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Korea: Introduction of withholding tax obligation for payments to artistes companies

It has been reported that the Republic of South Korea has introduced per 1 January 2008 the obligation for Korean resident payers to non-resident entertainment companies (?artiste companies?) without a permanent establishment in Korea. Any person who pays for entertainment services to such no-resident must withhold 20% on the total payment, and submit that amount to the Korean tax authorities before the 11th of the month following the month in which the payment was made. Then, apparently, the artiste company also needs to withhold 20% on payments to artists or sportsmen who receive a salary for services in Korea from the non-resident artiste company. There is a refund procedure (with interest) for withholding tax which exceeds the tax due by either non-resident entertainment company or non-resident artiste or sportsmen taking into account the proper application of an applicable tax treaty. The reason behind the introduction of the withholding obligation is probably that the legislator and the tax offcie have the perception that compliance with the current non-resident tax liability obligation in Korea for non-resident artists and sportsmen is not adhered to properly. Apparently this is also related to the tax treaty concluded between Korea and the United States, which does not contain the typical tax treaty provision for artistes and sportsmen (Article 17 of the OECD Model) so that US performers will only be subject to Korean tax if they fulfil the usual conditions for source taxation for employees or independent persons. Whether there is a procedure to prevent withholding by proper filing of documentation has not been made public, but it will probably only be a matter of time before requests therefore will be made.
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The editors of  the Journal Sports Law & Taxation are Professor Ian Blackshaw and Dr Rijkele Betten, with specialist contributions from the world's leading practitioners and academics in the sports law and taxation fields.

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Managing editor
Dr. Rijkele Betten

Consulting editor
Prof. Dr. Ian S. Blackshaw

Editorial board

Prof. Guglielmo Maisto
Maisto e Associati, Milano

Dr. Dick Molenaar
All Arts Tax Advisors, Rotterdam


Mr. Kevin Offer
Hardwick & Morris LLP, London

Mr. Mario Tenore
Maisto e Associati, Milano


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