‘Estimated annual salary of 2 billion won’ Klinsmann earns money in Korea, pays taxes in the US?
At his inaugural press conference in March, Klinsmann, the coach of the windswept Korean national soccer team, said, “It’s normal for me to live in Korea as the head coach of the Korean national team,” a reference to Sangju.
However, more than six months into his tenure, Klinsmann has only been in South Korea for a little over two months.
In a recent interview in the United Kingdom, Klinsmann, who constantly emphasized the word “international,” said he has no intention of staying in the country, saying he has an obligation to keep up with soccer trends on the international stage.
However, an unexpected problem arises when Mr. Klinsmann is not physically present in Korea.
Generally, under the Income Tax Act, a foreigner is considered a “resident” if they stay in Korea for more than 183 days, and a “non-resident” if they stay for less than 183 days. Even if Mr. Klinsmann spends all of 2023 in Korea, he will not be a resident for more than 183 days, making him a non-resident under Korean tax law.
However, there is a big difference between resident and non-resident when it comes to paying taxes.
If you stay for more than 183 days and become a ‘resident’, you will be obliged to pay the tax withheld when you receive your income, and then pay additional income tax through a comprehensive income tax return in May or June of the following year.
For Mr. Klinsmann, who earns an estimated $2 billion a year, the highest tax bracket would be 49.5% (including local taxes).
However, if Klinsmann fails to fulfill the 183 days and becomes a non-resident, he will only have to pay 22% withholding (including local taxes) and will not have to pay comprehensive income tax in Korea, which could be up to hundreds of millions of won.
The irony is that Klinsmann, who is in a “public position” as the head coach of the South Korean national soccer team, pays taxes on his billions of won salary, which is made up of “public funds” such as taxes from the public and sports funds, in the United States rather than in South Korea, where he lives.
Experts have also pointed out that this is highly contrary to public sentiment.
“In the past, foreign managers of the Korean national soccer team were naturally classified as ‘domestically resident’ foreigners under the tax law because they usually stayed in Korea for a contract period of one year or more. Therefore, they not only withheld income from the soccer federation, but also paid ‘additional taxes’ through a final return. However, Klinsmann’s status as a ‘non-resident’ under the tax law meant that he was likely to pay only a ‘lower rate’ of 22% tax on his domestically generated income. The problem is compounded if the soccer federation that pays Klinsmann’s salary withholds 3.3% under Article 129, paragraph 1 of the Income Tax Act, rather than 22% based on the length of his contract of three years and five months. Given the symbolism of the position of national soccer team manager, and the fact that foreign managers have paid taxes in the past, I’m not sure how much the public will appreciate this.”
Despite the ongoing controversy, Klinsmann, an internationally-minded coach, will not be returning to Korea this time, 바카라사이트 but will travel to Germany to check on Ballon d’Or candidate Kim Min-jae.