Gift Tax
Overview
Gift tax (贈與稅) is a national tax imposed on a person (donee) who receives property without compensation from another person (donor). It is based on the Inheritance and Gift Tax Act (Korean: 상속세 및 증여세법; abbreviated as 상증세법). It is distinguished from capital gains tax and inheritance tax in that it recognizes taxable capacity for gratuitous transfers of property, not income, and levies tax. Gift tax has the character of a supplementary tax to inheritance tax and functions to prevent tax evasion through gratuitous intergenerational transfer of wealth and to alleviate the concentration of wealth.
Main Details
Legal Basis and Taxpayer
Gift tax is levied under the Inheritance and Gift Tax Act and its Enforcement Decree and Enforcement Rule. The taxpayer is the donee who receives the gift; even if the donor pays the tax on the donee's behalf, the amount paid on behalf is itself regarded as another gift and taxed. The donor is jointly liable for the donee's tax liability.
Taxable Objects and Concept of Gift
Not only gift contracts under the Civil Act but also all transactions in which property value is substantively transferred without compensation, such as ▲ low-price acquisition/high-price transfer, ▲ debt forgiveness, ▲ gratuitous use, ▲ title trust, ▲ gratuitous transfer of insurance proceeds or trust profits, are subject to taxation. Since 1998, the 'complete inclusion principle of gift tax' was introduced, allowing taxation if the economic substance is a gift even if it does not constitute a gift under the Civil Act.
Valuation of Gifted Property
The value of gifted property is in principle the market value, and if the market value is unclear, supplementary valuation methods (standard assessed value, appraised value, converted value, etc.) are applied. Real estate is calculated by officially announced price/standard assessed value, and stocks by market value or supplementary valuation (net asset value/net profit and loss value).
Gift Property Deduction
Up to a certain amount is deducted and no tax is imposed. Gifts received from the same person over 10 years are aggregated and applied.
- Spouse: KRW 600 million
- Lineal ascendant (parents, grandparents, etc.): KRW 50 million (KRW 20 million if the donee is a minor)
- Lineal descendant (children, grandchildren, etc.): KRW 50 million
- Other relatives (blood relatives within the sixth degree, in-laws within the fourth degree): KRW 10 million
Tax Rate Structure
A five-bracket progressive tax rate is applied according to the tax base.
| Tax Base | Tax Rate | Progressive Deduction |
|---|---|---|
| KRW 100 million or less | 10% | KRW 0 |
| Over KRW 100 million to KRW 500 million | 20% | KRW 10 million |
| Over KRW 500 million to KRW 1 billion | 30% | KRW 60 million |
| Over KRW 1 billion to KRW 3 billion | 40% | KRW 160 million |
| Over KRW 3 billion | 50% | KRW 460 million |
Filing and Payment
The donee must file and pay with the district tax office having jurisdiction over the donee's address within three months from the last day of the month in which the gift was received. A penalty tax of 20% for failure to file and 10% for underreporting is imposed; higher penalty taxes apply for fraudulent acts. If the tax payable exceeds KRW 10 million, installment payment (payment in installments) is possible; unlike inheritance tax, payment in kind is in principle not allowed.
Special Tax Treatment and Non-Taxation
- Gift tax is not imposed on gifts of KRW 10 million or less from other relatives, etc.
- Special tax treatments are operated for start-up funds, family business succession stocks, etc.
- From 2024, a marriage and childbirth gift property deduction was newly established; property received from lineal ascendants within two years before or after marriage registration or within two years from the date of childbirth is additionally deducted up to KRW 100 million each.
Recent Trends
With the 2024 tax law amendment, the marriage and childbirth gift property deduction was introduced, greatly reducing the tax burden on property transfers aimed at supporting marriage and childbirth. At the same time, the existing deduction system, such as the spouse deduction of KRW 600 million and child deduction of KRW 50 million, is maintained.
In 2025, the government proposed a reform plan for the inheritance and gift tax system for the first time in about 30 years, discussing measures to lower the top tax rate from 50% to 40%, raise tax base brackets, and introduce a child deduction for gift tax. This reform plan repeatedly underwent adjustments and stalled due to disagreements between the ruling and opposition parties during National Assembly deliberation, and the implementation timing and details have not been finalized. Meanwhile, as aging and rising asset prices increase demand for intergenerational asset transfer, tax-saving strategies through advance gifts and the tax authorities' corresponding verification (post-audit of gift tax, title trust investigations) are both strengthening. In addition, interpretations are accumulating regarding gift taxation standards and valuation methods for new asset types such as virtual assets and overseas stocks.
Related Topics
- [[상속세]]
- [[상속세 및 증여세법]]
- [[양도소득세]]
- [[증여재산공제]]
- [[명의신탁]]
- [[국세청]]