Capital Gains Tax on Stocks Must Be Reported Last Year... Major Shareholder Criteria Eased Starting This Year

Capital Gains Tax Filing and Payment Due by the 29th of This Month

Major shareholders of listed companies who transferred stocks in the second half of 2023 (July to December), small shareholders of listed companies who traded over-the-counter, and shareholders of unlisted companies must report and pay capital gains tax on stock transfers by the 29th of this month.

The National Tax Service (NTS) announced on the 6th that it will send capital gains tax pre-reporting notices to major shareholders of listed companies and shareholders of unlisted companies who traded on the Korea Over-the-Counter Market (excluding small shareholders of small and medium-sized enterprises and mid-sized companies) among those required to pre-report, to facilitate the reporting process.

A major shareholder is defined as one who meets the major shareholder requirements based on the shareholding ratio or market capitalization as of the end of the previous fiscal year of the business year to which the transfer date belongs, or who meets the shareholding ratio requirement through stock acquisition after the end of the previous fiscal year.

The relaxed market capitalization threshold for major shareholders (from 1 billion KRW to 5 billion KRW) will be applied starting from the pre-reporting for August 2024 (for transfers made on or after January 1, 2024). Care should be taken to avoid errors during this pre-reporting.

Reporting can be done by accessing Hometax or Sontax through identity verification (such as financial certificates or simple authentication) without the need for membership registration, using the assistance materials provided. The NTS provides major shareholders with stock transaction details and capital gains tax reporting assistance materials necessary for reporting capital gains tax on stock transfers to support accurate reporting. Additionally, a simplified capital gains tax reporting service is offered, allowing taxpayers who transferred stocks up to three times to easily report capital gains and tax amounts on a single screen.

An NTS official stated, "When reporting capital gains tax on stock transfers, we provide additional guidance on common reporting mistakes during the Hometax report preparation to help taxpayers avoid disadvantages such as underreporting penalties. We ask taxpayers to review the report carefully before submission."