[Yoon Administration Tax Law] Stock Option Tax Exemption Limit Raised from 50 Million Won to 200 Million Won

President Yoon Suk-yeol is arriving at the Yongsan Presidential Office Building in Seoul on the morning of the 19th. [Image source=Yonhap News]

The government will raise the tax-exempt limit on stock options from the current 50 million KRW to 200 million KRW to attract talent to venture companies. Additionally, tax incentives to revitalize startup and venture investments will be expanded.

On the 21st, the Ministry of Economy and Finance announced the '2022 Tax Reform Plan' containing these measures.

First, the tax-exempt limit on stock option exercise gains will be significantly increased from 50 million KRW per year to 200 million KRW, and a cumulative limit of 500 million KRW will be newly established.

The tax exemption benefit on stock options for executives and employees of venture companies was abolished in December 2006 but reintroduced in January 2018. The tax-exempt limit was raised from 30 million KRW in 2020 to 50 million KRW this year, but the government plans to increase it fourfold through tax law amendments.

The plan aims to reduce tax burdens to help venture companies easily recruit and retain key talent for growth. From the venture industry's perspective, preventing the outflow of executives and employees is crucial, so they have emphasized the need to ease tax burdens.

Furthermore, even if income tax is imposed when stock option exercise gains exceed the tax-exempt limit, the government will allow payment in installments over up to five years instead of a lump sum.

Currently, this applies only to unlisted and KONEX-listed venture companies, but it will be expanded to include KOSDAQ and KOSPI-listed venture companies in the future.

The Ministry of Economy and Finance will also extend the application period of related tax incentives by three years to support the revitalization of startup venture investments.

Accordingly, capital gains and dividend income will be tax-exempt when investing in venture companies such as startup investment firms, and a 5% tax credit on the investment amount will be granted when general domestic corporations invest in venture companies. Additionally, capital gains of angel investors will be tax-exempt, and the investment amount will be deductible from income.

An angel investor refers to an individual investor who provides funding and management guidance to early-stage venture companies that have technological capabilities but lack capital. During his candidacy, President Yoon Seok-yeol sought ways to support angel investments to foster a startup growth ecosystem.

The Ministry of Economy and Finance plans to expand the proportion of angel investor shares eligible for tax incentives in startup investment firms from 10% to 30% of the capital increase amount to revitalize the venture exit market.

This content was produced with the assistance of AI translation services.