ENGLISH

- Consolation money is a type of payment of damages for the emotional distress suffered because of divorce, and gift tax, which is imposed on gifted property (Article 4(1) of the Inheritance Tax and Gift Tax Act), has no application because the payment of consolation money is not a gift under Article 2(6) of the Inheritance Tax and Gift Tax Act. However, gift tax may be imposed where consolation money is found to be a de facto gift, as in the case of a sham divorce for tax evasion.

- Consolation money is not an income under Article 4 of the Income Tax Act, and income tax, which is imposed on income (Article 3 of the Income Tax Act), does not apply either.

- If the title is transferred to real estate as consolation money, the transferee must pay acquisition tax, local education tax, and special rural development tax according to the Local Tax Act (Articles 7 and 150 of the Local Tax Act; Article 3 of the Act on Special Rural Development Tax).

- When the title to real estate is transferred as consolation money, the transferor obtains the economic advantage of having consolation money and child support obligations extinguished in exchange for assigning the real estate, constituting a transfer for consideration under the Income Tax Act (Article 88 of the Income Tax Act), and transfer income tax must be paid on the transfer income (Articles 2, 4, and 94 of the Income Tax Act).