Not Only Nobel Prizes Are Tax-Exempt... Gold Medal Pensions and Crime Reporter Rewards Are Also Tax-Exempt

Non-Taxable Other Income... Including Academic and Arts Academy Awards
Non-Taxable Benefits Also Apply to Prize Money from the National Petition 'Gukminjean'

As it became known that the prize money of 11 million kronor (approximately 1.34 billion KRW) awarded to author Han Kang, the first Korean to receive the Nobel Prize in Literature, is exempt from taxation, attention is also focused on other items eligible for tax exemption benefits.

According to the Ministry of Economy and Finance, Article 18 of the Enforcement Decree of the Income Tax Act specifies that prize money and awards received by recipients of the Nobel Prize or awards from foreign governments, international organizations, or other foreign entities or funds are exempt from taxation as other income.

However, prize money that is not subject to tax exemption is classified as other income. Other income refers to various types of income not classified under business income, earned income, interest income, dividend income, pension income, etc., as defined by law. If the amount of other income after deducting necessary expenses is 3 million KRW or less, a separate tax of 20% is applied. If it exceeds 3 million KRW, it is classified as comprehensive taxation and taxed accordingly.

Prize money paid to sports merit recipients under the National Sports Promotion Act is a representative example of tax-exempt income. Rewards received by national athletes for winning medals at the Olympics and other events, as well as pensions received thereafter, are also tax-exempt.

Author Hangang [Image source=Yonhap News]

Athletes who win a gold medal at the Olympics receive a monthly pension of 1 million KRW (a lump sum of 67.2 million KRW), silver medalists receive 750,000 KRW per month (a lump sum of 56 million KRW), and bronze medalists receive 525,000 KRW per month (a lump sum of 39.2 million KRW). Athletes can choose to receive the pension monthly or as a lump sum, and these payments are not subject to taxation. However, prize money received from associations or companies is taxable.

Prize money and awards received by recipients of the Korean Academy of Science and Technology Awards under the Korean Academy of Science and Technology Act or the Korean Arts Awards under the Korean Arts Academy Act also enjoy tax exemption benefits. The Korean Academy of Science and Technology awards prizes in fields such as applied natural sciences, basic natural sciences, social sciences, and humanities, with prize money of 100 million KRW per recipient.

The Korean Arts Academy awards prizes in four categories: literature, fine arts, music, and theater/film/dance, with prize money of 50 million KRW per recipient. Prize money of 10 million KRW awarded to the first-place winner of the Korean National Art Exhibition is also tax-exempt.

Prize money for “National Proposals” submitted and adopted by ordinary citizens (not policy-related officials) through the National Participation Portal (Gukmin Sinmungo) is also tax-exempt. The prize amounts are regulated as follows: Gold Prize between 5 million KRW and 8 million KRW, Silver Prize between 3 million KRW and 5 million KRW, and Bronze Prize between 1 million KRW and 3 million KRW per proposal.

Prize money and awards received from the national or local governments are also explicitly stated as tax-exempt. Prize money awarded to quality masters selected under the Quality Management and Industrial Product Safety Control Act and compensation received by crime informants are similarly exempt from taxation.