What is the Expense Reimbursement policy in South Korea?

Modified on: Mon, 17 Nov, 2025 at 5:28 PM

This guide explains the requirements for claiming business expense reimbursements in South Korea, including documentation standards, tax implications, and special rules for travel and per diems.

Tax Treatment of Reimbursements

Business Expenses: If expenses are substantiated with valid receipts and are reasonable, reimbursement of actual costs is not treated as taxable income for employees.
Per Diem Allowances: Non-taxable if:
- Within reasonable limits.
- Clearly linked to business travel.
- Supported by documentation.

Important: Any reimbursement that is purely a benefit to the employee (not business-related) may be taxable as employment income.

VAT Invoice Requirements

VAT invoices must be issued to:
Horizons Global Technology Korea Ltd. / 호라이즌스글로벌테크놀로지코리아 유한회사
This ensures the expense qualifies as a corporate business expense and allows VAT input recovery.
Do not request invoices in your personal name.

Documentation Standards

All business-related expenses over KRW 30,000 per paymentmust be supported by valid receipts:
- VAT invoice or VAT-exempt invoice.
- Credit card receipt.
- Cash receipt.
For amounts above KRW 30,000, the corporation must keep qualifying payment evidence for tax compliance.

Types of Valid Supporting Receipts

Expense Type	Threshold	Acceptable Documentation
General Expenses	KRW 30,000+	VAT invoice, VAT-exempt invoice, credit card receipt (personal card acceptable under CITL)
Entertainment	KRW 30,000+	VAT invoice or corporate credit card receipt only (personal card not acceptable)

Exception: Cash gifts for condolence/congratulation up to KRW 200,000 do not require receipts.

Travel & Transportation Expenses

Air, train, bus, taxi, rental car: Must be for business purposes and properly documented (ticket or receipt + business justification).
Rental cars/taxis: Require invoice/receipt, business purpose, and employer authorization.
Parking fees and tolls: Reimbursable separately with receipts.
Personal vehicle use: No statutory mileage rate in Korea; reimbursement must be reasonable and documented.

Per Diems & Business Travel

Internal per diem rates should align with actual cost norms.
Require trip authorization and proper documentation.
Excess or unused amounts may be treated as taxable income.

Other Key Points

Health and wellness expenses (gym, therapy, yoga) are taxable benefits unless part of an approved corporate wellness program.
Korea applies VAT (Value Added Tax):
- Standard rate: 10%.
- Business-related expenses with proper tax invoices allow input VAT deduction.

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South Korea