1. those who control their cash flow protect their wealth
every May and December, South Korea's National Tax Service's servers are swamped with traffic, as May is the month for comprehensive income tax and December is the month for comprehensive real estate tax. Whether you're a high net worth individual or a regular working person, the numbers on your tax bill are always more daunting than you might expect. In particular, the 2024 tax on imputed income and 2025 tax on real estate holdings are expected to put even more liquidity pressure on taxpayers, given the high interest rate environment and volatile asset markets.
many people assume that taxes should be paid in a lump sum when the bill arrives, no questions asked. This is partly because that's how taxes are supposed to be paid.but if you look at it from a "taxes are finance" perspective, it's a different story. countries have put in place a variety of legally guaranteed 'installment payment' arrangements to help taxpayers avoid the financial crunch that can result from paying a large tax bill all at once.
more than just a tax payment guide, this report provides a comprehensive analysis of the latest tax law changes for 2025, interest rates, and the issue of card company fee reductions to provide strategies to optimize taxpayers' cash flow. from interest-free installments of the combined income and estate taxes, to long-term deferral of the estate and gift taxes, to "tax finance" strategies using interest-free credit card installments, this report delves into the big-ticket tax payment techniques that savvy taxpayers need to know.
2. short-term liquidity strategy: The art of the interest-free split payment
"Installment payments" are one of the most basic yet powerful tools for paying taxes. this is because you don't have to put up collateral or pay interest, you just get an extension of time to pay over the threshold amount set by law. This gives you the opportunity to free up short-term cash flow, which you can then deposit in a short-term deposit or parking passbook to earn additional interest.
2.1 December relief pitcher: real estate tax payment strategies
comprehensive real estate tax (ad valorem tax) is a typical holding tax levied on home and land owners and is payable annually between December 1 and 15 (or the following weekday if it falls on a public holiday).the ad valorem tax installment scheme is considered to be a taxpayer-friendly scheme with significantly lower barriers to entry and a longer benefit period compared to other taxes.
2.1.1 Payment eligibility criteria and calculations
the key to the comprehensive real estate tax installment program is the low threshold of KRW 2.5 million. as long as the amount of tax owed exceeds KRW 2.5 million, anyone can apply.
2.1.2 6 months of interest-free benefits and economic value
the biggest attraction of the comprehensive real estate tax payment is the '6-month payment period' and 'no interest'.if you use a regular credit loan or negative passbook to pay taxes, you will incur interest costs of 5-6% per year, but if you utilize the National Tax Service's installment system, you can borrow money without interest for six months.
in addition, the comprehensive real estate tax is subject to a rural special tax (20% of the final tax amount), which can also be divided equally according to the installment ratio of the final tax, ensuring convenience in calculation and payment.
2.2 May Survival Strategy: A Guide to Comprehensive Income Tax Payments
for sole proprietors and freelancers, May is known as the month of dread. comprehensive income tax can be paid in installments, but the thresholds and time periods are different from those of the final tax, so you need to be careful.
2.2.1 Installment thresholds and calculations
the installment threshold for comprehensive income tax isKRW 10 million.although this is a higher threshold than the final tax , it is a common threshold for taxpayers with business income.
2.2.2 Installment periods and ease of application
the installment period for comprehensive income taxis 2 monthsafter the due date.while this may seem short compared to the six months for the end-of-year tax , for businesses with fast cash flow, the two-month grace period can be crucial to pay employees or defend vendor payments.
the application process is also very straightforward. there's no complicated approval process - you simply submit your comprehensive income tax return with the amount you'd like to pay in the"Tax due" box and the application is automatically completed. this is a gesture by the tax authorities to minimize the cost of tax cooperation.
2.3 November interim payment
in addition to the May tax return, there is also a process for making aninterimpayment in November. you can pay half of the previous year's tax in advance, and if the amount exceeds KRW 10 million, you can pay it on the same basis as the finalized tax return. so be sure to check this box when planning your November finances.
3. play the long game for life's big events: annual installment of inheritance and gift taxes
with the rise in real estate prices, inheritance and gift taxes are no longer just a concern for the wealthy - even owning a single apartment in a metropolitan area can trigger inheritance tax. the last thing you want to do is rush to sell your property or dispose of it cheaply in order to pay a lump sum of cash to avoid paying billions in taxes. That's where the annual installment plan comes in.
3.1 What is annual installment and how will it change in 2025?
annual installment is a system that allows you to spread your taxes over a number of years, effectively giving you a long-term, low-interest loan from the state. Unlike simple installments, you are required toprovide security foryour taxes and paya surchargein the formof interestover the period of the installment.
3.1.1 Application requirements
you can apply if your inheritance tax or gift tax liability exceedsKRW 10 million. (To avoid confusion with past regulations, it is necessary to check the exact latest legislation, and in some sources, it is sometimes confused with the provision for installment payments in excess of KRW 20 million, but the basic requirement for deferred payment is that the tax liability exceeds KRW 10 million. however, the tax liability must be secured).
3.1.2 The latest deferred payment surcharge interest rate for 2025: 3.1% per annum
the most important variable when considering deferred payment is the interest rate, which is called the 'deferred payment surcharge'.
for applications on or after March 21, 2025:3.1% APR.
how it'schanging: It's up slightly from 2.9% in 2023 , but it's higher than the low rates of the pre-2022 period and still competitive compared to recent mortgage rates (in the 3-4% range) and credit card rates (over 5%).
strategic decision: If the expected return on your holdings is above 3.1% per annum, it makes economic sense to utilize deferred taxes to protect your assets and spread out the taxes rather than sell the assets and pay the taxes.
3.2 In 2025, the game of family succession changes: up to 20 years of opportunity
the biggest buzzword in the 2024 and 2025 tax reforms is "expanding support for family succession. the deferral period has been dramatically increased to facilitate a smooth transition for small and mid-sized businesses.
3.2.1 General inheritance and gift tax deferral periods
inheritance tax: Basically , it can be spread over10 yearsfrom the date of authorization.
gift tax: Basically , it can be spread over5 yearsfrom the date of authorization.
3.2.2 Extension of family inheritance and gift tax exemptions
if you're eligible for the family inheritance credit or family succession gift tax, the deferral period is significantly extended. this is to help you reinvest your business's money instead of using it to pay taxes.
family inheritance : Up to 20 years (10 years of deferral followed by 10 years of installments or 20 years of installments), depending on the percentage of the family estate.the grace period (interest-only period) allows you to focus on stabilizing your business without the burden of repaying principal for the first 10 years.
family succession gifts : Effective for returns filed on or after January 1, 2024, the deferral period for gifts of stock for family succession purposes has been significantly expandedfrom 5 to15 years. this is a significant incentive for executives to consider family succession through inter vivos gifts.
[Table 1] Comparison of deferral periods for inheritance and gift tax (as of 2025)
category general case with family inheritance/succession exception inheritance tax 10 years up to20 years ( 10 years deferred, 10 years payable ) gift tax 5 years up to15 years ( expanded from 5 years)
4. the solution to the liquidity crisis: reinventing credit card payments in 2025
"What if I don't have the cash to pay right away, and it's complicated to set up collateral for deferred payments?"Credit cardpayments are a last resort and a surprising source of benefits. once shunned for their high fees, they're becoming the new tax payment trend, thanks to the end of 2025 fee reductions and aggressive marketing by credit card companies.
4.1 National Tax Card Payment Fee Reduction: 0.8% → 0.7
in principle, when paying national taxes (income tax, value-added tax, end-of-life tax, inheritance and gift tax, etc.) by credit card, taxpayers are required to pay a 'payment agency fee'. this is because the tax law requires that the card fee is paid by the taxpayer, not the state, for reasons of equity with cash payers.
however, asof December 2, 2025, this fee rate has been drastically reduced. this is to ease the burden on small businesses and micro-entrepreneurs who are struggling in a weak economy.
credit cards: 0.8% → 0.7%, a 0.1 percentage point reduction
debit cards: 0.5% to 0.4%, a 0.1 percentage point reduction
small business exception: Small businesses that meet certain requirements may see a larger reduction in fees for VAT and GST payments.
Insight: You might ask, " Only a 0.1% reduction?" but if your tax bill is KRW 100 million, that's a reduction from KRW 800,000 to KRW 700,000. Overall, the fee savings are expected to be around KRW 16 billion.
4.2 "Card-Tech" strategies to offset fees
even with the 0.7% fee, there are times when it makes sense to pay taxes with a card. that's when you can take advantage ofinterest-free financing andpoints/mileage offers.
4.2.1 The leveraging effect of partial interest-free financing (slim financing)
card companies runpartial interest-free financing offers that coincide with tax season (May, July, September, and December). for example , let's say you take advantage of the "10-month partial interest free (1st-3rd installment fee paid by customer, 4th-10th installment fee waived)" offer. you need to weigh the total cost of the first three installment fees plus the tax payment processor fee (0.7%) against the expected return from using the cash freed up by deferring tax payments for 10 months to save or invest. If the current parking passbook interest rate is around 3% per annum, it may be beneficial from a liquidity management perspective to slow down the cash outflow through longer-term installments of 10-12 months.
4.2.2 Opportunities to earn tax miles
most cards exclude tax payments from earning points or miles. however, there are some specialized cards that do count tax payments (e.g., certain airline mileage cards, business-only cards, etc.) if you have a card that earns 1 mile for 1,000 won and you pay 1,000 won in taxes, you'll earn 10,000 miles. if you convert the value of the miles to 15-20 won per mile, that's a benefit of about 150,000 won. even if you subtract the 0.7% fee (70,000 won), it's a good deal, so be sure to check the terms and conditions of your card carefully.
4.3 Local taxes are '0 won': card splitting newcomer
unlike national taxes,localtaxes such as property taxes, acquisition taxes, and car taxesdo not have a card payment fee. this is due to an agreement between the Local Tax Law and local governments, and is the most favorable condition for taxpayers.
4.3.1 Paying by card in installments (split payments)
since there are no fees for local taxes, you should actively utilize your card. In particular, Wetax and Seoul ETAX offer the ability to split a single billinto multiple cards.
strategy: Pay 1 million won with card A to fulfill the previous month's performance -> pay the remaining 1 million won with card B to fulfill the conditions for the new issuance event.
this is called "tilting at card windmills," and it's a clever financial trick that allows you to take advantage of the benefits of multiple cards at the same time with a single tax payment.
5. hands-on guide: Apply from home in five minutes
once you've mastered the theory, it's time to put it into practice. no need to visit the tax office, you can do it all from your PC or smartphone.
5.1 How to apply for a comprehensive real estate tax installment (based on mobile handtax)
access and login: Launch the ' National Tax Service Handtax' app and log in with a joint certificate or simple authentication.
navigate to the menu : [ Application/Submission] > [Application/Declaration] > [Application for Comprehensive Real Estate Tax] > [Application for Payment of Regular Real Estate Tax]. ( Note: If you simply go to the 'Pay' menu, only the full payment will appear, so be sure to use the 'Apply' menu)
confirm and enter an amount: The system will automatically calculate and show you the maximum amount you can pay in installments. Set the amount you can pay as your installment amount, minus the amount you can pay right away.
submit: Once you hit the Submit button, your payment will be accepted immediately and you'll be able to see your bill with the installment applied without waiting for approval.
5.2 Pay with a credit card and increase your limit
it's not uncommon to run out of credit when paying taxes. if this happens, don't panic and ask your card company for a 'temporary limit increase'.
this is a temporary increase in your creditlimit if you need money for something like a wedding , funeral, car purchase, ortax payment, as long as your credit is in good standing.
how to apply: You can request a "special limit to pay taxes" through your card company' s app's Help Center menu or call center, and your limit will usually be increased immediately or within the same day.you may be asked to provide supporting documentation (such as a bill).
6. managing risk and conclusion: finalizing your tax finances
there are certain things to keep in mind when implementing a tax payment and installment strategy.
6.1 Never pay late
if you pay your taxes late without requesting an installment agreement, you'll be charged alate payment penalty. it's 3% as soon as the payment is due, and then it snowballs to 0.022% interest every day thereafter (almost 8% per year).the " I'll pay it later" mentality is your biggest asset-eating enemy. you need to take advantage of "legal delinquency" by paying in installments, deferred payments, and credit card installments.
6.2 The irrevocability principle
taxes paid by credit cardcannot be canceled.even if you choose the wrong number of installment months, or want to switch to a different card, there's no going back - be sure to double-check the length of the installment period, whether interest is applied, and whether you're eligible for credit before hitting the pay button.
6.3 Conclusion: Save what you know, keep what you earn
the tax payment landscape in 2025 offers taxpayers more options than ever before.
for small amounts ($2.5 to $10 million): Take advantage of interest-free installment plans to buy yourself two to six months.
for larger amounts (inheritances and gifts): Plan for a 10- to 20-year time horizon by making deferred payments at 3.1% per year . this is a real tax savings when adjusted for inflation.
if you lack liquidity: Don't be afraid of the 0.7% fee and take advantage of credit card installments. it'll get you through the crisis at a much lower cost than the late payment surcharge (3%+@).
taxes are an unavoidable obligation, but when and how you pay them depends on your knowledge and strategy. we hope these strategies will help you become a smarter taxpayer who shares your tax burden and protects your assets.
FAQ: Frequently asked questions
Q. willfiling an installmentagreement increase my chances of beingselected for anaudit? A . No. Installment agreements and deferred payments are legitimate rights of taxpayers provided for by law (the Internal Revenue Code and the Inheritance and Gift Tax Act). whether or not you apply for an installment agreement has nothing to do with the selection criteria for an audit. on the contrary, following an installment plan in good faith will help you manage your creditworthiness.
Q.can I pay my corporate taxes in installments? A . Yes, you can. corporate taxes can be paid in installments if the amount of tax owed exceeds KRW 10 million. small and medium-sized businesses have two months to pay, and general businesses have one month.
Q.can I be denied permission to pay in installments? A . Yes, you may be denied if your collateral is insufficient or inadequate. the IRS will examine whether the assessed value of the collateral (such as real estate) is sufficient to cover the tax liability, so it's important to make sure you have solid collateral.