The Foreign Exchange Transactions Act considers individuals with a domicile or residence in Korea as residents, and all other individuals as non-residents. Korean nationals are considered non-residents if they engage in business activities abroad or reside abroad for more than two years. A period of stay within Korea for up to three months during a brief return visit is included in that two-year period. A foreign national who was a resident and leaves the country to reside abroad for more than three months is also considered a non-resident. Family members who primarily depend on that person for their livelihood follow the same classification.
The same Act defines the acquisition of domestic real estate by non-residents, the acquisition of securities, and the creation or change of claims arising from deposits, etc., as capital transactions. Therefore, it is necessary to consider whether reporting is required when assets are transferred to family members living abroad.
## Whether Reporting is Required Depends on the Recipient's Nationality and Assets
Foreign exchange transaction regulations differentiate based on whether the recipient is a Korean national or a foreign national.
- Domestic Real Estate: No reporting is required if acquired by a Korean national non-resident. No reporting is required even if received by inheritance or gift from a foreign national non-resident. If received as a gift by a foreign national non-resident, reporting to the Bank of Korea is required.
- Stocks and Securities: No reporting is required if received by a non-resident through inheritance or gift. No reporting is required even if a Korean national non-resident receives won-denominated securities domestically. If received as a gift by a foreign national non-resident, it is subject to reporting to the Bank of Korea.
- Deposits and Other Assets: Inheritance or gifts exchanged in won between Korean national non-residents and residents do not require reporting. The same applies when a resident receives from a non-resident. Other cases require reporting to the Bank of Korea.
Even within the same family, the outcome can vary depending on whether nationality has been changed and how assets are transferred. It’s faster to first organize family relationships, nationality, and a list of assets.
## When Sending Inherited Assets Abroad and Reporting Timing
You must submit documents proving acquisition and sale to a foreign exchange bank if you are selling an apartment inherited and sending it abroad. Overseas Koreans who are non-residents remit through a designated foreign exchange bank within the amount range of the real estate sales funds confirmation certificate or funds source confirmation certificate issued by the jurisdiction tax office. Here, overseas Koreans refer to Korean nationals with foreign permanent residency, people who have obtained foreign nationality after emigrating abroad, etc.
Transactions requiring reporting must be reported before exchange or remittance. Transactions without reporting are subject to a fine of 100 million won or less, and failure to submit a post-report is also subject to a fine of 30 million won or less. If the unreported amount exceeds 2 billion won, it may be subject to imprisonment for less than one year or a fine. Minor violations may end with a warning, but if there are two or more violations within five years, foreign exchange transactions may be suspended or restricted within one year.
## Power of Attorney and Overseas Document Preparation
If it's difficult for family members living abroad to come directly, a domestic family member or agent can proceed with a power of attorney. The basic documents are as follows:
- Photocopy of passport and other documents proving identity, along with documents showing overseas residency
- Power of attorney (if drafted abroad, it requires apostille or consular confirmation according to the country of residence)
- Gift contract, or family relationship certificate/property inheritance agreement, etc., showing inheritance relationship
- Real estate registration certificate, securities balance, bank statement, etc., showing asset information
- Notification form designated by the notifying agency (real estate notification form for real estate)
If the country of residence is a member of the Apostille Convention, one apostille is sufficient; if it is not a member, it goes through notarization and consular confirmation.
Hwang Yun-sang Administrative Agent Office handles confirmation of whether the individual is considered a non-resident and whether notification is required, preparation and submission of the notification form and attached documents, and guidance on overseas power of attorney authentication. The notification results and processing period vary depending on the agency's judgment and the condition of the documents. Costs will be provided after consultation. If you are planning to transfer assets to family members overseas, please consult us before sending money or selling assets.