Freelancer 3.3% Refund
Estimated withholding-tax refund.
Approximate estimateBased on 2026 rulesSources: Income Tax Act · National Tax Service · Hometax
Estimated refund
313,500원
Prepayments exceed the final tax, so a refund is expected.
What is the 3.3% refund?
Freelancers (business income earners) have 3.3% (3% income tax + 0.3% local tax) withheld from each payment. At the May comprehensive income tax filing, any overpayment is refunded, or a shortfall must be paid additionally.
Calculation steps
Withheld = income × 3.3%. Income amount = income − expenses. Tax base = income amount − (dependents × personal deduction). Determined tax = progressive brackets + 10% local tax. Refund = withheld − determined tax.
How to set the expense rate
If you can document actual expenses, enter the amount directly; otherwise refer to the National Tax Service's simplified expense rate by industry code.
Why does a refund happen in May? — worked example
Each monthly payment is withheld at a flat 3.3% of gross income, without accounting for actual expenses or dependent deductions. At the May comprehensive income tax filing, the determined tax is recalculated from the tax base — income after expenses, minus personal deductions — using progressive rates. This determined tax is usually lower than the sum of monthly withholding, so the difference is refunded.
Using the calculator's defaults (40M KRW annual income, 60% expense rate, 1 dependent): withheld = 40M × 3.3% = 1.32M. Income amount = 40M − 24M (60% expenses) = 16M. Tax base = 16M − 1.5M (1 dependent) = 14.5M. Calculated tax = 14.5M × 15% − 1.26M deduction = 915,000, plus 10% local tax gives a determined tax of 1,006,500. Refund = 1.32M − 1,006,500 = 313,500 KRW — matching the example shown above exactly.
A refund is more likely if actual expenses exceed the applied rate, if you have dependents, or if credits like pension savings or insurance premiums haven't been applied yet. Otherwise, additional tax may be due. Verify the exact result on Hometax.
Switching the expense input to "expense amount" lets you enter documented actual spending instead of the industry's simplified rate. If your real, documentable expenses exceed the rate-based estimate, entering the amount directly gives a more accurate income figure and refund estimate.
How the 3.3% withholding works, and how expenses are recognised
The 3.3% withheld from freelance payments is not the tax itself but a prepayment. The real liability is settled the following May, and the difference is refunded or collected.
Why 3.3%
It is 3% withholding on business income plus 0.3% local income tax. Because the rate is flat, low earners over-pay and high earners under-pay.
That is why freelancers with modest income receive large refunds: in the lowest bracket the real rate is below 3%, and deductions widen the gap further.
Higher earners face a bill in May instead, so it is worth setting money aside as income grows.
Two ways to have expenses recognised
Either keep books, and deduct actual costs — equipment, office rent, telecoms, travel — with documentation, or do not.
Without books, expenses are estimated using official ratios. Smaller businesses may use the simplified ratio, which is generally generous and often favours freelancers with low real costs.
Above a turnover threshold the simplified ratio is unavailable and the much lower standard ratio applies, sharply raising the liability — the point at which bookkeeping starts to pay.
Business registration and VAT
Receiving payments net of 3.3% is not the same as being registered. Freelancers supplying personal services are often VAT-exempt and can work without registration.
Registering brings VAT filing obligations but allows input tax credits and the issue of tax invoices, which widens the range of clients — worthwhile as equipment spending or scale grows.
Either way the income tax filing duty is identical. Withholding statements are reported to the tax authority, so skipping the return draws penalties.
Legal basis
- Withholding on business income — Income Tax Act art. 129(1)3
- Estimated assessment and expense ratios — Enforcement Decree art. 143
- Bookkeeping duty — Income Tax Act art. 160
- VAT exemption for personal services — VAT Act art. 26(1)15