ENGLISH

- Inheritance tax will be imposed to inheritors (Articles 3 and 3-2 of the “Inheritance Tax and Gift Tax Act”).

- The inherited property refers to all the property reserved to the inheritee, including the following articles and rights. However, those that are exclusively personal to the inheritee and cease to exist following the death of the ancestor will be excluded:

- All the articles having economic value that can be converted into money

- All the legal or de facto rights having property value

- The taxable value of inherited property will be an amount obtained by adding the value of the property transferred in advance and the value of the presumed property for inheritance after deducting the public charges and taxes, funeral expenses, and debts from the value of inherited property (if the amount after deducting the public charges and taxes, funeral expenses, and debts from the inherited property exceeds the value of the inherited property, it will be deemed as the value of inherited property) (Article 13 of the “Inheritance Tax and Gift Tax Act”).

- The tax basis of inherited property refers to the amount minus the deduction, appraisal and assessment fees of inherited property, and the value of casualty loss from the taxable value of inherited property (Article 25 of the “Inheritance Tax and Gift Tax Act”).

- Inheritance tax will be the amount calculated by applying the prescribed tax rates to the tax basis of inherited property (Article 26 of the “Inheritance Tax and Gift Tax Act”).

- The value of the inherited property will be evaluated based on the market price at the time of the commencement of inheritance (Article 60 of the “Inheritance Tax and Gift Tax Act”).

- The tax subject to voluntary payment is calculated by adding the extra tax for generation-skipping inheritance to the calculated tax, deducting various tax credits, and deducting any amount of annual installments and payment in kind.

- If an inheritor or beneficiary is a lineal descendant, other than an offspring of the inheritee, an amount equivalent to 30/100 (40/100 if the value of inherited property that an inheritor or a beneficiary who is a lineal descendant of the inheritee other than his/her offspring and is a minor has received or is to receive, exceeds two billion won) of the amount calculated by multiplying the proportion of the property the inheritor or beneficiary has received or is to receive among the inherited property by the calculated amount of inheritance tax. However, this will not be the case for inheritance by representation (Article 27 of the “Inheritance Tax and Gift Tax Act”).

- The tax will be deducted under the following circumstances:

- The inheritance tax is payable biannually and making the payment twice a year is referred to as the payment in installment and making the payment over a long period of time is referred to as the payment in annual installments.

- If the value of the real estate and securities in the inherited property exceeds 1/2 of the total value of property and the amount of tax payable exceeds 20 million won, the taxpayer is allowed to pay the tax with the inherited real estate and securities, which is referred to as the payment in kind (Article 73 of the “Inheritance Tax and Gift Tax Act”).

- An inheritor or beneficiary is under an obligation to declare the tax subject to voluntary payment calculated as above, taxable value of inheritance, and the tax basis of inherited property to the head of a competent tax office within six months from the last day of the month in which the commencement date of the inheritance falls (Article 67 (1) of the “Inheritance Tax and Gift Tax Act”).

- A person who reports inheritance tax must pay the amount to the tax office having jurisdiction over the place for tax payment, the Bank of Korea, or the post office, by the respective reporting deadline (Article 70 of the “Inheritance Tax and Gift Tax Act”).

- Where a taxpayer fails to file a return (including scheduled returns and interim returns) on the tax base of national tax pursuant to the tax-related Acts within the statutory due date of return, the amount obtained by multiplying an amount he/she should pay upon filing the tax return by the following rates must be paid as the penalty tax (Article 47-2 (1) of the “Framework Act on National Taxes”).

- If a person fails to pay or underpays the inheritance tax until the statutory due date, he/she must pay the penalty tax for insincere payment in addition to the inheritance tax (Article 47-5 (1) of the “Framework Act on National Taxes”).

- If there are more than one inheritor or beneficiary, each and every inheritor or beneficiary must pay the actual amount calculated by multiplying the proportion of the property he/she has received or he/she will receive by the calculated amount of inheritance tax (Article 3-2 (1) of the “Inheritance Tax and Gift Tax Act”).

- However, since the co-inheritors or beneficiaries are jointly and severally liable to pay inheritance tax within the limits of property each has received or is to receive (Article 3-2 (3) of the “Inheritance Tax and Gift Tax Act”), if anyone among the co-inheritors defaults on his/her inheritance tax, the other co-inheritors will remain liable to pay the tax.

- In addition, even if one of the co-inheritors have paid the entire inheritance tax, no gift tax is imposed on the co-inheritors who have not paid any inheritance tax.