Korea Mixed-use Building and Shared Input VAT Apportionment Calculator
Review Korean 2026 shared input VAT using sales, direct purchases, expected sales or building area. Separate small-amount exceptions, final settlement and period-by-period asset recalculation from an actual VAT refund.
What is common input VAT for a mixed-use building or business?
A building containing commercial and residential space, or a shop making taxable and exempt supplies, may incur costs that serve both activities.
Before claiming or abandoning all VAT on an invoice, identify which activity actually uses each input.
Article 40 of the Korean VAT Act gives priority to actual attribution and applies statutory allocation rules to common input VAT whose attribution cannot be distinguished.
This calculator separates the current potential credit and non-creditable amount, settlement when estimates become established, and later recalculation following ratio changes.
South Korea rules, reviewed for 2026
Check the basis for the current input, the settlement when area or supply figures become established, and any subsequent payment or credit adjustment.
These outputs may concern different transactions and periods; adding them does not give the final refund for the current return.
Amounts are in KRW and a potential credit remains subject to valid evidence, business use and the full Korean VAT return.
Enter actual VAT, rather than the construction budget
Separate tax from transaction value
For a KRW 1,000,000,000 net transaction with KRW 100,000,000 VAT, the starting VAT amount is KRW 100,000,000.
Do not enter the net amount or the KRW 1,100,000,000 gross budget as input VAT.
First separate inputs attributable directly to taxable activities and directly to exempt activities from the common amount.
Separate land and exempt services
Enter land-related VAT mistakenly included in the common amount separately; it is removed from the allocation base and shown as non-creditable.
This field is not the purchase price of the land itself.
An invoice for exempt national housing construction services contains no input VAT, so its value should never enter the common VAT amount.
Use taxable and exempt supply values related to the common input for the relevant tax period, excluding output VAT from taxable values.
The statutory exempt-supply amount can include relevant government or public subsidies and similar receipts, so copying only accounting revenue may produce a different ratio.
A direct-purchase basis excludes common purchases from its denominator; projected supplies and planned use areas must remain distinct from actual supplies.
Use m² consistently for all areas, and reconcile the taxable and exempt areas with the supporting plans.
Which allocation basis takes priority?
- Continue the planned-area basis where an earlier building or structure allocation must be maintained until actual use areas are established.
- Otherwise, use actual supply values when both taxable and exempt supplies exist.
- When one or both supply values are absent, prioritize planned use area for a newly built or acquired building or structure whose taxable and exempt planned areas can be distinguished.
- For other cases with missing supplies, look for an available basis in this order: direct purchase values excluding common purchases, projected supply values, then planned use area.
This sequence distinguishes Decree Article 81(1), 81(4) and 81(5).
It does not allow choosing the most favorable ratio or treating zero exempt revenue during construction as an automatic full credit.
Each alternative requires a positive denominator from its taxable and exempt figures; if all supporting totals are zero, no allocation ratio can be calculated.
Compare the selected basis and its explanation with the actual transaction.
Why planned area can continue after revenue starts
If planned area was used under the proviso to Article 81(4), the appearance of both commercial and residential rental income does not replace it before use areas are established.
Distinguish a revised plan from establishment of actual use areas, and review the Article 82(2) settlement in the establishment period.
The exact 5%, KRW 5,000,000 and KRW 50,000 boundaries
Actual exempt supplies below 5%
Review the full-credit exception when the exempt share of actual supplies is below 5% and common input VAT is below KRW 5,000,000.
A share of exactly 5% or VAT of exactly KRW 5,000,000 fails this exception.
This tool tests that condition only on the actual-supply basis.
Common input VAT below KRW 50,000
The separate small-amount exception applies when common input VAT for the tax period is below KRW 50,000.
KRW 49,999 meets the amount boundary, while KRW 50,000 does not.
Land-related VAT removed from the allocation base does not become creditable through this exception.
Actual taxable supplies of KRW 96,000,000 and exempt supplies of KRW 4,000,000 give an exempt ratio of 4%.
Common VAT of KRW 4,999,999 can meet the below-5% exception, whereas KRW 5,000,000 produces KRW 200,000 of non-creditable common VAT under ordinary allocation.
An exempt planned-area share of 4% is different from an actual exempt-supply ratio of 4%.
Do not substitute a low planned-area, projected-supply or direct-purchase ratio for the actual supply test.
The KRW 50,000 and KRW 5,000,000 boundaries concern total common input VAT for the relevant tax period, rather than each invoice.
Do not split invoices into separate calculations to obtain an exception for every item.
Recheck a provisional-return result against the full tax-period totals at the final return.
Work through the ledger and building plans
- Confirm general VAT status and the tax period, then classify invoices as directly taxable, directly exempt or common use.
- Enter common VAT and included land-related VAT, and review the evidence and attribution confirmations.
- Enter actual supply values and any necessary alternative figures; confirm planned-area priority or continuation of an existing area basis.
- Reconcile the current basis, exempt ratio, exception, potential credit and total non-creditable amount with the ledger.
- Add settlement when estimates become established; create a separate later recalculation table where a depreciable asset ratio changes.
- Save the review statement with supporting evidence and confirm the applicable provisions and exclusions with a tax adviser before filing.
After changing inputs, calculate again and confirm that the displayed result reflects the new figures.
Zero means a figure is actually absent; it is not evidence for a blank or an unverified value.
A scenario using estimated area or tax remains a scenario, without establishing an eligible credit or actual refund.
Distinguish provisional-return settlement from Article 82 settlement
From a provisional to a final return
Allocation under Article 81(1) uses the provisional reporting period ratio and is settled at the final return.
This mode recalculates the potential credit from actual supplies and total common VAT for the whole tax period, and tests the applicable exceptions again.
A credit taken on the provisional return should not simply be carried forward unchanged.
When projected supply or use area becomes established
If Article 81(4) used direct purchase values or projected supplies, review Article 82(1) settlement in the period when supply values become established.
If it used planned use areas, review Article 82(2) settlement in the period when actual use areas become established.
This tool does not mechanically carry the Article 81(2) below-5% or small-amount exceptions into those two settlements.
Confirm cumulative common VAT and the amount already credited separately from the current allocation inputs.
For construction invoices spanning several periods, reconcile the cumulative scope and past credits without including land-related or directly attributable amounts again.
Select the period in which supplies or use areas actually become established; a projected completion date alone does not establish the filing period.
Read the settlement sign
Final potential credit = cumulative common input VAT × (1 − final exempt ratio).
Settlement difference = final potential credit − amount already credited.
A positive difference means additional credit, a negative difference means additional payment, and zero means no change.
The review statement truncates fractions of a won in non-creditable amounts; final filing conventions can produce a rounding difference.
Allocation and settlement for KRW 100,000,000 common VAT
Assume eligible common input VAT of KRW 100,000,000 after removing land-related inputs, with planned taxable area of 400m² and exempt area of 600m².
The planned exempt ratio is 60%, producing KRW 60,000,000 non-creditable VAT and a KRW 40,000,000 potential credit.
Holding total common VAT constant, a change in final areas produces the following settlement.
| Scenario | Taxable / exempt area | Potential credit, KRW | Settlement, KRW |
|---|---|---|---|
| Planned basis | 400 / 600m² | 40,000,000 | Prior credit 40,000,000 |
| More taxable area | 450 / 550m² | 45,000,000 | Additional credit 5,000,000 |
| Less taxable area | 350 / 650m² | 35,000,000 | Additional payment 5,000,000 |
If the entered KRW 100,000,000 includes KRW 10,000,000 land-related VAT, the allocation base is instead KRW 90,000,000.
At a 60% exempt ratio, the potential credit is KRW 36,000,000 and non-creditable common VAT is KRW 54,000,000; including land-related VAT gives KRW 64,000,000 total non-creditable VAT.
These examples demonstrate the arithmetic and do not replace classification of individual construction inputs.
Later recalculation uses a 5 percentage point difference
VAT Act Article 41 and Decree Article 83 address a depreciable asset whose exempt ratio changes by at least 5 percentage points from acquisition or the most recent recalculation.
Moving from 60% to 65% is exactly 5 percentage points and reaches the threshold.
Continue comparing related supply ratios if the original basis was supplies, or related use-area ratios if it was area.
Do not treat the result as a filing amount before confirming the original allocation and exclusions such as Article 66.
Use whole-asset VAT and the original acquisition date
Payment adjustment = whole-asset input VAT × residual factor × (new exempt ratio − reference exempt ratio).
For buildings and structures, the residual factor is 1 − 5% × elapsed tax periods, capped at 20 periods.
For other depreciable assets, it is 1 − 25% × elapsed tax periods, capped at 4 periods.
The acquisition period is period zero; add one per subsequent half year and never let the residual factor fall below zero.
Do not use only the earlier credited amount as the base, and do not restart elapsed periods after an intervening recalculation.
Compare cumulatively against the last recalculation ratio
Assume whole-asset VAT of KRW 100,000,000, acquisition in the first half of 2026 and an initial exempt ratio of 60%.
The following Article 83 example assumes that Article 66 deemed-supply treatment, the asset-sale-period exclusion and other exclusions have been confirmed inapplicable.
A row below the threshold leaves the reference unchanged; a row reaching it updates the reference for later comparisons.
| Tax period | New / reference ratio | Elapsed / residual | Recalculation, KRW |
|---|---|---|---|
| 2026 second half | 64% / 60% | 1 / 95% | 4 pp · below threshold |
| 2027 first half | 65% / 60% | 2 / 90% | Additional payment 4,500,000 |
| 2027 second half | 69% / 65% | 3 / 85% | 4 pp · below threshold |
| 2028 first half | 60% / 65% | 4 / 80% | Additional credit 4,000,000 |
In a separate single-change scenario, a move from the original 60% to 70% in the first half of 2029 occurs six periods after acquisition, with a 70% residual factor.
KRW 100,000,000 × 70% × 10 percentage points gives KRW 7,000,000 additional payment.
Using the original KRW 40,000,000 credit as the base would apply the allocation share twice and understate this amount.
Future-period examples hold the current 2026 rules constant and do not establish future tax legislation.
Practical use for building owners and mixed businesses
Building or acquiring mixed-use property
Use plans distinguishing taxable and exempt intended areas together with invoices for common construction work to review the initial potential credit.
Distinguish later revenue changes from establishment of actual use areas, and collect past period credits to reconcile cumulative settlement VAT.
Before a change in use, review exempt conversion and deemed-supply treatment as well as the formal building-use classification.
Operating a mixed taxable and exempt shop
For a pharmacy or food-supply shop, reconcile supplies actually classified as taxable or exempt with VAT on shared rent or common interior work.
The industry label alone does not establish the treatment of every sale.
When one supply category is absent during startup, identify an applicable alternative basis and supporting evidence instead of choosing an arbitrary prior-year ratio.
When the result must be held for review
Exempt conversion, closure and disposal require separate checks
Decree Article 83(4) excludes recalculation where Article 66 applies.
Article 66 can cover certain partial exempt use as well as full conversion or closure.
Also check the exclusion for the relevant asset supply period under Enforcement Rule Article 55(3).
Hold the recalculation amount when applicability is unconfirmed or an exclusion applies, and review the transaction first.
- The tool excludes simplified VAT, special allocation such as slaughter counts, all-workplace aggregation for telecommunications or railways, pre-registration credit eligibility and penalties.
- Recheck the ledger if land-related VAT exceeds the entered VAT, or if prior credits exceed cumulative common VAT used for settlement.
- Enter up to 20 period rows chronologically without duplicates, exempt ratios from 0 to 100%, and whole-won tax amounts from zero to KRW 1,000,000,000,000.
- The result does not establish lawful area classification, invoice validity, exempt-business status or national housing construction exemption eligibility.
Review the broader return in the VAT refund and tax savings calculator, and check deemed-supply scope with the business closure VAT calculator.
For purchases before registration application, use the pre-registration input VAT calculator to review timing and evidence conditions.
Frequently asked questions
Does a 40% commercial area guarantee a refund of 40% of construction VAT?
No.
It describes a potential credit only when an eligible common input amount must be allocated by area.
First remove directly attributable residential inputs, land-related VAT, exempt construction services and other exclusions.
The actual refund depends on the complete VAT return, including output tax and other credits or adjustments.
Is the amount on an exempt housing construction invoice common input VAT?
An invoice for an exempt construction service contains no input VAT to allocate.
Do not enter its net amount or a gross construction budget in the common VAT field.
Eligibility for the national housing and construction service exemption under Article 106(1)(4) of the Restriction of Special Taxation Act requires a separate review of the contract, supplier and other conditions.
Should an initially area-based building switch to revenue once rental income starts?
When the building or structure was allocated by planned area under the proviso to Decree Article 81(4), that basis continues until actual use areas are established.
The appearance of taxable and exempt revenue alone does not change it.
Review the Article 82(2) settlement for the tax period in which the use areas become established.
What happens at exactly 5% or exactly KRW 5,000,000?
The below-5% exempt-supply exception excludes a ratio of exactly 5%.
It also excludes common input VAT of KRW 5,000,000 or more.
The separate small-amount exception requires less than KRW 50,000, so exactly KRW 50,000 does not qualify.
Does a planned exempt area of 4% qualify for the below-5% supply exception?
A planned area share of 4% is not an actual exempt-supply share of 4%.
This tool tests the below-5% supply exception only on the actual-supply basis.
It does not transfer that exception automatically to planned or final area settlement.
Do positive settlement and recalculation amounts mean the same thing?
The settlement difference equals the final potential credit minus the amount already credited.
A positive difference means additional credit and a negative one means additional payment.
Later recalculation is shown as a payment adjustment, so a positive amount from a higher exempt ratio means additional payment and a negative amount means additional credit.
Read the payment or credit label beside the number.
Does recalculation restart the building depreciation clock?
No.
Only the ratio used for the next comparison changes to the ratio of the most recent recalculation.
Elapsed tax periods for the residual factor continue from the original acquisition period.
The cap is 20 periods for buildings and structures, and 4 periods for other depreciable assets.
Can this table handle converting the whole building to housing or selling it?
Exempt conversion or closure subject to Decree Article 66 and the tax period of an asset sale require separate review.
Even partial exempt use may fall under Article 66, so a partial change alone does not establish that Article 83 applies.
This tool holds the recalculation amount when applicability is unconfirmed or an exclusion applies.
Official sources and documents to prepare before filing
The rules were checked on 2026-11-09 for ordinary Korean general-VAT periods under current 2026 legislation.
Current-law search results and article texts were verified directly through the National Law Information Center OPEN API.
Distinguish the commencement date of the whole instrument from that of the relevant articles, and recheck exception amounts, ratios and exclusions after amendments.
- VAT Act Articles 39(1)(7), 40 and 41: MST276117, effective 2026-01-02; exempt and land-related exclusions, actual attribution, common allocation and recalculation.
- VAT Act Enforcement Decree Articles 66, 81, 82 and 83: MST283641, whole instrument effective 2026-04-01; relevant articles effective 2026-02-27; allocation, settlement, depreciation factors and exclusions.
- VAT Act Enforcement Rule Articles 54 and 55: MST284995, whole instrument effective 2026-04-01; relevant articles effective 2026-03-20; related supplies, use areas and disposal-period exclusion.
- Restriction of Special Taxation Act Article 106(1)(4): MST284389, effective 2026-09-18; national housing and prescribed construction-service exemption.
Prepare the ledger, plans and prior credit history
Confirm the selected allocation basis and record the potential credit separately from non-creditable VAT.
Bringing the expected settlement period and subsequent ratio changes to a tax consultation helps identify the specific evidence still needed.
Confirm transaction attribution and applicable exclusions before filing the actual return.
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