Business Closure VAT (Deemed Supply) Calculator

Estimate the Korean VAT due on remaining goods when a business closes — the “deemed self-supply” of leftover inventory, buildings, and depreciable assets on which input VAT was previously deducted (Value-Added Tax Act Article 10(6), Article 29(3)3, and Enforcement Decree Article 66(2)). Inventory is taxed at market value; buildings depreciate 5% per taxable period (max 20), other depreciable assets 25% per period (max 4), each times 10% VAT. Filing is due by the 25th of the month after the closure month.

Tax scenario inputs

Enter Korea-related tax assumptions in KRW. The model uses a simplified effective-rate estimate.

Supply value estimate

₩10,000,000

Output VAT

₩1,000,000

Net VAT payable

₩0

Potential refund

₩0

VAT rate used

10%

This English page is a simplified Korea-related tax planning estimate. It does not reproduce official forms, progressive brackets, exemptions, local surtaxes, filing classifications, or eligibility decisions. Confirm current Korean rules before filing, paying, investing, or restructuring.

Related calculators

This calculator is based on Korean rules — the 2026 Value-Added Tax Act and its Enforcement Decree. It estimates the VAT a general (standard) taxpayer owes on leftover business assets at closure and is for planning only; confirm your figures with a Korean tax accountant (세무사) or the district tax office before filing.

What is closure VAT on remaining goods?

When a business closes in Korea, VAT is charged on the goods it still holds — unsold inventory and business assets such as buildings, interior fit-outs, and equipment.
Because the owner already deducted (or was refunded) the input VAT paid when buying these items, the law treats any that remain at closure as if the owner “sold them to themselves” and requires 10% VAT on their remaining value.
This is called deemed supply (간주공급) or self-supply of remaining goods.

Many small business owners assume closing is finished once they file the closure report, then receive an unexpected VAT bill — sometimes millions of won — due by the 25th of the month after the closure month.
Enter each remaining asset and this tool computes the elapsed taxable periods, the remaining-value ratio, the tax base and VAT per asset, and the filing deadline.

What is taxable and what is not

Not every leftover asset is taxed.
Only goods for which input VAT was deducted are subject to deemed supply (VAT Act Article 10(1) and 10(6)).

Taxable (VAT applies)

  • • Leftover inventory / raw materials with deducted input VAT
  • • Buildings and structures with deducted input VAT (within 10 years of acquisition)
  • • Interior fit-outs, machinery, fixtures, vehicles with deducted input VAT (within 2 years)

Excluded (no VAT)

  • • Assets for which input VAT was never deducted
  • • Land (VAT-exempt) and assets used in VAT-exempt business
  • • Buildings past 10 years / other assets past 2 years (remaining value is 0)
  • • Goods transferred through a comprehensive business transfer (사업양도)

Tax base by asset type

1. Inventory (goods, raw materials, products)

Remaining inventory is taxed at its market value at the closure date (VAT Act Article 29(3)3).
VAT is 10% of that market value.

VAT = market value × 10%

2. Buildings and structures

The tax base is the acquisition cost reduced by 5% for each elapsed taxable period (Enforcement Decree Article 66(2)1).
Elapsed periods are capped at 20, so after 10 years the tax base becomes 0 and no VAT is due.

tax base = acquisition cost × (1 − 5% × elapsed periods)
VAT = tax base × 10%

3. Other depreciable assets (fit-outs, machinery, fixtures, vehicles)

All depreciable assets other than buildings are reduced by 25% per elapsed taxable period (Enforcement Decree Article 66(2)2).
Elapsed periods are capped at 4, so after 2 years the tax base becomes 0.

tax base = acquisition cost × (1 − 25% × elapsed periods)
VAT = tax base × 10%

Counting elapsed taxable periods

A Korean VAT taxable period is six months.
The first period runs 1 January to 30 June, the second 1 July to 31 December (VAT Act Article 5).

The period of acquisition counts as 0, and you add 1 for each half-year up to the period of closure (Enforcement Decree Article 66(5)).

elapsed periods = (closure year − acquisition year) × 2 + (closure half − acquisition half)

Example

A commercial building bought for KRW 300 million in March 2018 (2018 period 1), with the business closing in August 2026 (2026 period 2).
Elapsed periods = (2026 − 2018) × 2 + (2 − 1) = 17.

Tax base = 300M × (1 − 5% × 17) = 300M × 0.15 = KRW 45 million.
VAT = 45M × 10% = KRW 4.5 million.

How to use

Step 1: Enter the closure date

The taxable period containing this date drives the elapsed-period calculation for depreciable assets.

Step 2: Add remaining assets

Add inventory, buildings, and other depreciable assets.
For depreciable assets enter the acquisition date and cost (VAT-exclusive); for inventory enter the market value at closure.

Step 3: Confirm input-VAT deduction

Tick whether the asset’s input VAT was deducted.
Assets without a deduction are automatically excluded from deemed supply.

Step 4: Review the result

See total VAT, the per-asset breakdown, and the filing deadline, plus tax-saving tips and a checklist.

Ways to reduce closure VAT

Transfer the business as a whole

A comprehensive business transfer — handing over the entire operation with its people and facilities intact — is not treated as a supply of goods (VAT Act Article 10(9)2).
In that case no deemed supply arises and the closure VAT disappears.

Sell down inventory before closing; use the age rule

Selling inventory normally before closing turns deemed supply into ordinary sales, letting you collect the price and issue tax invoices.
And because buildings hit zero value after 10 years and other assets after 2 years, older assets may carry little or no closure VAT.

Frequently asked questions

Q. When is closure VAT filed and paid?

A. By the 25th of the month after the month of closure (VAT Act Article 49).
If you close in August, file and pay by 25 September.

Q. Do assets without an input-VAT deduction get taxed?

A. No.
Deemed supply applies only to goods whose input VAT was deducted, so non-deducted assets, exempt-use assets, and land are not included.

Q. Does this apply to simplified taxpayers too?

A. Not identically.
A simplified taxpayer (간이과세자) has a one-year taxable period and uses an industry value-added rate, so results differ.
This calculator is built for general (standard) taxpayers.

Q. Is the acquisition cost VAT-inclusive or exclusive?

A. Enter the VAT-exclusive supply value that the input-VAT deduction was based on (Enforcement Decree Article 66(4)).