Criteria for Distinguishing Residents and Non-Residents in the Foreign Exchange Transactions Act Released

In interpreting the imposition of obligations under the Foreign Exchange Transactions Act, it is necessary to clearly distinguish between 'residents' and 'non-residents'.

In this law, residents are defined as 'individuals with an address or residence in the Republic of Korea and corporations with their main office in the Republic of Korea', and non-residents are defined as 'individuals and corporations other than residents'.

If the above definitions are not clear enough, specific criteria are provided below, and in judging based on the following contents, it is also required to judge based on the substantial center of economic activity.

Residents

- Corporations, etc.: Korean diplomatic missions abroad, organizations with their main office in Korea, institutions, and other similar organizations

- Nationals: Those dispatched abroad for the purpose of working at Korean diplomatic missions, those who were non-residents and have entered and stayed in Korea for more than three months

- Foreigners: Those engaged in business activities in Korea, those staying in Korea for more than six months

Non-residents

- Corporations, etc.: Foreign government missions in Korea, international organizations, United States military and equivalent UN forces, business offices and offices of domestic corporations abroad

- Nationals: Those engaged in business activities abroad, those working in international organizations abroad, those staying abroad for more than two years (if they return temporarily and stay for less than three months, that period is included in the two years)

- Foreigners: Diplomats, consuls, or their attendants or employees working at foreign government missions or international organizations in Korea, those entering for official duties of foreign governments or international organizations, foreigners who were residents and have left Korea and stayed abroad for more than three months

Co-resident family

- Those who primarily maintain their livelihood by a resident or non-resident follow the classification of the respective resident or non-resident

As you can see from the above classification criteria, if a foreigner stays in Korea for more than six months, they are obligated as a resident, and if a foreigner who was a resident with an address in Korea stays abroad for more than three months after leaving, they are treated as a non-resident again. Therefore, it is necessary to carefully check whether you are a resident or non-resident according to your situation in terms of obligations under the Foreign Exchange Transactions Act.