The regular reminded that capital gains tax deductions under the Repatriation Individual Account (RIA) program are determined by the settlement date rather than the trade date, meaning investors who sell too close to the deadline could receive a smaller tax benefit than expected.
The caveat was issued amid rising demand. Introduced to lure funds from overseas stock investments back into South Korea's capital market, the program provides tax incentives to eligible investors who reinvest their proceeds in domestic assets. As of the end of June, cumulative RIA accounts had reached 313,594, with assets under management totaling 2.656 trillion won ($1.9 billion), according to the regulator.
The program offers tax incentives to investors who sell overseas stocks acquired by Dec. 23, 2025, and reinvest the proceeds in South Korean equities. Investors whose transactions settle by the end of May receive a 100 percent deduction on eligible capital gains, while the deduction falls to 80 percent for settlements completed by the end of July and 50 percent by the end of December.
The difference can be significant. For an investor realizing a 20 million won ($14,400) capital gain, the tax burden rises from about 330,000 won if eligible for the 80 percent deduction to about 1.65 million won once the deduction falls to 50 percent.
To illustrate the risk, the FSS cited a complaint from an investor who sold overseas stocks on May 29 expecting to qualify for the full 100 percent deduction before the May 31 deadline. However, because the transaction was settled on June 2, the investor qualified for only an 80 percent deduction.
The regulator also reminded investors that the tax benefit is conditional. Proceeds from overseas stock sales must be reinvested through the RIA account in eligible domestic assets and held for at least one year. Eligible investments are limited to locally listed stocks, domestic equity funds including exchange-traded funds, and cash deposits held within the account. Net purchases of overseas stocks through accounts outside the RIA during the holding period may also reduce the available deduction.
It also issued guidance on other investment products. It cautioned investors considering Individual Management Account (IMA) products that early termination may be restricted and that charges can extend beyond basic management fees to include sales commissions, administrative fees and performance fees.
Separately, the regulator warned that investors using bank-managed money trust products investing in ETFs may incur additional trust fees ranging from 0.03 percent to 2.0 percent, as well as early redemption fees of up to 1.0 percent, potentially leaving actual returns below advertised target yields.
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