 |
| Inheritance tax in south korea (koreatimes) |
South Korea has one of the highest inheritance tax rates in the world, making it essential for heirs to understand how the system works. Knowing about taxable assets, progressive tax rates, and available deductions can help reduce the tax burden.
🏡 Why Is South Korea’s Inheritance Tax So Controversial?
1️⃣ Burden on Heirs & Business Owners
Many heirs are forced to sell inherited properties or company shares to afford the high taxes. This has affected conglomerates (chaebols) like Samsung, Hyundai, and LG, whose heirs have faced multi-billion-dollar tax bills.
2️⃣ Real Estate Challenges 🏠
With skyrocketing property prices in Seoul, inheritance tax bills have become overwhelming. Many middle-class families struggle to keep their inherited homes due to excessive taxation.
3️⃣ Comparison to Other Countries 🌍
While South Korea taxes up to 60% (including 20% largest on shareholders), other countries have much lower inheritance taxes:
📌 Japan: 55% (but with many exemptions)
📌 United States: 40% (only for estates over $13.61 million)
📌 United Kingdom: 40% (but only on estates above £325,000)
📌 Germany & France: 30% – 45%
Therefore, this guide covers everything you need to know about inheritance tax (상속세 – sangsokse) in South Korea, including tax rates, exemptions, and legal strategies to minimize tax payments.
1. Who Must Pay Inheritance Tax in Korea?
Inheritance tax applies when an individual inherits assets from a deceased person.
Heirs Subject to Tax:
✅ Spouse (husband/wife)
✅ Children (biological and legally adopted)
✅ Parents (if the deceased has no spouse or children)
✅ Siblings & other relatives (if no direct heirs exist)
💡 Even foreigners who inherit property or financial assets in Korea must pay inheritance tax.
2. Taxable Assets for Inheritance Tax
Inheritance tax applies to all types of assets, including:
✅ Real estate (houses, apartments, land)
✅ Cash & bank deposits
✅ Stocks & bonds
✅ Business ownership (company shares)
✅ Vehicles & valuables (art, jewelry, antiques, etc.)
Even if the heir resides outside South Korea, the inheritance tax still applies to assets located in Korea.
3. Inheritance Tax Rates in South Korea
Korea has a progressive inheritance tax system, meaning higher-value estates face higher tax rates.
| Value of Inherited Assets (KRW) | Tax Rate (%) |
|---|---|
| Up to 100 million KRW | 10% |
| 100 million – 500 million KRW | 20% |
| 500 million – 1 billion KRW | 30% |
| 1 billion – 3 billion KRW | 40% |
| Over 3 billion KRW | 50% |
- First 100 million KRW → 10% tax
- Next 400 million KRW → 20% tax
- Next 500 million KRW → 30% tax
- Remaining 1 billion KRW → 40% tax
Without deductions, the tax liability can be very high, making tax planning essential.
4. Inheritance Tax Deductions & Exemptions
South Korea provides various deductions to help reduce the taxable amount for heirs.
Inheritance Tax Deductions in Korea (2024)
| Deduction Type | Details & Maximum Deduction |
|---|---|
| Personal Deduction (기초공제) |
Choose between: Basic Deduction + Additional Personal Deductions (Children, Elderly, Disabled, etc.) OR Lump-Sum Deduction (500 million KRW) |
| Spousal Deduction (배우자 상속공제) |
Minimum 500 million KRW, up to 3 billion KRW (max 5 billion KRW for large estates) |
| Business & Agricultural Inheritance Deduction (기업/영농 상속공제) |
Special deduction for business owners and farming inheritance – Up to 2 billion KRW |
| Co-residential Property Deduction (동거주택상속공제) |
Applies if the heir lived with the deceased in the inherited property – Up to 600 million KRW or 100% of property value |
| Financial Asset Deduction (금융재산상속공제) |
Deduction on inherited financial assets (cash, stocks, etc.) – 20% of assets, up to 200 million KRW |
| Disaster Loss Deduction (재해손실공제) |
If inherited property is destroyed before the tax filing deadline – Deduction based on actual damage |
If an heir inherits 2 billion KRW, and qualifies for the 500 million KRW spouse deduction and 500 million KRW lump-sum deduction, the taxable amount is 1 billion KRW.
 |
| Example of Inheritance tax calculator (Source: 상속세 계산기) |
5. Inheritance Tax Filing & Deadlines
📌 Important Deadlines:
- Inheritance tax returns must be filed within 6 months of the decedent’s death.
- If the inheritance includes real estate, the heir must register property ownership transfer after paying taxes.
- Late filing penalties apply if the tax return is not submitted on time.
💡 Tip: If you are inheriting property or assets, consult a Korean tax professional to avoid penalties and maximize deductions.
6. Inheritance Tax for Foreigners in Korea
If a foreigner inherits assets in Korea, they must pay Korean inheritance tax.
- Some countries have tax treaties with Korea to prevent double taxation.
- If the deceased was a foreign national, their home country may also impose inheritance taxes.
💡 Foreign heirs should check tax treaties and consult experts to reduce their tax burden.
7. How to Reduce Inheritance Tax Legally
💡 Smart tax planning can help reduce inheritance tax liability. Here’s how:
- Gifting assets before death can lower inheritance tax, but gift tax (10-50%) still applies.
- Gifts made within 10 years before death may still be subject to inheritance tax review.
- Many wealthy individuals use trust funds to distribute assets gradually, reducing inheritance tax.
- Some business and real estate investments qualify for special inheritance tax reductions.
- Korean inheritance tax laws are complex, so seeking professional advice can help heirs maximize deductions.
📌 Key Takeaways:
✅ Inheritance tax rates range from 10% to 50%.
✅ Basic Deduction: Choose between basic deduction + dependents OR 500 million KRW lump sum deduction.
✅ Additional deductions available for spouse, children, elderly parents, disabled family members, and funeral costs.
✅ Foreign heirs must check tax treaties to avoid double taxation.
✅ Proper planning (trust funds, gifting, tax-exempt investments) can legally reduce inheritance tax.
🔍 Final Thoughts
With one of the highest inheritance tax rates in the world, proper estate planning is crucial for families looking to preserve wealth across generations. Whether through gifting, trusts, or tax-efficient investments, it is essential to plan ahead to minimize financial burdens.
Do you think South Korea should lower its inheritance tax? Let us know in the comments! 👇
SEO Keywords
- South Korea inheritance tax
- how to calculate inheritance tax in Korea
- Korean inheritance tax exemptions
- inheritance tax for foreigners in Korea
- How to reduce inheritance tax legally in Korea