Taxation issue with Stock Options in Korea; 4 Non-Resident and Foreigners

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In the contemporary landscape, Korean ventures and startups are increasingly gravitating towards recruiting talent from overseas. This trend mirrors the broader phenomenon of business globalization and the diminishing barriers to cross-border interactivity across all industries.

It is not uncommon for venture companies to engage remote workers from abroad and incentivize them with stock options to enhance their local employability and harness their full potential. However, the current hurdle lies in the lack of institutional and systemic preparedness in Korea, resulting in formidable obstacles for non-residents seeking to exercise stock options.

Although the foreign exchange regulations have seen improvements, eliminating the need for investment registration certificates(외국인투자등록증: 개인) for foreign non-residents to trade domestically listed stocks, the ensuing lack of clear-cut business guidelines at banking and securities branches gives rise to considerable inconvenience.

Similarly, the complexity of regulations regarding the payment of capital gains tax upon exercising stock options for unlisted stocks proves to be a vexing challenge, even for domestic employees.

In order to bolster the attraction of foreign investors and ensure a steady influx of foreign currency, Korea needs to devise pragmatic measures aimed at luring foreign investors and facilitating unhindered domestic and remittance transactions.

While current procedures are compliant with the law, the month-long wait to open a Korean Won account at a bank or securities firm presents a formidable impediment.

It is imperative to meaningfully and methodically internationalize the financial system to align with global standards, actively ushering in and putting into effect a sophisticated financial ecosystem.