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Transferring money into and out of South Korea can be done in several ways. The South Korean won is a controlled currency, and South Korean tax laws are thorough. That means you may face limits on how much you can send and what your recipient may owe for taxes on the transferred amount.
South Korea has extensive tax regulations that cover incomes of all types, including gifts. According to our research, South Korean gift tax laws work similarly to the country’s inheritance tax laws.
Your recipient may have to report the amount gifted and file it along with instructions on the deductions. Because tax law is so involved, your recipient should likely talk to a tax professional about what exactly they might owe, which forms to use and when to file.
Penalties vary based on the severity of the infraction, among other factors. A percentage of the amount that’s overdue may be one resulting penalty. It’s a rate that could build over time, too.
Your recipient can seek out advice from a tax professional to help avoid running into any penalties in the first place.
In short, yes. Transfer services may report amounts as small as $1,000 to the IRS, so it’s likely that a large sum will be flagged. Any amount over $10,000 will likely need to be reported, but the exact threshold depends on the purpose of your transfer and how big it is.
Which forms you file will depend on your situation, and a tax professional can help you sort out which one you need and when you need to file it.
Because the South Korean won is a regulated currency, you may run into some limits or additional filing requirements when attempting to transfer money into or out of the country. On top of limits as a result of currency controls, banks and transfer services may have limits of their own.
You’ll have to find a provider without maximums like Xe if you want to avoid running into additional caps on the amount you can send.
Your recipient can receive money in several different ways, including a direct deposit into their bank account and cash pickup. The method used to send and receive the funds will impact how long they take to arrive and how much the transfer will cost.
South Korea has several cash pickup locations in Seoul, Busan and Incheon, but it may not be the best option if your recipient lives in a smaller town. To get a full look at how to send money to South Korea, check out our comprehensive guide.
Transferring large sums of money to South Korea could have tax implications for both you as the sender, and your recipient. The type of tax applied and forms you need to fill out will depend on a number of factors. Before making a transfer of $10,000 or more, you and your recipient may want to talk with your respective tax professionals to get the full scope of what needs to be reported and how.
For a better look at transferring money across borders, take a look at our guide and compare services.