Parent-company RSUs: your employer's deadline is March, not May

Back when I worked at the Korean arm of a foreign company, I received stock in the overseas parent. Once I met the conditions and stayed the required period (vesting), the shares landed in my account. That arrangement is known as an RSU, or restricted stock unit. Yet the payslip for the month in which the shares actually reached my brokerage account said nothing about them at all. No trace of tax withheld either.

When the overseas parent grants the shares directly, the Korean subsidiary does not withhold. The employee reports and pays that tax in May of the year after the shares vest. So does the Korean subsidiary have nothing to do at all? It does not get off that easily. Two months before that May, by 10 March, it has a document to file with the tax office.

So the company withholds nothing?

That is right, it does not. Why not? Because the Income Tax Act places employment income received from a non-resident or a foreign corporation located outside Korea beyond the scope of withholding (Income Tax Act art. 127(1)4(b)). The Korean subsidiary is not the party that granted the shares. It has no basis to withhold and no obligation to. That is why nothing shows on the payslip.

If your workplace is a Korean branch of a foreign corporation, the answer can differ. We set that case aside here and deal only with a resident employed by a Korean subsidiary that is a separate legal entity.

To the employee this can look like tax-free income. It is not. Where there is income, there is tax; what differs here is only the way it is collected.

So how much is the income?

The market price on the day you receive the shares. The National Tax Service has said as much: where an employee of a Korean subsidiary receives RSUs from a foreign parent, the income arises on the day the conditions are satisfied and the shares are delivered, and the employment income is the market price on that day (원천세과-600, 30 September 2011).

The reference date is not the day you were promised the shares (grant) but the day the conditions were met and the shares actually changed hands (vest). Whether the share price rises or falls afterwards, the employment income stays as it was. Any gain or loss on a later sale is computed separately, under the capital gains rules (Income Tax Act art. 94(1)3(c)).

Note that this article is written for RSUs. Stock options are handled differently, so what is set out here should not be applied to them.

The employee files in May of the following year

So what do you actually do? When you file your global income tax return in May of the year after the shares vest, you add this stock income to the salary you received from your employer and report them together. Nothing was withheld along the way, so it is all settled at that point.

Tax on RSUs received from an overseas parent as consideration for your work can also be paid through a taxpayers' association (Income Tax Act art. 149 subpara. 1). It is not a way of spreading the tax out, though. You pay earlier than you otherwise would, and in return you get a credit of 3 percent of the tax and no longer have to file separately in May (art. 150(3), art. 73(3) proviso).

This article assumes a resident who worked in Korea throughout the vesting period. If work in Korea and abroad were mixed during that period, the first question is how much is attributed to each country. And where the employee was seconded from overseas, residency itself has to be examined separately.

The company files a statement by 10 March

This part is on the company. Where an employee receives stock-based compensation from a foreign corporation that is an overseas controlling shareholder, a statement of stock purchase options and similar awards must be filed with the competent tax office by 10 March of the year following the tax period in which the award was received (Income Tax Act art. 164-5(1)). The form takes its name from stock purchase options, but stock-based compensation is reported on the same statement.

The party that files is not the overseas parent that granted the shares. It is the domestic (that is, Korean) corporation where the employee works, or the foreign corporation with a place of business in Korea. An overseas controlling shareholder means a foreign shareholder that owns, directly or indirectly, 50 percent or more of the voting shares of that domestic corporation (Enforcement Decree of the Adjustment of International Taxes Act art. 45(1)1).

The absence of withholding and this filing obligation are two separate things. It is easy to assume that a company that withheld nothing is out of the picture. It is not: even if the employee forgets to file in May, the tax office learns of the payment from this statement. Where the statement is not filed or is filed with false particulars, the head of the tax office may require it to be filed or supplemented, and it must then be submitted within 60 days of that request (same art. (2) and (3)).

If even one employee receives stock from the overseas parent, two things are worth checking: whether that employee filed in May of the following year, and whether the company filed the statement by 10 March.

Where the flow runs the other way, that is, a Korean company withholding at a treaty-reduced rate on interest, dividends or royalties paid abroad, the filing procedure was covered in an earlier article.

Where the Korean company reimburses the parent for the cost of the stock compensation, there is more to weigh on the corporate income tax side. We will take that up in a separate article.

A quiet payslip does not mean nothing happened.

Legal basis

Income Tax Act art. 127(1)4(b): employment income received from a non-resident or a foreign corporation located outside Korea (excluding a domestic branch or domestic business office) is beyond the scope of withholding. However, income that is booked as necessary expenses or deductible expenses in computing the Korean-source income of a domestic place of business falls back within the scope of withholding

Income Tax Act art. 73(1)1 and (3), art. 70(1): the exception that relieves a person whose only income is employment income from having to file does not apply to a person with employment income falling under art. 127(1)4, so a return must be filed from 1 to 31 May of the following year (unless a taxpayers' association has withheld and paid on a year-end-settlement basis)

Income Tax Act art. 149 subpara. 1, art. 150(3) and (4): a taxpayers' association may be formed, and a credit of 3 percent of the tax amount applies to amounts collected on or before 31 December 2027 (capped at 1 million won a year, apportioned monthly where the period is less than a year)

Income Tax Act art. 94(1)3(c): gains from transferring shares issued by a foreign corporation or listed on a market outside Korea, as prescribed by Presidential Decree, are capital gains

Income Tax Act art. 164-5 and Enforcement Decree of the Income Tax Act art. 216-5(1): where an employee receives stock-based compensation from a foreign corporation that is an overseas controlling shareholder, the domestic corporation or the foreign corporation with a place of business in Korea must file a statement of stock purchase options and similar awards by 10 March of the following year; where it is not filed or is filed with false particulars, the head of the tax office may require filing or supplementation and it must be submitted within 60 days

Enforcement Decree of the Adjustment of International Taxes Act art. 45(1)1: an overseas controlling shareholder is a foreign shareholder owning, directly or indirectly, 50 percent or more of the voting shares of a domestic corporation

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By JH Kim, Korean CPA (KICPA) · August 2026

This article is for general information only and is not tax or legal advice on any specific matter. Tax outcomes depend on the particular facts of each case. Accounting Corporation YOON accepts no liability for any action taken in reliance on this article. Always obtain individual professional review before acting. Based on Korean law in force as of August 2026; subsequent amendments may affect its accuracy.