영세율: zero-rated exports, and why they are not the same as exempt

Two different Korean VAT treatments both come out as “no VAT charged” on an invoice. They are not the same thing, and conflating them is one of the more common filing errors foreign buyers make.

Why the difference matters to the supplier

Under zero-rating the supply remains within the VAT system, taxed at nought. The supplier charges you nothing but still recovers the VAT it paid on its own inputs. Under exemption the supply sits outside the system, and the supplier cannot recover its input VAT — so that cost is usually buried in the price you pay.

This is why an exporter will happily quote zero-rated, while an exempt supplier may quote higher than you expect. The tax is still there; it has just moved.

Why it matters to you

A zero-rated supply produces a proper 세금계산서 showing VAT at zero. That is a normal tax document, and your own accounts and customs paperwork will expect it. An exempt supply produces a 계산서, which is a different document — and if your finance team is reconciling against an expected tax invoice, it will not match.

Services are less obvious than goods

Physical exports are relatively clear. Services supplied to an overseas customer are more involved, with treatment depending on where the service is deemed supplied and how it is paid for. If you are buying development work, design or consultancy from a Korean supplier, do not assume zero-rating applies simply because you are abroad — ask the supplier what treatment they intend to apply, and confirm it with your own adviser.

Either way, the supplier must be VAT-registered and actively trading to issue a valid tax invoice at all. That is the first thing to establish — see the guide to taxpayer types.