Human-Service Business Income Earner

Definition

The National Tax Service defines an 인적용역 earner as an individual who 'supplies services on an independent footing without physical facilities and without hiring workers' and receives payment. Here 물적시설 (physical facilities) means buildings and other business equipment, including leased ones, used continually and repeatedly for the business alone. Taxpayers with business income must in principle file a final global income tax return, but for some withheld business income received by simplified-ledger taxpayers the liability ends with the payer's year-end settlement.

History

In National Tax Service statistics, withholding-covered human-service earners rose from 3.26 million in 2008 to 6.69 million in 2018 and 8.47 million in 2022, then reached 8.69 million in 2024, about 70,000 more than the previous year's 8.62 million. Growth slowed from 11.9% in 2021 (the COVID-19 pandemic peak) to 7.5% in 2022, 1.7% in 2023 and 0.8% in 2024. The increase was led by 기타자영업 (other self-employment) with no specified industry or occupation code, which grew roughly tenfold from 490,000 in 2009 to 4.56 million in 2022, raising its share of all human-service business earners from 14% to 54%, or a majority. Since 2016, more than 80% of the growth has come from 기타자영업.

Cited background factors include simplified income reporting through the Hometax system, the extension of employment insurance to special-form workers, platform workers and artists along with a shortened income-reporting cycle, the expansion of the platform industry, online shopping and delivery services, and the rise of multiple jobholding. On the other hand, critics argue that a considerable share are disguised self-employed workers, in reality wage workers who take freelancer or sole-proprietor form instead of an employment contract while 3.3% business income tax is withheld from their labor costs. Since 2022 the number of non-wage workers has exceeded the number of non-regular workers for three consecutive years; in 2024 non-wage workers (8.69 million) outnumbered non-regular workers (8.46 million) by 230,000, though the two statistics may double-count multiple jobholders. Non-wage workers aged 60 and over drove the increase, rising from 1.45 million in 2023 to 1.52 million in 2024, while 41% (3.58 million) of all non-wage workers are in their thirties or younger. Average annual business income per person was 16 million won in 2022, 17 million won in 2023 and 18 million won in 2024, still at subsistence level.

Relations

Article 144 of the Income Tax Act, on the timing and method of withholding on business income and the issuance of withholding receipts, requires the withholding agent to withhold income tax calculated by applying the withholding rate to the amount paid when paying withholding-eligible business income, and to issue a receipt. The withholding rate on human-service business income is 3.3%, comprising 3% income tax plus 0.3% local income tax. The Ministry of Economy and Finance announced a 2026 tax revision plan on 3 August 2026 cutting the rate on other human-service business income from 3% to 2%, lowering the effective deduction from 3.3% to 2.2% for income paid on or after 1 January 2027.

Withholding does not finalize the tax but sets aside an amount in advance, so freelancers settle their full-year income and necessary expenses in the final global income tax return the following May and receive a refund when the amount prepaid exceeds the final liability. Against this prepayment-and-refund structure, the tax platform 삼쩜삼, named after the 3.3% rate, grew by charging fees of up to about 20% of the refunds users receive, surpassing 20 million subscribers, and came into conflict with tax accountants over encroachment on their professional territory and incentives for excessive refund claims.

Employers entering human-service payments must input occupational codes for expense processing. Some services have specified industries, such as insurance agents (940906), door-to-door salespeople (940908), quick delivery services (940918) and designated drivers (940913), while 기타자영업 (940909), whose substance is hard to identify, leads the growth and is the largest in number.

Employment statistics diverge from tax statistics for this category. Between 2016 and 2022, the supplementary survey of the economically active population showed wage workers rising from 74.0% to 76.5% and non-wage workers falling from 26% to 23.5%, but National Tax Service statistics showed wage earners among consolidated income recipients falling from 81.5% to 78.3% while pure global income filers rose from 15.2% to 19.0%. One reading is that many of those counted as wage workers in the employment statistics report business income to the tax authority. In the National Data Office's August 2025 supplementary survey by type of employment, of 22.413 million wage workers, 13.845 million were regular and 8.568 million non-regular (38.2%), with social insurance coverage for non-regular workers at 37.1% for the national pension, 53.2% for health insurance and 53.7% for employment insurance. Crucially, human-service business income earners fall outside that wage-worker survey altogether.

Distinctions

Whether a person is a worker under the Labor Standards Act is judged by substance rather than the form of the contract: whether the person provided labor to an employer in a subordinate relationship for the purpose of wages. Factors examined include the employer's determination of work content and direction and supervision, specification of working hours and place, the possibility of running an independent business, bearing of profit and loss risk, the nature of remuneration, matters concerning remuneration such as whether income tax is withheld as wage income, continuity and exclusivity, and status under social security statutes. However, 'if on the whole it is recognized that the person provided labor to the employer in a subordinate relationship for the purpose of wages, the absence of some of these indicia or the concurrent possession of another status cannot by itself mean the person is not a worker under the Labor Standards Act' (Supreme Court decisions 2004다29736 of 7 December 2006 and 2008도11087 of 23 April 2009, among others). The 3.3% withholding method and the self-employment label therefore do not by themselves settle worker status.

For tax purposes too, human services for which an individual receives an allowance or similar consideration according to the outcome of work correspond to wage income scarcely distinguishable from that of a worker, yet are classified under tax law not as a worker but as a human-service business income earner. The National Tax Service guidance distinguishes human-service business income from wage income: supplying human services on an independent footing without an employment relationship is business income, while pay received for providing labor under an employment relationship is wage income (서면1팀-527, 26 April 2006). Continuous and repeated provision is business income; one-off provision is other income (소득-256, 28 July 2008).

Examples

The services enumerated by statute include writing, calligraphy and painting, drafting, sculpture, composition, music, dance, cartoons, illustrations, comic monologue, acting, voice acting, singing and similar services; direction, adaptation, production, filming and recording for entertainment; architectural supervision and academic services; instruction in music, dance, cooking and baduk; solicitation, savings promotion and collection services for insurance subscribers (insurance agents); door-to-door sales of books and recordings; services for which an author receives royalties; proofreading, translation, historical verification, stenography, drafting and typing; lectures by persons without an employment relationship; naming, physiognomy and divination; hospitality workers and dancers; and also medical and health services, funeral services, waste collection and transport, physical activity, housework and nursing care at long-term care institutions for older persons, and housekeeping services provided by housekeeping service agencies.

Occupations with specified codes include insurance agents, door-to-door salespeople, quick delivery services and designated drivers, while 기타자영업, whose substance is hard to identify, leads the growth. Freelancers, special-form workers and platform workers (including delivery riders) fall in this category, and critics note that they are 'workers in substance under a company's labor control but called boss in name only, placed in a blind spot of the social safety net including labor law and the four major insurances.' Also cited are the roughly 40,000 'fake 3.3' workers in Coupang Rocket Delivery, call centre 'trainees', the spread of 'fake 3.3 × day labor × dispatch' in logistics, and 'non-special-form, non-platform, non-employment-contract' arrangements in services. Institutionally, employment insurance coverage was extended over the same period to special-form workers, platform workers and artists, and industrial accident insurance coverage was widened by abolishing the exclusivity requirement.