How to pay contractors in South Korea

How to choose: five questions for paying a contractor in South Korea

1. Is the contractor an individual or a company? A freelancer is an individual taxed on business income. A Korean payer withholds 3.3% on it, 3% plus 10% local tax (EY, checked 2026-10-27), and the contractor settles the real tax in the annual return due by 31 May (PwC, checked 2026-10-27). A foreign national can register as a sole proprietor only with a work visa and an Alien Registration Card (Deel, checked 2026-10-27), so ask for the registration, not just a name. If the contractor is a person, collect an invoice or receipt for each payment and keep the contract beside it. If it is a company, ask which invoice it issues and how it treats VAT.

2. Who bears the tax? We found no published rule that makes a payer with no Korean presence withhold the 3.3%, so with a foreign client the contractor usually pays it in the May return, with income tax of 6% to 45% plus 10% local tax on top (PwC, checked 2026-10-27). Social insurance is self-paid too, and the pension contribution rate is 9.5% since 1 January 2026 (Korea Times, checked 2026-10-27). A contractor who quotes a net rate is quoting a number that tax and premiums reduce, so write down whether your fee is gross.

3. Won, or dollars? 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, and transfers to virtual accounts are not supported (wise.com, checked 2026-10-27). A SWIFT wire can carry dollars to an account that holds them. Won: Wise or a platform paying KRW. Dollars: a wire, once the contractor confirms the account and asks the bank whether a purpose or supporting document is needed.

4. How much do you pay each month? Fees come as a percentage per payout or a monthly seat. At 3%, a percentage fee equals a $40 seat at about $1,333 a month, roughly KRW 1.77 million at 1,325 won to the dollar, and a $49 seat at about $1,633. Below that line a percentage fee costs less; above it a seat does.

5. How close is the engagement to employment? The Labor Standards Act defines an employee as a person who offers labor to a business for wages, whatever the occupation (KLRI, checked 2026-10-27). The Supreme Court held on 21 March 2021 that wedding planners on freelancer contracts were employees where the company controlled their work, hours and place (Asia Business Daily, checked 2026-10-27); in 2023 it held a freelance radio announcer was not, because the contract set no working conditions and other jobs were allowed (Asia Business Daily, checked 2026-10-27). See also contractor misclassification. If your contractor looks like the first case, use a Contractor of Record. 4dev acts as Contractor of Record — the contracting party for each contractor — which reduces reclassification risk; Deel and Multiplier also list a Contractor of Record, and Skuad an Agent of Record. Read the liability clause in the contract, not the product name. If the role is a job, hire through an EOR.

Rule of thumb. One contractor who wants won, under about $1,300 a month: Wise or a percentage-fee platform. A team, or a document with every payment: a contractor platform. Single-client, full-time work: a Contractor of Record, or an EOR if it is a job. Compare the field in the contractor payouts rating.

Payout rails that work in South Korea in 2026

Money comes into Korea through the banking system, in won or in a foreign currency. The one rule we found that bites is on collection outside it: a Korean company that collects a receivable into an overseas account, through an overseas subsidiary, in goods or services, or in stablecoins must report to the Bank of Korea beforehand (Asia Business Daily, checked 2026-10-27). The article gives no threshold and addresses companies; we found no rule text for an individual contractor, so confirm with the contractor’s bank before the first payment.

What the contractor needs

A freelance developer, designer or writer in Korea is an individual taxed on business income, who 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 a tax invoice that meets NTS requirements, with sequential numbering (same source). The contractor files the annual income tax return by 31 May, with tax on a 6% to 45% scale plus local income tax of 10% of the tax (PwC, checked 2026-10-27).

The contractor also pays the National Pension, National Health Insurance and Employment Insurance premiums on declared income, the full amount themselves (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). Classification, IP and the contract are in our hiring guide.

Documents and tax on the payer’s side

Korean withholding. Business income paid to individuals is generally withheld at 3.3% by the payer (EY, checked 2026-10-27). We found no published rule that applies it to a payer with no Korean presence. If you pay through a Korean entity, ask a Korean tax adviser; the withholding then comes off the invoice.

VAT. Korean VAT is 10%. 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). Ask the contractor how the invoice treats it.

US payers. Korea is on the IRS list of US income tax treaty partners (irs.gov, checked 2026-10-27). Pay for services performed outside the US is foreign-source income (irs.gov, checked 2026-10-27), so there is no US withholding and no Form 1099-NEC. An individual signs Form W-8BEN.

What to keep on file:

• the signed contract for work, with currency, receiving account and who bears transfer charges;
• the contractor’s invoice or receipt for each payment;
• payment confirmations with the invoice number in the reference;
• the W-8BEN, if you are a US payer.

On a platform or Contractor of Record model you keep the platform’s invoice; the platform holds the contractor’s documents.

Where it breaks

• Name mismatch. Wise needs the recipient’s name in Latin letters, exactly as on the bank’s form; a mismatch is the common reason for a rejected transfer (wise.com, checked 2026-10-27).
• No verification, no won. Above KRW 950,000 the recipient verifies through a Korean phone number, by Kakao message or SMS; a contractor without one stalls the transfer.
• Virtual accounts. Wise does not support transfers to them, so a contractor who gave you one needs to give you a normal account number.
• Overseas account or stablecoin. A company contractor collecting this way falls under the Bank of Korea’s prior-report rule above.
• The contractor quotes net. Tax and self-paid premiums come out of the contractor’s pocket, and the pension rate rises 0.5 points a year toward 13%, so a net rate agreed now is short next year.
• Reclassification. Control over work, hours and place decided the 2021 wedding-planner case (Asia Business Daily, checked 2026-10-27), and the government has proposed a presumption of worker status in civil disputes, with passage not confirmed in the sources we found (Korea Times, checked 2026-10-27).