the account holder's identity.
Informants who provide key evidence on individuals who fail to report overseas financial accounts can receive a reward of up to 2 billion won.
In addition, those who supply the NTS with specific information on tax evasion through overseas trusts may receive a reward of up to 4 billion won.
"Those obligated to report overseas financial accounts and overseas trusts should file faithfully, with the mindset that voluntary reporting is the best choice," the NTS said.
oskymoon@heraldcorp.com
