South Korea-US treaty: status and key articles
The South Korea-US tax convention has been in force since 1979 with subsequent protocols. Coverage includes income tax, dividends, royalties, interest, and residency tie-breakers.
- Article 7 (Business Profits): Korean-resident operating profits are taxable only in Korea without US PE.
- Article 10 (Dividends): 10% for 10%+ ownership. 15% standard.
- Article 11 (Interest): 12% on portfolio interest.
- Article 12 (Royalties): 10-15% depending on type.
- Article 23 (Relief from Double Taxation): Korean FTC mechanism.
Withholding rates by income type for Korean residents
| Income type | Default US rate | Korea treaty rate |
|---|---|---|
| US-source dividends (10%+ ownership) | 30% | 10% |
| US-source dividends (standard) | 30% | 15% |
| US-source portfolio interest | 30% | 12% |
| US-source royalties (copyright) | 30% | 10% |
| US-source royalties (industrial) | 30% | 15% |
| Business profits without US PE | Generally not taxed | Generally not taxed |
How the NTS treats US LLCs
Korea's National Tax Service (NTS) generally treats US single-member LLCs as transparent (similar to a partnership) for Korean tax purposes. LLC operating income flows through to your Korean comprehensive income tax return and is taxed at progressive rates.
For Korean YouTube, Twitch, and other platform creators, this means platform payouts (which often pay your LLC + EIN) are reported on the Korean return as foreign-source income, with US tax paid (if any) creditable via the FTC mechanism.
How to file W-8BEN-E from Korea
- Line 1: LLC legal name
- Line 4: Chapter 3 status: Disregarded Entity
- Line 5: Country of residence: Korea
- Line 6: Permanent residence address in Korea
- Line 8: US TIN (EIN)
- Line 9: Foreign TIN (your Korean resident registration number)
- Part III: claim treaty benefits citing Article 10 for dividends or Article 12 for royalties
Common mistakes by Korean founders
- Not filing W-8BEN-E with platforms (YouTube, Twitch, AdSense default to 30% without it)
- Missing Form 5472 + 1120 ($25K penalty)
- Not declaring LLC income on Korean comprehensive income tax return
- Not securing Korean tax-residency certificate (kokje gwanjeong jeungmyeongseo) when platforms request it
- Triggering Korean CFC rules on low-tax-jurisdiction passive holdings