Engaging a contractor in South Korea runs on a freelancer’s business income. An individual, usually a registered sole proprietor, invoices you, is withheld 3.3% when a Korean payer pays, and settles the real tax in an annual return due by 31 May. Social insurance is self-paid. The legal risk is classification, because Korean courts look at who controls the work, the hours and the place, whatever the contract is called. This guide covers the contractor’s tax, reclassification, the contract and the payer’s paperwork. The payment side is on our South Korea payouts page. It is general information, not legal advice.
Freelancer or company
Individual. A freelancer is taxed on business income and can register as a sole proprietor at the local district tax office; registration is free, and a foreign national needs a qualifying work visa and an Alien Registration Card (Deel, checked 2026-10-27). A registered business issues tax invoices with sequential numbering that meet NTS requirements (same source).
Company. A contractor working through a company bills as a corporation. Ask for the company’s registration and how its invoice treats VAT. Korean VAT is 10%, and services supplied to non-residents can be zero-rated if the consideration is received in foreign currency and the service is a listed type (PwC, checked 2026-10-27).
The contractor’s tax and contributions
Withholding. Business income paid to individuals is generally withheld at 3.3%, which is 3% plus 10% local income tax (EY, checked 2026-10-27). That duty sits with a Korean payer. We found no published rule that applies it to a payer with no Korean presence, so with a foreign client the contractor normally declares the income themselves. If you pay through a Korean entity, ask a Korean tax adviser, because the 3.3% then comes off the invoice.
Annual tax. The return is due by 31 May of the following year (PwC, checked 2026-10-27). Tax runs on a progressive scale: 6% up to KRW 14 million, 15% to KRW 50 million, 24% to 88 million, 35% to 150 million, 38% to 300 million, 40% to 500 million, 42% to 1 billion and 45% above, plus local income tax of 10% of the tax (PwC, checked 2026-10-27).
Contributions. A self-employed person pays National Pension, National Health Insurance and Employment Insurance premiums on declared income and carries the full amount (Deel, checked 2026-10-27). The pension contribution rate went from 9% to 9.5% on 1 January 2026 and is to reach 13% (Korea Times, checked 2026-10-27). The client pays none of it, but a contractor quoting a net rate must cover all of it, and the pension part rises each year.
Reclassification risk
The Labor Standards Act defines an employee as a person who, whatever the occupation, offers labor to a business or workplace for the purpose of earning wages (KLRI, checked 2026-10-27). The label does not decide it. On 21 March 2021 the Supreme Court dismissed an appeal by a wedding company’s CEO who had treated seven planners as freelancers: they kept fixed daily commuting times, reported regularly, had attendance managed through a computer network and were not independent business owners, so they were employees (Asia Business Daily, checked 2026-10-27). In 2023 it reached the opposite result for a freelance radio announcer, because the contract set no working conditions, other jobs were allowed and the company did not designate the commuting time or place (Asia Business Daily, checked 2026-10-27).
A single client, fixed hours and your instructions are the facts a claimant would use (contractor misclassification). If the person is found to be an employee, minimum wage and severance rules apply (Korea Times, checked 2026-10-27). The law may also shift. On 20 January 2026 the Ministry of Employment and Labor announced a presumption that anyone providing labor for another’s business is a worker in civil disputes, with the burden moving to the business to show otherwise (same source). It was targeted for passage by 1 May; on 12 August 2026 the minister told the National Assembly the government aims to legislate by the end of the year (Lexology, checked 2026-10-27). We found no report that it has passed. If the role is a job, hire through an EOR; see Employer of Record.
What to put in the contract
- A written contract for work scoped to deliverables, with the fee, currency, receiving account and who bears transfer charges. Skuad describes the Civil Code “contract for work” as the basis for an independent contractor (Skuad, checked 2026-10-27).
- An invoice or receipt for every payment, matched to the payment reference.
- IP assignment in writing. Author’s property rights may be assigned in whole or in part; if all are assigned, the right to produce and exploit derivative works under Article 22 is presumed not to be included unless stated (Copyright Act arts. 45(1), 45(2), checked 2026-10-27). Article 9 deals with works made by employees in the course of duties, so it does not carry over to a contractor. Name the derivative-work rights in the assignment and ask local counsel about formalities.
- Independence markers: the contractor’s own equipment and schedule, the right to work for other clients, and a fee tied to deliverables, the features the 2023 radio ruling relied on.
Taxes and paperwork
The contractor’s side. Register as a sole proprietor where required, issue an invoice or receipt per payment, pay the self-paid insurance premiums, and settle tax in the May return.
The client’s side. Pay against the invoice. US payers collect a W-8BEN from an individual and file no 1099: pay for work done outside the US is foreign-source income (irs.gov, checked 2026-10-27), and Korea is on the IRS list of treaty partners (irs.gov, checked 2026-10-27).
How to pay contractors in South Korea
Wise delivers won to a Korean bank account, with business transfers up to KRW 999,999,999 each; above KRW 950,000 the recipient verifies through a Korean phone number (wise.com, checked 2026-10-27). A SWIFT wire is the alternative, and some platforms pay KRW directly. Rails, costs and platforms are compared on our South Korea payouts page.
Contractor of Record in South Korea
A Contractor of Record is the contracting party for the contractor and reduces reclassification risk; it does not remove it. In Korea the work still has to look independent, because courts weigh the facts of the engagement. Read the liability clause in the contract rather than the product name. Where the role is a job, with your hours, your tools and core work, hire through an EOR instead. Compare providers in our COR rating.