DT11352 - South Korea: Treaty summary

The table summarises the provisions of the treaty as they relate to income beneficially owned by UK residents. The rate shown is the ‘treaty rate’ and does not reflect taxes chargeable under domestic law before relief is given under the provisions of the treaty. The ‘treaty rate’ is the maximum rate at which South Korea is permitted to tax income in the relevant categories under the treaty. Rates chargeable under domestic law may be higher or lower.

In all cases other conditions for relief (e.g. beneficial ownership) will have to be met before relief is due under the treaty. The text of the treaty itself should be consulted for the full details. The text of the treaty can be found on gov.uk.

Subject	Comments	Article
Portfolio dividends	15%	10
Dividends on direct investments	5%	10
Conditions for lower rate on dividends on direct investments	The beneficial owner controls directly or indirectly at least 25% of the voting power in the company paying the dividends	10
Property income dividends	15% (Note 1)	10
Interest	10% (Note 2)	11
Royalties	10% (Note 3)	12
Government pensions	Taxable only in South Korea unless the individual is a resident and national of the UK	19
Other pensions	Taxable only in the UK	18
Arbitration	No	N/A

Note 1:  Other than where the beneficial owner of the dividend is a UK resident company that controls, directly or indirectly, at least 25% of the voting power in the South Korean company paying the dividend, in which case the treaty rate is 5%

Note 2: Interest  is exempt from South Korean tax  where it is paid

·         on a loan made, guaranteed or insured by the UK Export Credits Guarantee Department, or

·         to the UK government, a UK local authority, the Bank of England or a financial institution owned by the UK government or Bank of England.

Note 3: A reduced rate of 2% applies to payments for the use of, or the right to use, industrial, commercial, or scientific equipment (equipment leasing payments).