From 2025, any Korean resident who holds an overseas trust for even one day during the year is required to submit a detailed report to the National Tax Service (NTS). On May 23, 2024, the NTS held a briefing session at the Seoul Regional Tax Office, attended by over 70 professionals from major tax, accounting, legal firms, and financial institutions specializing in overseas asset management. This new system, introduced following the amendment of the ‘Act on International Tax Coordination’ at the end of 2023, aims to prevent asset concealment and offshore tax evasion through overseas trusts. The NTS is encouraging voluntary and accurate reporting ahead of the system’s full implementation.
According to the new reporting system, residents who maintained an overseas trust for any day in the previous year must submit their trust details to the NTS by June 30, 2025. Domestic corporations must report within six months from the end of the month in which their fiscal year ends, if they held an overseas trust for any day during the previous fiscal year. Failure to submit or submitting false information will result in a penalty amounting to 10% of the trust’s asset value. The NTS has previously worked to regularize offshore assets through mandatory reporting of overseas direct investments, real estate, and financial accounts, including virtual assets.
At the briefing, Han Chang-mok, Director of International Taxation, explained the background and purpose of the overseas trust reporting system. NTS Commissioner Lim Kwang-hyun emphasized, “This system is crucial for regularizing offshore assets held through trusts,” and stated, “As this is the first year of implementation, we will actively guide taxpayers and strictly enforce penalties for violations.” The NTS plans to publish guidance materials before the June reporting deadline and provide individual notifications to taxpayers likely to hold overseas trusts.
Going forward, the NTS will strengthen verification of non-reporters using on-site data collection, foreign exchange transaction records, and information exchange data, imposing penalties and collecting evaded income, inheritance, and gift taxes. The implementation of this system is expected to significantly reduce asset concealment and offshore tax evasion via overseas trusts. Experts predict that the importance of transparent asset management and compliance with international tax norms will increase. Taxpayers must understand the strengthened obligations and report faithfully within the deadline to avoid penalties.
The full implementation of the overseas trust reporting system marks a significant step in Korea’s efforts to combat global asset movement and tax avoidance. With the NTS adopting advanced data collection and verification methods, transparency in offshore assets is expected to improve substantially. This initiative not only secures tax revenue but also aligns with international standards for tax transparency and fair taxation. As complex offshore trust structures become harder to exploit, the roles of financial institutions and tax professionals will become increasingly important. Integrating AI-driven data analysis could further enhance the detection of unreported or evaded assets, boosting the efficiency of tax administration.