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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] South Korean investors seeking a full capital gains tax deduction under the Repatriated Investment Account (RIA) program must effectively sell their U.S. stocks by early morning Korea Standard Time (KST), industry sources said.
According to the financial investment industry on May 27, the 100% tax deduction on overseas stock capital gains applies only to transactions settled by the end of this month. The deduction rate will be reduced to 80% in June–July and further to 50% from August through year-end.
Crucially, eligibility is determined not by the order execution date but by the settlement date. Given the typical settlement cycle for overseas equities and the weekend falling on May 30–31, transactions must be completed by May 29 to qualify for the full deduction—effectively requiring sales of U.S. stocks before approximately 8–9 a.m. KST.
Investors are advised to verify settlement schedules and cut-off times with their respective brokerages, as these may vary.
To maintain eligibility, funds repatriated through RIA must be reinvested in domestic assets—such as Korean-listed stocks, equity funds, or deposits—for at least one year following settlement.
The program has already driven a notable shift of overseas investment funds back into the domestic market. As of May 19, a total of 242,865 RIA accounts had been opened across 24 securities firms, with combined assets of KRW 1.84 trillion. Of this, approximately KRW 1.21 trillion has been allocated to domestic equities and funds.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
