미국 진출 근로소득자 과세에 대한 검토 ―한미 조세조약의 금액 기준을 중심으로― = A Review of Taxation on Employment Income forWorkers Entering the U.S. ―Focusing on the Monetary Threshold in the Korea-U.S. Tax Treaty―

다국어 초록 (Multilingual Abstract)

In recent years, South Korea’s investments in the U.S. have been experiencing an unprecedented upward trend, and this increase in corporate investments has naturally led to a rise in the relocation of domestic residents to the U.S. At this point, it is necessary to review whether the Korea-U.S. Tax Treaty and domestic tax laws reasonably support the entry of South Korean residents into the U.S. from a tax perspective. This study examines the current status of Korean residents’ entry into the U.S. market, compares tax treaty provisions between Korea and the United States, conducts case studies and quantitative analysis, and proposes issues with the current system along with recommendations for improvement.
The current Korea-U.S. Tax Treaty was signed in 1976, and prior research has pointed out its outdated nature. In the treaty, income from dependent personal services (employment income) is generally recognized as taxable by the country of residence. However, unlike other tax treaties, if the provider of dependent personal services receives a salary equivalent to USD 3,000 during their stay in the source country, the source country retains the taxing rights. Given the current trade trends, this aspect of the treaty is disadvantageous to South Korea. This provision is rarely seen in other tax treaties signed by South Korea or by the U.S. with other countries, and thus requires review. In practical cases, there have been instances where key executives of South Korean companies on business trips to the U.S. were found to be at risk of taxation. Considering the salary levels of executives at publicly traded companies, even short-term business trips could pose significant taxation risks in the U.S. Furthermore, when South Korean residents become subject to taxation in the U.S. under this tax treaty, there is not only the burden of tax filing, but also the possibility that, under current interpretations, the foreign tax credit may not be applicable to income taxes paid in the source country.
Therefore, this study proposes that, like the model tax treaties, the outdated Korea-U.S. Tax Treaty should be promptly updated by removing the unnecessary income threshold for foreign employment source income, and that tax treatments for overseas workers should be aligned with those in other tax treaties. At the same time, the current foreign tax credit system for employment income should be revised to ensure that it operates smoothly in cases such as business trips abroad, allowing foreign tax credits to be applied when taxes are levied based on monetary thresholds in the U.S. Additionally, the tax exemption rules for foreign employment income, which create confusion around foreign tax credits, should be revised, and there is a need for enhanced education by domestic tax authorities for South Korean companies expanding into the U.S.