Inheritance & Gift Tax

File and pay within six months from the end of the month in which death occurred (Inheritance Tax and Gift Tax Act art. 67). Prepare an asset inventory (real estate, deposits, shares, insurance), records of pre-death asset disposals and withdrawals, proof of debts and funeral expenses, and family relation documents. Pre-death disposals and withdrawals are often added back to the estate unless their use is substantiated. If the estate is complex, valuation and division must also fit within six months — plan the full timeline early.

Yes. Transfers into a family member’s account are often presumed to be gifts, and it falls on the taxpayer to show otherwise — living expenses, a loan, or entrusted funds management (see Inheritance Tax and Gift Tax Act art. 45). A loan claim needs more than a written note: actual interest payments and repayment flows must back it up. Substantiating after an audit or source-of-funds inquiry begins is much harder, so document large transfers in advance, and if questions have already been raised, organize your evidence with counsel first.

The rule is market value as of the date of death or gift (Inheritance Tax and Gift Tax Act art. 60). Sale, appraisal, or expropriation prices within the statutory window can qualify as market value; supplementary methods such as official assessed prices apply only where market value is hard to establish. Because the recognized value drives the tax, valuation is the most contested part of filing — especially for unlisted shares and leased real estate. A valuation gap with the tax office is itself an appealable issue.

Where the real owner and the registered holder of shares differ, the holder is deemed to have received a gift unless the absence of tax-avoidance purpose is established (Inheritance Tax and Gift Tax Act art. 45-2). The nominee arrangement itself triggers taxation, so showing that no property actually changed hands is not enough — you must present a clear non-tax reason with supporting records. Old nominee arrangements often surface late with large assessments; organize the history and documents to identify what can be contested.

Inheriting a qualifying SME or mid-sized company long operated by the decedent can substantially reduce inheritance tax through the business succession deduction (Inheritance Tax and Gift Tax Act art. 18-2), but post-deduction management conditions — maintaining the business line, employment, and shareholding — apply for years, and violations trigger clawback with interest. Whether you can keep the conditions matters as much as whether you qualify; the timing and route (inheritance vs. gift special provisions) also change the outcome.

Where the funds used to acquire real estate or shares are not explained by reported income, the difference is presumed to be a gift and you are asked to substantiate the source (Inheritance Tax and Gift Tax Act art. 45). Prepare a chronological reconstruction of the money flow — income, withdrawals, loans, lease deposits, proceeds of prior asset sales — linked account by account. Partial substantiation can leave the remainder taxed as a gift, so settle the scope and strategy before submitting a response.

A gift with assumed debt (a loan or lease deposit) splits into two taxes: gift tax for the recipient on the net value, and capital gains tax for the donor on the debt portion, which is treated as a sale (Income Tax Act art. 88). In family transactions the reality of the debt assumption is always scrutinized — who actually services interest and principal afterward matters. Whether a plain gift or a burdened gift is more favorable depends on the asset and debt mix; compare the tax outcomes before executing.

If the recipient is a Korean resident, gifts of overseas property are in principle subject to Korean gift tax. Conversely, where a non-resident receives overseas property from a resident, a special rule may tax the donor instead (Adjustment of International Taxes Act art. 35). Foreign gift tax already paid is credited against double taxation. Residency, situs, and timing can swing the outcome, so cross-border gifts warrant design before execution — and assessments warrant a review of whether those determinations can be contested.