Industries

Helping clients meet their business challenges begins with an in-depth understanding of the industries in which they work. That’s why KPMG LLP established its industry-driven structure. In fact, KPMG LLP was the first of the Big Four firms to organize itself along the same industry lines as clients.

How We Work

We bring together passionate problem-solvers, innovative technologies, and full-service capabilities to create opportunity with every insight.

Learn more

Careers & Culture

What is culture? Culture is how we do things around here. It is the combination of a predominant mindset, actions (both big and small) that we all commit to every day, and the underlying processes, programs and systems supporting how work gets done.

Learn more

Korea: Royalties received for use of domestically unregistered patents subject to withholding tax under U.S. treaty

Tax Tribunal decision

July 23, 2024

The Tax Tribunal on May 30, 2024, held (2024 Joong 0439) that royalties received by the taxpayer from Korean companies for the use of domestically unregistered patents were subject to withholding tax under the U.S.-Korea income tax treaty.

Summary

The taxpayer, a U.S. company specialized in developing semiconductor and intellectual property (IP) rights with respect to enhancing data center connectivity and improving memory bottlenecks, granted licenses for the use of patents owned by the taxpayer to Korean companies. The companies paid royalties to the taxpayer for the use of the patents and withheld corporate income tax at a rate of 15% under the U.S.-Korea income tax treaty.

The taxpayer filed a refund claim for the withheld taxes, arguing that the royalties were not Korea-sourced under the treaty because they were not registered in Korea.

The Tax Tribunal held that under Article 6(3) of the treaty, income from royalties is sourced based on where the property is used or where the right to use is granted. Article 93(9) of the Corporate Income Tax Act, as amended by Law No. 9267 on December 26, 2008, explicitly states that if a patent right is registered overseas and used for manufacturing or sales in Korea, the patents are considered used in Korea regardless of domestic registration status.

Read a July 2024 report prepared by the KPMG member firm in Korea

Thank you!

Thank you for contacting KPMG. We will respond to you as soon as possible.

Contact KPMG

Use this form to submit general inquiries to KPMG. We will respond to you as soon as possible.

By submitting, you agree that KPMG LLP may process any personal information you provide pursuant to KPMG LLP's Privacy Statement.

An error occurred. Please contact customer support.

Job seekers

Visit our careers section or search our jobs database.

Submit RFP

Use the RFP submission form to detail the services KPMG can help assist you with.

Office locations

International hotline

You can confidentially report concerns to the KPMG International hotline

Press contacts

Do you need to speak with our Press Office? Here's how to get in touch.

Headline