Korean dividends for foreign investors

Updated 2026-10-31

For a long time Korean dividends worked in an unusual order: investors had to own the shares on 31 December to receive a dividend that the company would only announce in February or March. Reforms since 2023 have brought Korea closer to international practice, but both systems are still in use, so reading the filing is important.

Annual, interim and quarterly dividends

• Year-end dividend (결산배당): approved at the annual shareholders' meeting, or by the board if the articles allow it.
• Interim dividend (중간배당): once a year during the fiscal year, decided by the board if the articles allow it.
• Quarterly dividend (분기배당): a listed company may pay up to three times during the year, after the first, second and third quarters, if its articles allow it.

Each board decision is filed as a cash dividend decision (현금ㆍ현물배당결정) showing the dividend per share, the record date, the total amount and the yield.

The record date reform

Under the old practice, the record date for year-end dividends was fixed at the end of the fiscal year. Investors bought without knowing the amount.

In January 2023 the Financial Services Commission and the Ministry of Justice set out a new approach. Based on the Ministry's interpretation of the Commercial Act, a company can separate the record date for voting at the annual meeting from the record date for the dividend. If its articles of incorporation are amended, the board can set the dividend record date after the dividend amount is decided. Many companies amended their articles in 2023 and 2024, and their record dates now fall in February, March or April.

Quarterly dividends needed a change in the Capital Markets Act, because that law fixed the record dates at the end of March, June and September. An amendment passed at the end of 2024 and promulgated in January 2025 removed the fixed dates, so companies can also decide quarterly amounts first and set the record date later.

Not every company has switched. Always read the record date in the filing rather than assuming it is the end of the period.

Ex-dividend timing

Korean trades settle two business days after the trade (T+2). To be on the register on the record date, the purchase has to be made at least two business days before it. The next trading day is the ex-dividend date (배당락일), normally one business day before the record date. On that day the price usually opens lower by about the dividend, though the market moves for many other reasons too.

For year-end record dates under the old practice, remember that the Korean market is closed on 31 December, so the last day to buy falls earlier in the last week of the year.

Worked example

A hypothetical company decides on 10 February to pay a dividend of ₩1,000 per share, with a record date of Friday 28 February. Assuming no holidays in between:

• Last day to buy and receive the dividend: Wednesday 26 February.
• Ex-dividend date: Thursday 27 February.
• Payment: usually within about a month of the decision; the filing gives the expected date.

A non-resident investor holding 1,000 shares receives ₩1,000,000 gross. At the standard non-resident withholding rate of 22% (below), ₩220,000 is withheld and ₩780,000 is paid. If a hypothetical tax treaty allowed 15% and the investor had filed the right documents in time, ₩150,000 would be withheld and ₩850,000 paid.

Withholding tax for non-residents

Korea withholds tax on dividends paid to non-residents without a permanent establishment in Korea. The standard rate is 20% income tax plus local income tax of one tenth of that, for a combined 22%.

Many of Korea's tax treaties reduce the rate, commonly to somewhere between 5% and 15% depending on the treaty and on the size and type of the holding. To receive a treaty rate, the beneficial owner usually must give the withholding agent (in practice the custodian) an application for the reduced rate and proof of tax residence before payment. If the documents are missing, the full domestic rate applies and the investor has to claim a refund later from the National Tax Service. Rules and forms change; confirm the current requirements with your custodian or a tax adviser, and check the treaty between Korea and your country of residence.

Recent Korean tax reforms on dividends, such as separate taxation for some high-dividend companies, mainly concern Korean resident individuals and do not change the non-resident withholding described here.

Stock dividends and other cases

• Stock dividends (주식배당) pay new shares instead of cash and lower the base price on the ex-date.
• Preferred shares (우선주) often pay a slightly higher dividend than common shares; the filing lists both.
• Dividends from capital reserves (감액배당) are paid out of reserves rather than retained earnings and can be treated differently for tax.

Comparison with the US

US companies declare a dividend, then set a later record date, which is the order Korea has now adopted. The US moved to T+1 settlement in May 2024, so in the US the ex-dividend date is usually the record date itself, while in Korea under T+2 it is one business day earlier. US withholding on dividends to foreign holders is 30% unless a treaty lowers it, and is claimed with Form W-8BEN.