The Profit Split Method across Jurisdictions – Report on Korea

The profit split method (PSM) has gained prominence as multinationals operate through integrated value chains reliant on intangibles, where one-sided methods may fail. This article analyses the PSM's interpretation under Korean transfer pricing law through three tribunal and court decisions addressing method selection, combined net profit, allocation keys and methodological consistency. Korean jurisprudence follows the OECD Guidelines while demanding strict statutory compliance. The cases reveal four principles: (i) integrated value creation justifies PSM selection; (ii) allocation keys must reflect economic reality; (iii) statutory profit definitions and residual profit splitting govern strictly; and (iv) methods must apply consistently across comparable transactions.This article is part of a special issue of the International Transfer Pricing Journal on the application of the PSM across jurisdictions. The other articles include the General Report and contributions on Belgium, France, Germany, Ireland, Italy, the Netherlands, Portugal, Spain and the United States.