What is the Global Financial Income Tax

The global financial income tax is a system where, if a person's 'financial income' earned over one year exceeds a certain threshold, the excess is combined with other income (labor, business, etc.) and taxed.

Here, financial income is broadly two things.

First, 'interest income' from deposits, savings, and bonds.

Second, 'dividend income' received from stocks, funds, and ETFs.

Normally, if the combined amount of these two isn't large, the bank or brokerage takes the tax on its own (withholding) and that's the end of it. But when the amount grows, the state calls it in as subject to global taxation, saying, 'this income is quite substantial, so let's combine it with other income and calculate it properly.'

The key number is 'annual financial income of 20 million won.' If the sum of interest + dividends received from January 1 to December 31 exceeds this amount, you become subject to global taxation.

Exactly 20 million won is not subject; you must exceed it by even 1 won to be subject.

But here's an easily misunderstood part. Exceeding it doesn't mean a high rate applies to the whole amount.

Up to 20 million won ends at the 14% rate as-is (15.4% including local income tax), and only the portion exceeding 20 million won is combined with other comprehensive income and taxed at progressive rates of 6–45%.

For example, if financial income is 21 million won, the 20 million won is taxed as before and only the excess 1 million won is combined with other income and additionally calculated.

This system didn't fall out of the sky—it has its own history.

Following the real-name financial system, it was first implemented in January 1996, and at that time the threshold was 'over 40 million won per year, combined for a married couple.'

But as the 1997 IMF foreign-exchange crisis hit, implementation was briefly postponed for the 1998–2000 income years, then restarted in 2001.

In 2002, the Constitutional Court ruled that 'combining a couple's income is unconstitutional,' so couple-combining was abolished and it changed to a per-individual 40-million-won threshold.

And in 2013, the threshold was lowered to today's 20 million won. Cutting the threshold in half meant the number of people subject to it increased. It's good to remember that tax systems keep changing with the times.

The global financial income tax isn't just a tax issue. Surprisingly, the impact can be significant on health insurance premiums.

For an employed person, if income other than salary exceeds 20 million won per year, an additional health insurance premium is charged on that excess.

More greatly affected are 'dependents.' A person who was covered under a family member's health insurance without paying premiums, if they become subject to the global financial income tax, can lose dependent status and switch to a regional subscriber, paying premiums separately.

So the more dividends and interest pile up through long-term investing, the more it matters to have the habit of calculating not just 'returns' but the hidden costs of taxes and health insurance premiums too. Comparing the results of holding various assets over a long time on 'The Return of Almost Everything,' which we operate ourselves, will let you feel more concretely the difference between pre-tax returns and the amount you actually end up with.