Tax Treaty
Korea-US Tax Treaty: Why There's No Estate Tax Treaty
In Brief
The Korea-US Tax Convention (1979) covers income tax only. Unlike Japan, the UK, and Germany, Korea has no estate tax treaty with the US. The fix is the IRC §2014 unilateral foreign death tax credit, claimed via Form 706-CE.
What the Treaty Covers
The 1979 convention applies to income taxes. For US-person heirs receiving ongoing income from inherited Korean assets, it caps Korean withholding:
| Income Type | Standard Korean Rate | Treaty Rate |
|---|---|---|
| Dividends | 22% | 15% |
| Interest | 22% (or 14%) | 12% |
| Royalties | 22% | 15% |
These rates apply via Form W-8BEN, with a US foreign tax credit (Form 1116) offsetting US income tax.
What the Treaty Does NOT Cover
The US has dedicated estate tax treaties with Australia, Austria, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Netherlands, Norway, South Africa, Switzerland, and the United Kingdom. Korea is not on this list.
This means no treaty-based reduction of US estate tax, no treaty QDOT relief, and no treaty domicile tiebreaker for Korean-American estates.
What Works Instead: IRC §2014
US law independently allows a credit for foreign death taxes (IRC §2014). Korean inheritance tax is recognized as "substantially similar" to US estate tax. The executor files Form 706-CE after Korean tax is paid and claims the credit on Form 706 Schedule P. This is statutory, not treaty-based — same effect, but subject to US domestic law. See our Form 706 guide.
Common Questions
Does the treaty reduce my Korean inheritance tax? No — Korean inheritance tax is imposed unilaterally by Korean law. The treaty is income tax only.
Can double taxation on inheritance be eliminated? For ongoing income: mostly yes (treaty + foreign tax credit). For the estate transfer: mostly yes via IRC §2014. For Korean inheritance tax itself: no way to eliminate.
Coordinated Across Both Countries
We provide the Korean tax payment certificate for your Form 706-CE.
Free ConsultationGeneral information only, not legal advice. Tax treaties are complex; consult qualified counsel.