Kim Young-gwon loses final appeal against income tax assessment
In short
South Korea’s Supreme Court upheld an additional income tax assessment of about 830 million won against footballer Kim Young-gwon (김영권). The court ruled that unused tax credits from China could not be applied against the credit limit for his later earnings in Japan.
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Footballer Kim Young-gwon (김영권) has lost his final appeal against an additional South Korean income tax assessment of about 830 million won. Yonhap reported on October 18 that the Supreme Court upheld the lower court’s ruling on September 23. The dispute concerned whether taxes paid in China but not previously credited could be used when calculating Korean tax on his subsequent income from Japan. [ 1 , 3 ]
Kim played for a Chinese professional club from June 2012 to December 2018 before moving to Gamba Osaka in January 2019. He remained in Japan through December 2021 and joined Ulsan HD in January 2022. When filing Korean income tax returns for 2019–2021, he combined Japanese taxes with about 600 million won in unused credits from Chinese taxes paid in 2018. [ 3 ]
The tax authorities rejected that treatment because foreign tax credit limits must be calculated separately for each country. They recalculated his liability and added about 830 million won to the 1.07 billion won he had already paid. Kim challenged the assessment after his tax tribunal appeal was dismissed, arguing that he was not a Korean resident during his time in Japan. [ 3 ]
The courts found that his personal and economic ties were closer to South Korea under the Korea-Japan tax treaty. They cited remittances of most of his Japanese income to Korea for spending, family residence in a Seoul apartment, property transactions and income from rental and football-education businesses. Kim also argued that country-specific limits should apply only when a person has businesses in several countries during the same tax year. [ 3 , 5 ]
The Supreme Court rejected that interpretation. It held that the country-by-country calculation also applies when foreign business locations are in different countries in different tax years. As a result, unused Chinese tax credits could not be deducted within the credit limit corresponding to Japanese income. [ 1 , 3 , 5 ]
Why it matters
The ruling applies the country-by-country limit on foreign tax credits to amounts carried forward between tax years. It also upheld the finding that Kim was a Korean tax resident while playing in Japan from 2019 to 2021.
Key facts
- The Supreme Court upheld Kim’s defeat on September 23, Yonhap reported on October 18. [ 3 ]
- The additional income tax assessment was about 830 million won. [ 1 , 3 , 5 ]
- Kim combined unused Chinese tax credits from 2018 with Japanese taxes in his 2019–2021 Korean returns. [ 1 , 3 , 5 ]
- The court said the country-by-country credit limit also applies across different tax years. [ 1 , 3 ]
- The courts found Kim was a Korean resident under the Korea-Japan tax treaty. [ 1 , 3 ]
Confirmed by several sources
Still unclear
- The exact additional assessment amount. Asia Economy gave 830.84 million won and Korea Economic Daily gave 830.83 million won; Yonhap rounded it to 830 million won.