International Compliance Duties: Reporting Overseas Financial Accounts

1) What is the Overseas Financial Account Report?

Since 2011, Korea requires certain residents and domestic companies to disclose overseas financial accounts to improve transparency and prevent offshore tax evasion.

2) Who must file? (KRW 500M test)

Status: Korean resident or domestic company (not otherwise exempt) as of the last day of the year.
Ownership: Holds an account at an overseas financial institution.
Threshold: The sum of all overseas accounts reaches over KRW 500,000,000 at the end of any month in the year.

Tip: It’s a monthly “peak” test—if you cross KRW 500M even for one month, the reporting duty is triggered.

3) What counts as “overseas financial accounts”

Reportable assets are broad and include: cash, stocks, bonds, collective investment securities, derivatives, and virtual assets (e.g., crypto held with foreign exchanges/custodians).

4) When & how to file (June window)

Filing period: June 1–30 of the year following the reporting year.
Key data: Owner details, institution name, account number, and the year’s maximum month-end balance per account.
Where: File to your jurisdictional tax office (generally via NTS e-filing systems).

Documentation: Keep statements showing month-end balances for all months—audits often request the working showing the peak month.

5) Penalties & examples

Failure to file or under-reporting triggers an administrative fine based on the unreported amount (per account), up to 20%, capped at KRW 2 billion.

Unreported amount	Illustrative fine
≤ KRW 2B	≈ 10% of the amount
> KRW 2B ~ ≤ KRW 5B	KRW 200M + 15% of portion over KRW 2B
Higher tiers	Scale up to a maximum fine of KRW 2B

Risk note: Non-filing can also trigger separate penalties if related income was unreported—treat this as a high-priority compliance item.

6) Large-group TP docs (Master/Local/CbC)

Master & Local Files: Required if a taxpayer’s transactions with overseas related parties exceed KRW 50B and turnover exceeds KRW 100B; due within 12 months after year-end.
CbC Report: For a Korean ultimate parent with consolidated revenue ≥ KRW 1T, or a Korean constituent of a foreign MNE with consolidated revenue ≥ EUR 750M.

Alignment: Ensure the overseas account report, transfer-pricing docs, and statutory filings tell the same story about cash, functions, and risks.

7) Common mistakes & quick checks

Peak month misread: Checking only year-end balances; the law tests the highest month-end balance.
Entity mix-ups: Personal vs. corporate accounts—both can trigger filing if thresholds are met.
Crypto omission: Overseas exchanges/custodians holding virtual assets are within scope.
Incomplete IDs: Missing account numbers or institution details causes rejection or penalties.

Quick prep: Make a 12-row table (Jan–Dec) of month-end balances per account; highlight the max month and keep proofs.

8) Summary & next topic

Residents/companies with overseas accounts peaking over KRW 500M must report in June.
Penalties scale with the unreported amount, up to 20% (max KRW 2B).
Large groups: don’t forget Master/Local Files and CbC when thresholds apply.

Next (Part 20): Tax Disputes & Appeals—objections, pre-assessment reviews, and litigation paths.

9) Disclaimer

General information only; thresholds and rules can change. Confirm current guidance or consult a professional for your facts.

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Overseas Financial Account Report KRW 500M Threshold June Filing International Compliance Transfer Pricing Documentation CbC Report KRTaxPolicy

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