How to Apply for Angel Investment Income Deduction
A step-by-step guide to applying for angel investment income deductions during annual tax filing, including required documents and procedures.
How to Apply for Angel InvestmentAngel Investment
Direct investment by individual investors (angel investors) in early-stage venture enterprises, eligible for income tax deductions. Income Deduction
Knowing the venture investment income deduction system itself is not enough. To actually receive the tax benefit, you must apply through the correct procedure. This article explains the entire angel investment income deduction application process in detail, step by step.
Application Timing: May of the Year Following Investment
The angel investment income deduction is applied for during the comprehensive income tax filing period in May of the year following the investment. For example, if you invested in 2025, you apply in May 2026.
Salaried workers complete their employment income year-end settlement each January or February, but the venture investment income deduction is not applied through year-end settlement. It must be applied for separately through the May comprehensive income tax filing. Not knowing this and finishing with year-end settlement means missing out on the income deduction.
Filing period: May 1 to May 31 each year (until June 30 for those required to obtain a faithful tax reporting confirmation)
Extensions are available in cases of overseas residence or special circumstances, but generally the May 31 deadline must be observed.
Required Documents List
The following documents must be prepared before applying for the income deduction.
Key Document: Venture Enterprise Investment Confirmation CertificateInvestment Confirmation Certificate
Document confirming investment in a venture enterprise. Required for income deduction applications.
The most important document is the Venture Enterprise Investment Confirmation Certificate issued by KBAN (Korea Business Angel NetworkKorea Business Angel Network
Organization issuing angel investment income deduction confirmations. Handles angel fund registration and investment verification.). Without this document, it is not possible to apply for the income deduction.
The investment confirmation certificate includes the following information: - Investor's name and resident registration number - Name and business registration number of the investee company - Investment amount and date - Number of shares and acquisition unit price - Income deduction applicable amount - Investment confirmation certificate issuance number
Supporting Documents
Additional documents that may be required depending on the situation are as follows.
- Copy of share acquisition agreement: A contract proving share acquisition in the case of direct investment
- Certificate of registration in the shareholder register: A document confirming registration as a shareholder of the investee company
- Individual investment association contribution confirmation: A contribution verification document issued by the association in the case of investment through an individual investment association
KBAN Investment Confirmation Certificate Issuance Process
The investment confirmation certificate is applied for directly by the investor with KBAN. The issuance process is as follows.
Step 1: Join KBAN and Apply Online
Access the official website of the Korea Business Angel Network (www.kban.or.kr) and register as a member. After registering as an individual investor, apply online through the 'Investment Confirmation Certificate Application' menu.
Step 2: Submit Investment-Related Documents
Upload or mail the following documents to KBAN.
- Investment agreement (share acquisition agreement, convertible bond acquisition agreement, etc.)
- Investment payment transfer records (deposit evidence)
- Copy of the investee company's venture enterprise confirmation certificate (valid at the time of investment)
- Investee company's shareholder register or certificate of registration in the shareholder register
- Copy of applicant's ID
Step 3: KBAN Review and Confirmation
KBAN reviews the submitted documents to confirm whether the investment in the venture enterprise is eligible. Processing is generally completed within 5–10 business days of application. If documents are incomplete or additional confirmation is needed, the person in charge will make contact.
Step 4: Receive Investment Confirmation Certificate
Once the review is complete, the investment confirmation certificate can be downloaded from the KBAN system, and if needed, it can also be received by mail. The issued investment confirmation certificate is attached when filing on HomeTax.
Note: Data from investment confirmation certificates issued by KBAN is shared with the National Tax Service. They are often automatically retrieved in HomeTax, but manual entry may sometimes be necessary, soStock Option
Stock purchase rights granted to venture enterprise employees. Up to 200M KRW/year in exercise gains are tax-exempt, with optional separate taxation. always verify.
Comprehensive Income Tax Filing Method via HomeTax
Once the investment confirmation certificate is ready, comprehensive income tax filing proceeds through HomeTax (www.hometax.go.kr).
HomeTax Filing Steps
1. Access and log into HomeTax Log into HomeTax using a public certificate or simplified authentication (Kakao, Naver, etc.).
2. Begin comprehensive income tax return preparation From the menu, select 'Report/Payment' > 'Tax Filing' > 'Comprehensive Income Tax' > 'General Report (Regular Filing)'.
3. Enter income Accurately enter all income including employment income, business income, and financial income.
4. Enter income deduction items
At the deduction item entry stage, find and enter the 'Venture Investment Income Deduction' item. This item is usually found under the 'Income DeductionsIncome Tax Deduction
Tax deduction system for venture enterprise investment: 100% for up to 30M KRW, 70% for 30-50M KRW, 30% for over 50M KRW. under the Special Tax Treatment Control Law' section.
- Select investment method (direct investment / individual investment association / venture enterprise investment trust)
- Enter investment amount
- Enter investment confirmation certificate number (or attach file)
5. Confirm deduction amount The system automatically calculates the deduction amount by applying bracket-specific deduction rates. Carefully verify the calculation results.
6. Confirm tax payable and complete filing Confirm the final tax payable (or refund amount) and submit the tax return.
Cautions During Filing
Verify Validity of Venture Enterprise Confirmation
At the time of investment, the relevant company must have been in a state of having received valid venture enterprise confirmation. This can be verified using the company name or business registration number on the Ministry of SMEs and Startups VentureIn site (www.venturein.or.kr). Even if the venture enterprise confirmation is revoked after investment, if it was valid at the time of investment, the income deduction eligibility is maintained.
Verify Compliance with 3-Year Holding Obligation
At the time of applying for the income deduction, it must be clearly determined whether the 3-year holding obligation has been completed for the investment, or is still ongoing. Although the income deduction itself is applied for in the year following investment, if shares are disposed of within 3 years, the deduction amount will be subsequently recouped.
Carryover Deduction Application
If there is a carryover deduction amount from exceeding the limit in the previous year, it must be entered in the carryover deduction item when filing for that year. Since it is not automatically reflected, direct verification and entry is required.
In the Case of Individual Investment Associations, Verify Association Settlement
In the case of investment through an individual investment association, the income deduction is calculated based on the amount the association actually invested in venture enterprises. Obtain the contribution specification and investment confirmation certificate issued by the association in advance. Since late association operational settlement can delay investment confirmation certificate issuance, it is advisable to coordinate the schedule with the association manager (GPGeneral Partner / Limited Partner
GP (General Partner) manages the fund; LP (Limited Partner) provides capital as an investor.) in advance.
Refund Schedule
Applying the income deduction often results in a refund, as the tax actually owed is less than the tax already paid.
The refund schedule is as follows.
- Filing within the filing period (May filing): Refund generally in June or July
- Refund after tax office review: If there are errors or suspicious items in the filed content, refund in August or September after additional review
- Amended return (correction claim): Omissions from previous filings can be refunded through a correction claim (claims possible within 5 years)
The refund account must be entered accurately when preparing the tax return. Refund progress can be checked in the 'Refund Inquiry' menu on HomeTax.
Whether to Use a Tax Accountant
The angel investment income deduction application is a relatively clear procedure, but it is advisable to seek help from a tax accountant in the following cases.
- Investments made in multiple companies
- Both individual investment association contributions and direct investments made together
- Cases where carryover deductions have accumulated in complex ways
- Cases with complex income structures such as overseas income
- Cases where deductions are distributed through joint spousal investment
Tax accountant fees are on the order of several hundred thousand won, but this is well worth investing in to prevent additional tax penalties or missed deductions from incorrect filings.
The angel investment income deduction is not difficult once you know the procedure. Apply for the KBAN investment confirmation certificate right after investment, and then apply through HomeTax in May of the following year. The most important things in this process are obtaining the investment confirmation certificate without fail and faithfully fulfilling the 3-year holding obligation.