Korea Inheritance Tax Advice in 2024
Many of our foreign clients here at Pureum Law Office (PLO) have asked about Korea inheritance tax when we were assisting them with related legal issues. This blog post explains the rules and laws associated with Korea’s inheritance tax in 2024.
What is Inheritance tax?
Inheritance tax refers to a tax levied on inherited property when the property is transferred free of charge (or bequeathed) to a family member or relative upon one’s demise.
Who is an inheritance tax payer?
Taxpayers who are obligated to report and pay inheritance tax include “heirs” who inherit property and “beneficiaries” who acquire property upon the demise of a donor as prescribed in a will or gift contract.
Heirs refer to the legal heirs who are blood relatives(parents and children), successors in stirps, and spouses of the deceased (decedent).
Samsung Inheritance Tax
After Samsung Group Chairman Lee Kun-hee passed away in 2021, South Korea’s inheritance tax made headlines as Lee’s family was saddled with a world-record breaking inheritance tax estimated at KRW 12 trillion (over USD 10 billion). Please refer to this news article.
Who is subject to inheritance tax?
The scope of taxation varies depending on whether the deceased (decedent) is a resident or non-resident as of the date of commencement of inheritance.
- (In the case of a resident) All inherited property in Korea and abroad
- (For non-residents) All inherited property in Korea
Tip: Judgment of Residents and Non-Residents (Korea Inheritance Tax and Gift Tax Act Article 2)
(Resident) A person who has an address* in South Korea or has resided in the country for more than 183 days
* Whether it is applicable to the case of having an address in Korea is subject to Articles 2, 4, 1, 2, and 4 of the Enforcement Decree of the Income Tax Act.
(Non-Resident) A person who is not a resident.
Korea Inheritance Tax Deductions and Limits
|
Classification of Deduction |
Amount (KRW) |
Limit |
| General deduction (when a resident is deceased) | 500 million | |
| Basic deduction (whether a resident or nonresident is deceased) | 200 million | |
| Minor deduction (when a resident is deceased) | 10 million X (number of years until age 19) | |
| Senior (65+) deduction (when a resident is deceased) | 50 million per senior | |
| Disabled deduction (when a resident is deceased) | 10 million X (Life remaining to life expectancy) | |
| Children deduction (when a resident is deceased) | 50 million per child | |
| Spouse deduction (when a resident is deceased) | In case of 500 million or more: the actual amount inherited | 3 billion |
| In case of less than 500 million: 500 million | ||
| Financial property deduction (when a resident is deceased) | 20 million or less: the full amount | |
| More than 20 million but less than 100 million: 20 million | ||
| More than 100 million but, less than 1 billion: Net financial asset value X 20% | ||
| More than 1 billion: 200 million |
Tip: In the case of the death of a resident, the larger amount is deducted by comparing the sum of the basic deduction and other personal deductions with the general deduction.
Korea’s Inheritance tax rate
The amount of inheritance tax is calculated by multiplying the tax base by the tax rate. The tax base is the amount excluding the above deductions from the inheritance amount. The tax rate is structured in a five-stage, progressive tax rate ranging from a minimum of 10% to a maximum of 50%.
You can check out other countries’ inheritance rates here.
|
Tax base |
Rate |
Progressive deduction (KRW) |
| Not exceeding KRW 100 million | 10% | |
| KRW 100 million ~ not exceeding KRW 500 million | 20% | 10 million |
| KRW 500 million ~ not exceeding KRW 1 billion | 30% | 60 million |
| KRW 1 billion ~ not exceeding KRW 3 billion | 40% | 160 million |
| Exceeding KRW 3 billion | 50% | 460 million |
Is it Still hard to understand? Here is an exercise for you:
<Excercise A>
Background
A(resident)’s inherited property: Savings of KRW 1.4 billion
A’s family members: B(Spouse), C(Son, 22), D(Daughter, 18)
A passed away without having written a will.
1. Inherited property to each family member
B: KRW 600 million, C: KRW 400 million, D: KRW 400 million
(If you don’t understand how it divided as above, please check out one of our related posts)
2. Calculation of Tax Base
a. General deductions: KRW 500 million
b. The lum sum of basic deductions and other personal deductions:
KRW 200 million(basic) + KRW 10 million(minor) + KRW 100 million(children) + KRW 200 million(financial property) = KRW 510 million
When a and b are compared, b is larger, so KRW 510 million is deducted.
- Tax base: KRW 1.4 bil – KRW 510 million = KRW 890 million
3. The total amount of inheritance tax
KRW 890 million X 0.3(30%) – KRW 60 million (progressive deduction) = KRW 207,000,000
<Excercise B>
Background
A(non-resident)’s inherited property: Savings of KRW 500 million.
A’s family members: B(Mother), C(Spouse), D(Son, 21)
A passed away without having written a will.
1. Inherited property to each family member
B: 0, C: KRW 300 million, D: KRW 200 million
2. Calculation of Tax Base
- Basic deductions: KRW 200 million
- Tax base: KRW 500 million – KRW 200 million = KRW 300 million
3. The total amount of inheritance tax
KRW 300 million X 0.2(20%) – KRW 10 million (progressive deduction) = KRW 50,000,000
Today, we have reviewed the general rules and laws of Korea’s inheritance tax but in order for you to calculate the exact amount of Korea inheritance tax, PLO highly advises to contact to professionals such as Certified Public Accountant or Tax Accountant in Korea. if you have questions about Korean inheritance tax, please contact us
