Inheritance tax and gift tax difference
상속세 증여세 차이
Category Gift tax Inheritance tax
Concept Tax when property is transferred to the beneficiary while the donor is alive Tax when property is transferred to the heir due to the death of the decedent
Calculation method Inheritance acquisition method Inheritance taxation method
Taxpayer Beneficiary Heir
Report and payment deadline Within 3 months from the end of the month to which the date of receipt of the gift belongs Within 6 months from the end of the month to which the date of commencement of inheritance belongs
Competent tax office Donee’s tax office Decedent’s tax office
Advantages Low tax rate can be applied to each person as it is taxed on each recipient
Disadvantages Deductions for gifted property excluding spouses are significantly lower than inheritance tax Higher tax rate is applied as it is a tax on the entire inherited property.
Tax rate 10-50% progressive tax rate
<source. Book ‘Transfer of Wealth’ >
Inheritance Taxation and Inheritance Acquisition
1) Inheritance taxation
– Inheritance tax is calculated based on the value of the entire inherited property of the ancestor, and the heirs jointly bear the amount.
2) Inheritance Acquisition
– The recipient calculates the amount of tax based on the donated property that he or she received as a gift, and the recipient bears the tax alone regardless of the recipient.
Inheritance commencement date and gift date
1) Inheritance commencement date
– It refers to the date of death of the ancestor, and the date of declaration of disappearance if inheritance commences due to the declaration of disappearance.
2) Date of gift
– It refers to the date of delivery or actual use of property, etc. In general, in the case of real estate, it is the date of receipt of ownership transfer registration, and in the case of cash, it is the date of delivery.
Representative gift tax deduction (10 years)
1) Spouse 600 million won
2) 50 million won for lineal ascendants and descendents
3) 10 million won for other relatives
Representative deductions from inheritance tax
1) 500 million won lump-sum deduction
2) Spousal Inheritance Deduction
3) Inheritance deduction for financial property, which deducts 20% of the net financial property value up to KRW 200 million
ㄴ If you withdraw money from the account of the decedent whose inheritance is imminent and transfer it to the heirs’ accounts, you cannot receive a deduction for inheritance of financial property.
4) Housing Inheritance Deduction
5) Family business inheritance deduction
You do not have to worry about inheritance tax up to 1 billion won.
However, it is important whether the spouse of the deceased is included among the heirs.