3.3% Comes Out at Contract, and Gets Settled Again in May

When a freelancer (business-income earner) gets paid by a client, the client is required to withhold 3.3% withholding tax up front and pay only the remainder. That 3.3% breaks down into 3% income tax + 0.3% local income tax, prepaid to the tax authority on the freelancer’s behalf — conceptually similar to how payroll deductions work for employees. For a 1,000,000 KRW contract, for example, income tax of 30,000 KRW plus local tax of 3,000 KRW = 33,000 KRW is withheld, and only 967,000 KRW actually lands in the account.

Clients must file a withholding receipt (payment statement) with the tax authority for whatever they withheld, and issue one to the freelancer on request. It records the amount paid and the amount withheld — the evidence you’ll need later to confirm tax already paid when filing comprehensive income tax. If you worked with multiple clients, the combined filings can be looked up on Hometax under "payment statement submission history," so it’s worth checking for any missing entries before filing.

Every May, freelancers file comprehensive income tax summing the prior year’s business income. The actual tax owed is recalculated from income after deducting necessary expenses, and this final figure often doesn’t exactly match what was withheld at 3.3%. If more was withheld than actually owed, the difference is refunded; if less, the difference is paid additionally. Freelancers with substantial expenses or lower income brackets often find the 3.3% withholding rate ran ahead of what they actually owe, which is why a refund is common.

Comprehensive income tax is calculated on income after subtracting necessary expenses. You can claim actual expenses backed by receipts and tax invoices, or — for smaller-scale freelancers who haven’t kept full records — the tax authority sets industry-specific simplified expense ratios and standard expense ratios that deem a portion of income as expenses. The simplified ratio applies a fixed industry percentage without receipts, but comes with eligibility conditions (mainly newer or lower-income filers); the standard ratio requires receipts for major costs like labor and rent while deeming the rest at a fixed rate. Which is more favorable depends on actual spending and industry, so it’s worth comparing case by case.

Even freelancers earning business income can fall into two different transaction types: those who issue tax invoices and those subject to 3.3% withholding only. Tax invoices are issued by the supplier on transactions carrying value-added tax, which brings a business registration and VAT filing obligation along with it. Personal-service business income exempt from VAT, by contrast, is documented with a withholding receipt instead of a tax invoice, wrapping up not with a VAT filing but with the following May’s comprehensive income tax return. It’s worth confirming with the client at contract time which category a given engagement falls into.

To estimate how much you might get back, try the freelancer 3.3% refund calculator; to check the full May comprehensive income tax by bracket, use the comprehensive income tax calculator. This guide was written from information as of 2026-07-19; expense ratio notices and rates can change yearly, so file with guidance from Hometax and a licensed tax accountant.