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South Korea Inheritance and Gift Tax Guide 2026

South Korea imposes one of the highest inheritance and gift tax regimes among OECD countries, with progressive rates of 10–50%. A KRW 500 million basic deduction is available for inheritance, and gift tax uses the same rate schedule. Valuation rules are detailed, and the tax is imposed on the worldwide estate of Korean residents.

Inheritance Tax Rates (2026)

South Korea's inheritance tax (상속세) uses a progressive rate schedule with five brackets, applied to the taxable estate after deductions:

  • Up to KRW 100 million: 10%
  • KRW 100M to 500M: 20% (minus KRW 10M)
  • KRW 500M to 1 billion: 30% (minus KRW 60M)
  • KRW 1B to 3 billion: 40% (minus KRW 160M)
  • Above KRW 3 billion: 50% (minus KRW 460M)

A 10% resident surtax (주민세) applies on the inheritance tax, making the effective top marginal rate 55%.

Basic Deductions (상속공제)

The inheritance tax system provides substantial deductions to reduce the taxable estate:

Basic deduction (기초공제): KRW 200 million per estate.

Person deduction (인적공제): Per-heir deductions — KRW 50 million per child, KRW 100 million per surviving spouse (or actual statutory inheritance share if higher), KRW 50 million for elderly (65+) dependents, KRW 50 million for disabled heirs.

General deduction (일괄공제): Alternatively, the estate may elect a flat KRW 500 million deduction (including the basic and person deductions combined). This is typically more favourable for smaller estates.

The total deductions available mean that the first KRW 500 million (and often substantially more with spousal deduction) of an estate may be tax-free. The financial services deduction (금융재산공제) of up to KRW 200 million applies to certain financial assets.

Gift Tax (증여세)

Gift tax is levied on the donor (or in some cases the recipient) using the same rate schedule as inheritance tax. Lifetime gifts are aggregated and taxed cumulatively — cumulative gifts across a lifetime are added together, and the tax is calculated on the total, with credit for tax paid on prior gifts.

Annual gift exclusions (증여세 면세한도):

  • KRW 50 million from a spouse (over a 10-year period; KRW 60M for certain circumstances)
  • KRW 50 million from parents to adult children (over 10 years)
  • KRW 20 million from parents to minor children
  • KRW 10 million from grandparents and others

Gifts exceeding these amounts are subject to gift tax at progressive rates (10–50%). The gift tax return must be filed within 3 months of the gift date.

Valuation Rules (상속세·증여세 평가)

For inheritance and gift tax purposes, assets are valued at their fair market value as of the date of death (inheritance) or gift date. Specific rules apply:

  • Real estate: Standard market value (시가표준액) as determined by local government, or appraised value for certain properties
  • Listed securities: Closing price on the valuation date (or average of closing prices over the preceding 2–4 months in certain cases)
  • Unlisted securities: Appraised value using NTS valuation methods (often based on net asset value and earnings)
  • Business assets: May qualify for valuation discounts for lack of marketability and minority interests

Deemed Gift Rules (증여의제)

South Korea has expansive deemed gift rules (증여의제 규정) that treat certain transactions as gifts even if no direct transfer occurs:

  • Below-market loans: Loans to family members at below-market interest rates may be deemed gifts
  • Asset transfer at undervalue: Selling assets below fair market value to family members
  • Third-party payment: Paying a family member's debts or expenses
  • Corporate transfers: Transactions with family-owned companies may be recharacterised as gifts to shareholders

Filing and Payment

Inheritance tax returns must be filed within 6 months of the date of death (3 months for non-residents). Gift tax returns are due within 3 months of the gift. The tax may be paid in installments (연부연납) over up to 5 years for inheritance tax and up to 2 years for gift tax, subject to providing adequate security. Interest applies to installment payments. Payment in-kind (물납) with certain assets (unlisted securities, real estate) may be permitted for inheritance tax under certain conditions.

FAQs

Can I avoid inheritance tax by gifting assets before death?

Lifetime gifts are aggregated for inheritance tax purposes. Gifts made within 10 years of death are included in the inheritance tax base. Gifts made more than 10 years before death are excluded from the aggregation. However, gift tax already paid on those gifts is credited against the inheritance tax.

How is the marital deduction calculated?

The surviving spouse may deduct either the actual statutory inheritance share (법정상속분) or KRW 1 billion (KRW 3 billion in some cases for estates over KRW 3 billion), whichever is higher. For estates of KRW 10B+, the spousal deduction can be substantial.

What is the gift tax rate for gifts from parents?

The same progressive 10–50% rates apply to all gifts. However, the first KRW 50 million given to an adult child over a 10-year period is exempt. Gifts above that amount are taxed at the progressive rates.

How does the deemed gift rule affect intra-family loans?

If a parent lends money to a child at 0% interest, the NTS may deem the forgone interest (difference between market rate and actual rate) as a gift. To avoid this, intra-family loans should be documented with a proper loan agreement and interest charged at a minimum of 4.6% (the NTS's annually published rate).

Disclaimer

This guide provides general information about South Korean inheritance and gift tax for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Korean tax advisor (세무사) or the NTS directly for advice specific to your situation. InvestmentKit does not provide tax advice.