VAT refund in South Korea: A complete guide to tax-free shopping in South Korea

South Korea is the capital of some of the world's interesting cultures, delicious cuisine, and stunning landscapes, making it an easy holiday choice for many British tourists. If you have already had enough of the cold and damp weather in the UK, hop on a plane to this vibrant country and discover why it’s one of the most visited destinations in the world!

Shopping is also something you should never miss in South Korea. With an incredible array of options, you can find everything from CDs of your favourite K-pop idols to renowned Korean skincare products, luxury brands, cutting-edge technology, and traditional crafts. Yet, you may soon realise that your spending can quickly add up while exploring the Korean shopping world.

But no worries! You can offset your holiday spending with a VAT refund. South Korea is one of the few countries that offers tax-free shopping for tourists, allowing you to reclaim up to 10% of the sales tax on many of your purchases. This article will guide you through your options for obtaining a VAT refund as a UK resident, including answers to the important questions like: how much is VAT in Korea?

Get ready for a more affordable vacation in South Korea!

There is one more way to save even more of your VAT refund in Korea, use a Wise debit card to receive your money! More on that later!

How much is VAT in South Korea?

The VAT is straightforward with only one common standard rate. The standard VAT in Korea is 10% for most purchases. Nonetheless, when buying certain cultural items, unprocessed foodstuffs, or medical products and services, you won’t need to pay any VAT at all.¹

How much VAT is refunded in South Korea?

The standard VAT rate in Korea is 10% of the purchase price, but your actual Korean tourist tax refund might be less than this. Some fees might affect your final VAT refund in Korea such as:

• Intermediary service Fees: Be aware that you will have to pay for agent administration fees that will be deducted from your refund amount. These fees can vary depending on the VAT refund agent and your total spending. You can check the exact refund amount at their counter with each agent.
• Foreign Exchange Fees: If you choose to receive your refund via a British credit card, you may incur foreign exchange fees, which can further reduce your reimbursement.

As a result, you could get a VAT refund in Korea of up to 7% of your original purchase price.

Who is eligible for tax-free shopping in South Korea?

To qualify for Korea’s VAT refund as a British tourist, you must meet the following requirements:²

• You are a non-Korean citizen staying in Korea for less than six months; or
• You are a Korean, but you only visit Korea for less than three months. You have been living in the UK for more than 2 years or holding permanent residency in the UK;
• You must take your unopened and unused goods with you out of Korea three months before purchase date; and
• Your purchase amount must be at least 15,000 KRW.

How to get VAT refund in South Korea?

There are two main ways for Brit travellers like you to enjoy a Korean tourist tax refund: you can either claim a VAT refund later at airports or downtown tax refund booths or receive a tax refund immediately at selected stores.³

Receive tax-refund receipts at the qualified store

Claim a VAT refund later: When shopping in South Korea, be sure to visit stores that are certified as tax refund brands. Look for the “Tax Refund” logo or sign displayed in the shop, or ask the sales assistants if your purchase is eligible. Most popular stores are typically certified, but it’s always a good idea to confirm. Before making payment, let the sales assistant know that you want to apply for a VAT refund. They may ask to see an official form of identification, like your passport, to verify your eligibility, so remember to bring one along.

If you qualify, the store will issue tax refund receipts. Keep these receipts in a safe place, as you’ll need them to claim your VAT refund in Korea. Without them, you won’t be able to get your money back later.

You will be able to claim your VAT refund in Korea at either the airport or downtown tax refund booths. Either way, you will need to declare your unopened/unused goods at the airport. So make sure you don’t open your goods before leaving Korea.

Downtown tax refund booths in Korea are only available at major attractions, and your purchase must not exceed 6,000,000 KRW per receipt. You will need to show the booth attendants your purchased goods, VAT refund receipt, passport, and international credit card.

Receive a VAT refund in Korea immediately: Some selected duty retailers can process your VAT refund in Korea immediately. The store assistant will then refund your VAT right away after you show your passport, as long as you can show that:

• Your purchase in one receipt is at least 15,000 KRW but less than 1,000,000 KRW;
• Total amount of your goods for the entire trip: less than 5,000,000 KRW.

Validate your goods at the airport

When you arrive at the airport, head to the check-in counter to get your boarding pass. Inform the airline staff that you have goods to declare.

If your goods are in your carry-on luggage, head directly to the Customs office after getting your boarding pass. If your goods cannot be carried on the aeroplane due to some security measures, don’t check in your goods just yet. Head to the Customs office after getting your boarding pass to validate your goods. After obtaining the Customs stamp, you can proceed to the oversized baggage counter at the check-in area.

You will need to be able to show your passport, your (unopened/unused) goods, and your receipts to the officers.

Obtain a VAT refund

You’re ready to claim your VAT refund in South Korea! Depending on the methods and tax agents you choose, you can receive your refund in cash, through your credit card, or via a digital wallet.

Keep in mind that the VAT refund in Korea may take up to 2 months to appear in your account.³

There you have it: a complete guide to tax-free shopping in South Korea. After reading this, you should feel more confident about how the VAT refund process works, and you’ll be ready to make the most of your travel savings! But there is another way to help you save even more!

If your card's denominated currency (e.g., GBP) differs from the local currency (e.g., KRW), you might need to pay a conversion when receiving the VAT refund. Your bank usually determines the conversion rate, typically with a mark-up! So your VAT refund in Korea might be even less than you expected!

If you want to bypass these foreign exchange fees, here's one suggestion: you can receive your refund conversion fee-free with a Wise debit card if no currency conversion is involved. Or, even if a currency conversion arises, Wise only charges a small fee and converts at mid-market rates - without any sneaky markups. This card lets you hold 40+ currencies, including KRW, maximising your savings for your next adventure.

Get your Wise card for a one-time fee of 7 GBP today and head to South Korea!

Get your card now

Please also be aware that tax rates and regulations may change over time. Always verify the information with official sources for the most accurate and up-to-date guidance.

Sources used for this article:

Sources last checked on 24-Sep-2024.