Estimate a solvent Korean company liquidation from realisable assets through outside liabilities, liquidation expenses, other-tax reserves, national and local liquidation-income tax, shareholder acquisition-cost recovery, deemed-dividend withholding, and immediate net proceeds for one resident individual ordinary shareholder.
The starting values are illustrative. Replace them with due-diligence estimates for asset proceeds, collectible receivables, guarantees and claims, ordinary-period taxes, liquidator fees, and registration costs, then use tax-adjusted equity confirmed by an adviser.
Enter assets at expected recovery value and every amount that must be paid before any shareholder distribution.
Cash plus expected disposal and collection proceeds
Financing, trade, payroll, severance, guarantees, and claims
Liquidator, tax, legal, registration, and disposal costs
VAT and ordinary-period taxes, excluding tax calculated below
Adjusted equity may differ from balance-sheet equity. Confirm the tax-adjusted figure after applicable reserves and tax adjustments.
Equity amount determined under Korean corporate tax rules
Estimate one ordinary shareholder’s distribution-time cash after withholding using ownership and acquisition cost.
0–100%; decimals are supported
Documented acquisition cost for the entered stake
Interest and dividends used only for the aggregation alert
The company has residual value after senior obligations
KRW 296,779,600
Before liquidation tax
KRW 370,000,000
Company distributable amount
KRW 332,600,000
Shareholder deemed dividend
KRW 232,600,000
Distribution-time withholding
KRW 35,820,400
Deduct senior obligations and estimated national and local liquidation-income tax before allocation.
After-tax distributable residual assets
KRW 332,600,000
Treat the amount above basis as a deemed dividend and estimate 14% national withholding plus local withholding equal to 10% of it.
Estimated immediate net proceeds
KRW 296,779,600
Other financial income plus the deemed dividend exceeds KRW 20 million. The 15.4%-equivalent withholding shown is only a distribution-time prepayment estimate; final Korean comprehensive income tax can change after progressive rates, dividend gross-up and credit, and other income are considered.
Relevant Korean rules for 2026 · primary legislation verified 2026-08-01
A Korean company’s cash balance or book equity is not automatically available for shareholder distribution. A solvent liquidation first converts assets into recoverable value and pays or reserves for every creditor claim, employee amount, liquidation expense, ordinary-period tax, guarantee, and disputed obligation. Only the residual value can move into the company-level liquidation-income calculation.
At the company layer, the calculator subtracts tax-adjusted equity at dissolution from pre-tax residual asset value. It then applies the 2026 national corporate-tax brackets and the standard local corporate-income-tax brackets. The resulting after-tax residual assets are allocated to the shareholder by ownership percentage.
At the shareholder layer, the portion of the distribution above the documented acquisition cost is treated as a deemed dividend for this model. The calculator estimates distribution-time national dividend withholding at 14% and local withholding equal to 10% of that national amount. The final headline is immediate cash after estimated withholding, not final comprehensive income tax.
Korea-specific estimate: This calculator addresses Korean corporate, local, and individual income-tax concepts. It is not a liquidation return, legal distribution schedule, solvency opinion, or substitute for advice from a Korean liquidator, attorney, or tax professional.
The starting figures are an illustrative formula check, not official averages or standard liquidation costs. Replace them with due-diligence evidence and use tax-adjusted equity confirmed from the company’s closing and tax-adjustment records.
Under the Korean Commercial Act, a dissolved company continues within the purpose of liquidation. The liquidator concludes existing affairs, collects receivables, pays debts, and distributes residual assets. The liquidator must prepare an inventory and balance sheet and complete creditor-protection steps before treating any amount as safely distributable.
The statutory creditor notice must invite claims for a period of at least two months and be announced at least twice. Known creditors must receive separate notice. Shareholder distribution is prohibited before company debts have been paid in full, although property sufficient for a disputed claim may be reserved under the applicable rule.
This legal sequence is why the calculator does not show a positive shareholder distribution when realisable assets are no greater than outside liabilities, liquidation expenses, and other reserved taxes. A shortfall is a stop signal, not a prediction that shareholders automatically owe the displayed deficit.
Start with cash and unrestricted deposits. Add receivables at expected collection value rather than face value. Enter inventory, land, buildings, vehicles, equipment, intellectual property, and other assets at expected net disposal proceeds after commissions, removal costs, discounts, and collection risk.
Related-party loans, old receivables, disputed claims, and illiquid assets deserve separate conservative, base, and upside scenarios. A large book asset with weak collection evidence should not make an otherwise distressed company appear solvent.
Outside liabilities should include financing and trade debt, wages, severance, refundable deposits, card balances, guarantees, litigation exposure, contract termination amounts, and restoration duties. Liquidation expenses can include liquidator compensation, legal and tax fees, registration and publication charges, appraisal, brokerage, demolition, disposal, and record-retention costs.
The other-tax reserve should not duplicate the liquidation-income national and local tax calculated by the tool. Use it for ordinary liquidation-period corporate income tax, VAT, withholding liabilities, asset-specific taxes, local charges, and evidence-based interest or penalties that must be paid before distribution.
Do not assume this input equals paid-in capital or the equity total shown on the balance sheet. Korean liquidation-income rules can require adjustments involving retained earnings, reserves, allowances, tax reconciliation items, and amounts with a capital character. The direction and amount depend on the company’s records.
Use the tax adjustment statement and closing workpapers immediately before dissolution, then have the figure confirmed by a Korean tax professional. An understated value overstates modeled liquidation income; an overstated value understates it.
Ownership must match the shareholder’s economic distribution right. A simple percentage is unsuitable when class shares or a valid unequal entitlement changes the allocation. Acquisition cost should be the documented cost for the exact stake entered, supported by subscription records, purchase agreements, payment evidence, and histories of capital increases, reductions, inheritances, gifts, and transfers.
Other annual financial income means the expected interest and dividend income for the same Korean tax year. The calculator adds the modeled deemed dividend solely to flag whether aggregate financial income exceeds KRW 20 million. It does not compute the final comprehensive income-tax return.
Senior payments = outside liabilities + liquidation expenses + other tax reserve
Pre-tax residual value = realisable assets − senior payments
Liquidation-income tax base = pre-tax residual value − tax-adjusted equity
Distributable residual assets = pre-tax residual value − national tax − local tax
Gross shareholder distribution = distributable residual assets × ownership
Deemed dividend = gross shareholder distribution − acquisition cost
Distribution withholding = deemed dividend × 14% + local tax equal to 10% of that national tax
Immediate net proceeds = gross shareholder distribution − distribution withholding
| Liquidation-income tax-base band | National rate | Standard local rate |
|---|---|---|
| Up to KRW 200 million | 10% | 1% |
| Over KRW 200 million through KRW 20 billion | 20% | 2% |
| Over KRW 20 billion through KRW 300 billion | 22% | 2.2% |
| Over KRW 300 billion | 25% | 2.5% |
These are marginal brackets: each slice of the tax base is taxed at its corresponding rate. The highest applicable rate is not multiplied by the entire base. The local figures are standard rates under the Local Tax Act; an ordinance may vary a standard rate within the statutory range, so confirm the filing jurisdiction.
The estimate does not model credits, exemptions, minimum-tax interactions, interim liquidation filings, refunds, penalties, or ordinary income earned during the liquidation period. Korean Corporate Tax Act Article 79 treats income for each liquidation-period business year separately from liquidation income, so reserve that tax elsewhere.
Assume KRW 500 million of realisable assets, KRW 100 million of outside liabilities, KRW 10 million of liquidation expenses, KRW 20 million of other tax reserve, and KRW 100 million of tax-adjusted equity. The modeled shareholder owns 100%, has a documented acquisition cost of KRW 100 million, and enters no other annual financial income.
These are illustrative inputs designed to reproduce the formula. They are not market data, an official safe-harbor reserve, or a recommendation for any company.
| Step | Calculation item | Amount |
|---|---|---|
| 1 | Outside liabilities, expenses, and other-tax reserve | KRW 130,000,000 |
| 2 | Pre-tax residual asset value | KRW 370,000,000 |
| 3 | Liquidation-income tax base | KRW 270,000,000 |
| 4 | National plus local company tax | KRW 37,400,000 |
| 5 | Gross shareholder distribution | KRW 332,600,000 |
| 6 | Deemed dividend above acquisition cost | KRW 232,600,000 |
| 7 | National and local distribution withholding | KRW 35,820,400 |
| 8 | Estimated immediate net proceeds | KRW 296,779,600 |
National withholding is KRW 32,564,000, which is 14% of the KRW 232,600,000 deemed dividend. Local withholding is KRW 3,256,400, equal to 10% of the national withholding. Their sum is the modeled distribution-time cash deduction.
Because the deemed dividend alone exceeds KRW 20 million, the shareholder should review Korean financial-income aggregation. The displayed 15.4%-equivalent withholding is a prepayment estimate; final tax may change after progressive rates, dividend gross-up and credit, deductions, and other income are applied.
Use the most likely recovery values, confirmed liabilities, current tax estimate, and written professional quotes. This is the central case for discussing whether to liquidate and the likely distribution range.
Reduce disposal and collection proceeds while increasing costs, taxes, and disputed-claim reserves. Check whether the company remains solvent before considering an early distribution.
Change one uncertain item at a time, such as a property sale, inventory recovery, or related-party receivable. Prioritize diligence and negotiation on the inputs that move solvency or net proceeds most.
Not without adjustment. The enforcement decree frames residual asset value as total assets minus total liabilities, but assets collected or disposed of during liquidation use recovery or disposal values, and assets distributed before disposal can require fair-value treatment. Book values that ignore collectability and disposal cost can materially distort both solvency and tax.
No. Income arising in each business year from dissolution through residual-value confirmation is handled separately from liquidation income. VAT, payroll withholding, asset-related taxes, and late-filing exposures may also remain. Put an evidence-based amount in the other-tax reserve and reconcile it with actual returns before distribution.
Not necessarily. The calculator uses 14% national dividend withholding and local withholding equal to 10% of that national amount to estimate cash deducted at distribution. When annual interest and dividend income exceeds KRW 20 million, the Korean comprehensive income-tax return may produce a different final liability after other income, progressive rates, dividend gross-up, and the dividend tax credit are considered.
Zero is only a conservative scenario that treats the entire distribution as a deemed dividend; it is not automatically the correct filing value. Reconstruct subscription payments, purchase contracts, capital changes, inheritance or gift returns, and prior transfers. Korean income-tax law contains a face-value or contribution rule for certain unclear-cost situations, so obtain fact-specific advice before filing.
No automatic legal conclusion follows from the number. It only says that entered realisable assets are below entered liabilities, expenses, and other-tax reserves. Shareholder liability, director responsibility, guarantees, avoidance rules, insolvency proceedings, and creditor arrangements depend on separate facts and law. Do not use the distribution estimate once the company falls outside the solvent scope.
Corporate Tax Act Article 84 generally measures the final filing deadline as three months from the end of the month containing the residual-value confirmation date. Interim distribution or a liquidation unresolved for one year can trigger separate interim filing and payment rules. Confirm the actual confirmation date and filing sequence with the responsible Korean tax office or adviser.
The following primary legislation was checked in the Korean National Law Information Center on August 1, 2026. The relevant Commercial Act version is effective July 23, 2026. Tax provisions used by the calculator were checked in their applicable 2026 versions. MST identifiers are included so a reviewer can match the exact law record used in the requirements and constants.
Begin with conservative recoveries and complete reserves, then update the model as assets are realised and creditor responses arrive. Give the calculation and evidence list to the liquidator, Korean tax adviser, and counsel so they can verify tax-adjusted equity, company returns, shareholder basis, withholding, and the legally permitted distribution date.
Make a final distribution decision only after all company debts have been paid or properly reserved, filing exposures have been reconciled, shareholder rights have been checked, and the people responsible for the liquidation have approved current workpapers.