Gross-up이 무엇인가요?

The Gross-up system is a mechanism designed to prevent double taxation on dividend income for individual shareholders.

Key Points:

• Purpose: When a corporation distributes profits as dividends, these profits have already been taxed at the corporate level. Without the Gross-up system, shareholders would be taxed again on the same income at the individual level, leading to double taxation.
• Mechanism: The Gross-up system effectively "grosses up" the dividend income received by an individual shareholder. This means a certain percentage (11% in this context) is added to the actual dividend received. This increased amount is then included in the shareholder's total income for calculating income tax.
• Dividend Tax Credit: To offset the tax paid at the corporate level and the tax on the "grossed-up" amount, a dividend tax credit is provided. This credit is calculated based on the "grossed-up" amount and is deducted from the calculated income tax.
• Application: This system primarily applies when the total financial income (interest and dividends) exceeds KRW 20 million. If the financial income is KRW 20 million or less, it is typically subject to separate taxation at a flat rate of 15.4%.
• Calculation Example: If a shareholder receives KRW 30 million in dividends and has other dividend income of KRW 20 million, the total dividend income is KRW 50 million. The amount exceeding KRW 20 million (KRW 30 million) is subject to Gross-up. The Gross-up amount would be KRW 30 million * 11% = KRW 3.3 million. This KRW 3.3 million is added to the total income for tax calculation. Subsequently, a dividend tax credit, calculated based on this Gross-up amount, is applied.