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Korea to waive tax on overseas stock sales to boost local investment

Published: 24 Dec. 2025, 12:24 Updated: 25 Dec. 2025, 16:17

A screen in Hana Bank's trading room in central Seoul shows the Kospi and won-dollar exchange rate on Dec. 24. [YONHAP]

Korea will temporarily exempt capital gains taxes on overseas stock sales for retail investors who reinvest the proceeds in domestic equities, the Ministry of Economy and Finance said Wednesday, in a bid to prevent further capital outflows and support the flagging won.

Under the plan, the government will set up a "Reshoring Investment Account" to encourage retail investors to move overseas funds into the domestic stock market.

Investors who sell overseas shares held as of Tuesday and reinvest the proceeds in Korean equities for the long term will qualify for a temporary exemption from overseas stock capital gains tax, which currently stands at 20 percent, within a set limit.

For example, investors who reinvest up to 50 million won ($34,200) in domestic equities for at least one year will qualify for the tax exemption.

Tax relief will vary depending on when investors return to the domestic market. Investors who reinvest in the first quarter of next year will receive a full exemption, while those returning in the second and third quarters will receive tax cuts of 80 percent and 50 percent, respectively.

The government also announced measures to help retail investors manage currency risk on overseas stock holdings.

The government said it would encourage major brokerages to offer foreign exchange forward selling products to retail investors, with tax benefits applying to currency hedging gains on overseas shares held as of Tuesday.

In addition, the ministry said it will expand tax support for dividends paid by overseas subsidiaries to domestic companies. Korea currently exempts 95 percent of such dividends from taxable income, a threshold the government plans to raise to 100 percent.

The Finance Ministry said the measures could redirect a significant share of overseas investments back into domestic markets or increase currency hedging activity.

As of the end of the third quarter, Korean individual investors held $161.1 billion in overseas stocks.

The ministry said the policy could help boost dollar supply in the local foreign exchange market.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY HYEON YE-SEUL [[email protected]]