Freelancing in Korea: What You Actually Need to Know About Invoices, the 3.3% Tax, and Bank Statements

 

Last winter, I met a designer in Hongdae who had been freelancing for eight months without knowing she needed to keep her bank statements organized for tax season. She'd been receiving payments with "3.3% deducted" in the transaction notes but had no idea what that meant or whether she needed to do anything about it. When May rolled around and someone mentioned comprehensive income tax filing, she panicked.

If you're freelancing in Korea—or thinking about starting—you've probably heard about the mysterious "3.3%" that gets deducted from your payments. You might wonder whether you need to issue invoices, how to prove your income, or what role your bank statements actually play. The Korean system for freelance work is straightforward once you understand it, but it operates differently from employment, and the terminology can feel confusing at first.

This guide walks through the practical side of freelancing in Korea: what the 3.3% withholding tax actually means, when you need formal invoices versus simple payment records, and how your bank statements fit into the tax picture.

Table of Contents

• What Does "Freelancing" Mean in Korea's Tax System?
• The 3.3% Withholding Tax: What It Is and Why It Exists
• How the 3.3% Is Calculated and Deducted
• Do You Need to Issue an Invoice?
• Bank Statements and Income Proof
• What Your Client Should Be Doing
• The May Tax Filing: Getting Money Back or Paying More
• Keeping Records That Actually Help You
• Common Mistakes Freelancers Make

What Does "Freelancing" Mean in Korea's Tax System?

In Korea, "freelancing" usually refers to earning business income (사업소득) as an individual without registering as a formal business entity. You're not an employee receiving wages, and you're not a registered business issuing tax invoices—you're somewhere in between.

This status applies to people doing project-based work: translators, designers, tutors, consultants, photographers, writers, or anyone providing services to clients on a contract basis without being hired as a regular employee. In my experience, many people fall into this category without consciously choosing it—they simply start taking on gigs and get paid.

The Korean tax office treats this income differently from salary. Instead of your employer handling everything through year-end tax adjustment (연말정산), you're responsible for filing your own comprehensive income tax return every May for the previous year's earnings.

The 3.3% Withholding Tax: What It Is and Why It Exists

The 3.3% is not your final tax bill—it's a withholding system. When a Korean client pays you for freelance work, they're required by law to withhold 3.3% of the payment and send it directly to the tax office on your behalf. You receive the remaining 96.7%.

This 3.3% breaks down into two parts: 3% income tax and 0.3% local income tax (which is 10% of the income tax). Think of it as an advance payment toward your final tax liability. It ensures the government collects at least some tax throughout the year rather than waiting until you file your return.

What surprised me when I first learned this system was that the withholding happens automatically—it's the client's legal obligation, not a choice. If someone hires you for freelance work in Korea and pays you the full amount without deducting 3.3%, they're technically breaking tax rules (though this happens more often than it should, especially with smaller clients who aren't familiar with the system).

Key takeaway: The 3.3% withholding is not your final tax rate. Depending on your total income and deductible expenses, you might get some of it refunded when you file in May, or you might owe additional tax.

How the 3.3% Is Calculated and Deducted

The calculation is straightforward. If your client agrees to pay you ₩1,000,000 for a project, they calculate 3.3% of that amount:

• Income tax (3%): ₩1,000,000 × 0.03 = ₩30,000
• Local income tax (0.3%): ₩1,000,000 × 0.003 = ₩3,000
• Total withheld: ₩33,000
• You receive: ₩967,000

The client then reports this withholding to the tax office by the 10th of the following month and pays the ₩33,000 on your behalf. This creates an official record that you earned ₩1,000,000 and that ₩33,000 was already paid toward your taxes.

One practical detail: the agreed amount should be the gross amount before tax. Some clients—especially those new to hiring freelancers—might ask whether the price you quote is "before or after tax." In Korea's standard practice, you quote ₩1,000,000, and the client withholds 3.3% from that, leaving you with ₩967,000. You don't add the tax on top like you would with VAT.

Do You Need to Issue an Invoice?

Here's where things get simpler than you might expect: if you're working under the 3.3% system and you haven't registered as a business, you cannot issue a formal tax invoice (세금계산서). That type of invoice is only for registered businesses that charge VAT.

Instead, your "proof" of the transaction comes from the withholding report your client files with the tax office. When they report the payment and the 3.3% withholding to the National Tax Service, that creates the official record. You don't need to create a government-recognized invoice.

That said, you should still create some kind of payment request or receipt for your own records and for clarity with your client. This doesn't need to be a formal tax document—it can be a simple document or email that includes:

• Your name and resident registration number (or business registration number if you have one)
• Client's name or business name
• Description of the work completed
• Gross amount (before withholding)
• 3.3% withholding amount
• Net amount you're receiving
• Date and payment deadline

I've seen freelancers use everything from Word documents to simple spreadsheets for this. The format doesn't matter as long as both parties understand what's being paid and how much is being withheld.

The business registration decision

If your freelance income becomes substantial or regular, you might consider registering as a business (개인사업자). This allows you to issue proper tax invoices with 10% VAT and potentially claim more business expenses. However, it also adds administrative work and may trigger additional obligations. Most casual or part-time freelancers stick with the simpler 3.3% system.

Bank Statements and Income Proof

Your bank statements serve two important purposes when you're freelancing: they prove you actually received the income, and they help you track your earnings throughout the year.

In Korea's apartment-heavy rental market, many people discover the importance of bank statements when they try to rent a place or apply for a loan. Unlike employees who can print an employment certificate showing their salary, freelancers need to demonstrate income through bank transaction records. Landlords and loan officers want to see consistent deposits that prove you earn enough to afford the rent or loan payments.

For tax purposes, bank statements become your backup evidence. When you file your comprehensive income tax return in May, the tax office already has the withholding reports from your clients. But if there's ever a question or audit, your bank statements show that the money actually changed hands and that you received the amounts being reported.

What matters most is keeping these statements organized by year. Most Korean banks let you download transaction histories as PDFs or Excel files through their internet banking or mobile apps. I recommend downloading these every quarter and saving them somewhere safe—not just relying on being able to access them years later through the bank's system.

Practical tip

Consider opening a separate bank account specifically for freelance income. When all your freelance deposits go into one account and personal expenses come from another, it's much easier to track your income and prove it when needed. This separation also simplifies record-keeping for any business expenses you might want to deduct.

What Your Client Should Be Doing

Understanding your client's obligations helps you know what to expect and what to ask for. When a Korean business or individual pays you for freelance work, they have specific responsibilities:

First, they must withhold the 3.3% and remit it to the tax office by the 10th of the following month. This is done through a withholding tax report (원천세 신고).

Second, starting from July 2021, they're required to submit a simplified payment statement (간이지급명세서) to the tax office by the end of the month following payment. Previously this was only done annually, but the government wanted more real-time tracking of freelance income.

Third, by the end of February each year, they must submit a full payment statement (지급명세서) summarizing all payments made to you during the previous year. This is the document that feeds into the tax office's records and shows up when you go to file your comprehensive income tax return in May.

You don't need to monitor whether your client does all of this correctly—it's their legal responsibility, not yours. However, it's worth knowing about because if a client fails to report properly, it can create confusion when you file your taxes and find that some income isn't showing up in the tax office's system.

The May Tax Filing: Getting Money Back or Paying More

Every year from May 1 to May 31, individuals with business income must file a comprehensive income tax return (종합소득세 신고) for the previous year. This is when the 3.3% withholding gets reconciled against your actual tax liability.

Your actual tax depends on your total income and allowable expenses. Korea's tax system gives freelancers a choice: you can either document your actual expenses (장부기장) or use a standard expense deduction (단순경비율 or 기준경비율) that varies by industry.

For many freelancers, especially those without substantial documented expenses, the standard deduction works out better. The government assumes a certain percentage of your income went to business expenses—this percentage depends on your type of work and your total income level. After applying this deduction, your taxable income is calculated, and then progressive tax rates are applied to determine what you actually owe.

Here's the key point: if the amount you already paid through 3.3% withholding exceeds your actual tax liability, you get a refund. If your actual tax is higher than what was withheld, you pay the difference.

In practice, many lower-to-moderate-income freelancers receive refunds. The 3.3% flat rate often exceeds what they actually owe after deductions and credits are applied. But as your income grows, the progressive tax rates kick in, and you might find yourself owing additional tax in May.

Worth noting: Filing is mandatory even if all your income was already withheld at 3.3%. Skipping the filing doesn't make sense because you might be entitled to a refund, and failing to file can result in penalties if the tax office expects a return from you.

Keeping Records That Actually Help You

The administrative side of freelancing can feel tedious, but a simple system makes everything easier when tax season arrives or when you need to prove your income for other purposes.

At minimum, keep these records for each project or payment:

• Contract or agreement (even if it's just an email exchange)
• Your payment request or invoice (the informal document mentioned earlier)
• Bank transfer confirmation showing the net amount received
• Any correspondence about the project scope and payment terms

If you plan to claim actual expenses rather than using the standard deduction, you'll also need receipts for business-related purchases. This could include equipment, software subscriptions, coworking space fees, transportation, or meals with clients. Keep both the physical receipts and digital records (credit card statements, Kakao Pay transaction histories, etc.).

One habit that helps: at the end of each month, spend 20 minutes reviewing all income received and expenses paid that month. Update a simple spreadsheet with dates, clients, amounts, and notes. This running record makes May tax filing infinitely less stressful than trying to reconstruct an entire year from scattered bank statements and email searches.

Common Mistakes Freelancers Make

From watching friends navigate Korean freelancing and talking to people who've hit snags, these are the mistakes that come up repeatedly:

Frequent pitfalls

• Not asking whether 3.3% was withheld: Some clients, especially individuals or very small businesses, might not know they're supposed to withhold. If you receive the full amount, you need to set aside money for taxes yourself.
• Losing track of small payments: That ₩200,000 translation gig seems minor, but it adds up. All income should be tracked and reported.
• Assuming the 3.3% is "final": As explained earlier, it's a withholding, not a settlement. You still need to file in May.
• Mixing personal and business finances completely: When every transaction runs through one account with your salary, online shopping, and freelance payments all mixed together, proving income becomes unnecessarily complicated.
• Ignoring the May deadline: Comprehensive income tax filing is mandatory for business income earners. Missing the deadline triggers penalties and interest.

Another issue I've seen: people working for foreign companies while living in Korea sometimes think they're exempt from Korean tax rules because the client is overseas. This isn't correct—if you're a Korean tax resident (typically defined as living here for more than 183 days per year), you owe Korean tax on worldwide income, including payments from foreign clients. The 3.3% withholding won't happen automatically in this case, but you're still responsible for reporting the income and paying tax on it.

FAQ

What if my client didn't withhold 3.3% and paid me the full amount?

You're still responsible for reporting this income and paying tax on it when you file in May. Set aside roughly 5-15% of the payment (depending on your total income level) to cover the tax you'll owe. Your client may face penalties for not withholding properly, but that's their problem, not yours—your obligation is to report and pay tax on what you earned.

Can I deduct business expenses if I use the 3.3% system?

Yes, but you have two options. You can keep detailed records and claim actual expenses, or you can use the simplified standard expense deduction based on your industry and income level. For many freelancers, the standard deduction is easier and often results in a similar or better outcome unless you have significant documented business costs.

Do I need to register a business to freelance in Korea?

No. You can work as an individual freelancer under the 3.3% withholding system without business registration. Registration becomes worth considering if you're earning substantial income regularly, want to issue formal tax invoices, or need to establish business credibility with clients.

How do I prove my freelance income when applying to rent an apartment?

The most common methods are showing bank statements with regular deposits, providing a copy of your comprehensive income tax return from the previous year (including the tax payment receipt), or getting a certificate of income amount (소득금액증명원) from the tax office. Different landlords accept different documentation, so ask what they need before preparing documents.

What happens if I don't file the May tax return?

The tax office will eventually notice—they have the payment statements from your clients showing you received income. You'll face late filing penalties (typically 20% of the tax owed, potentially reduced if you file voluntarily before being notified) plus interest on unpaid tax. Even if you're expecting a refund, failing to file means you don't get that money back.

Disclaimer

This article is for general informational purposes only and does not constitute legal, tax, or financial advice. Korean tax laws and regulations change periodically, and individual circumstances vary significantly. For specific guidance regarding your freelance income, withholding obligations, or tax filing requirements, please consult a qualified Korean tax professional or contact the National Tax Service directly. The 3.3% withholding rate and related procedures described here reflect common practices as of early 2026 but should be verified against current regulations.