The gift tax exemption limit is applied differently depending on the donor. Usually, a gift is chosen to create wealth for a family or to reduce real estate taxes.
When you acquire someone else’s property for free, gift tax is imposed in proportion to the value of the property. If you donate property within an appropriate limit, you can receive a gift tax exemption.
It would be very burdensome if taxes were added in a situation where you had to raise your property with difficulty. It is the only way to reduce damage while donating property. 증여세 면제 대상
Table of Contents 좋은뉴스
Gift tax exemption limit amount
Gift tax calculation method
stock gift tax
Penalty tax on gift tax report
Gift tax exemption limit amount
Donor Deduction Limit (Exemption Limit)
Spouse (excluding common-law marriage) KRW 600 million
Lineal ascendant: Parents, grandparents 50 million won (*20 million won if the beneficiary is a minor)
Lineal descendants: children, grandchildren, grandchildren 50 million won
Other relatives (blood relatives within 6 degrees, relatives within 4 degrees): 10 million won for brothers and sisters, daughters-in-law, and sons-in-law
Based on the first *gift date (the day the property was donated), the deduction limit is given in 10-year increments. Since the total amount of property gifted within 10 years is calculated, you need to check how much the donor’s deduction limit is if you donate in parts.
In the case of direct descendants, it can be misunderstood that it is okay to give as a gift to the father and mother. Parents and grandparents, not each person, are viewed as one lump, so you must give a gift within the deduction limit to prevent a gift tax bomb.
When a surviving property owner gives away property to someone else, the giftee (the person who receives the property) pays gift tax. *If the donor (the person who gives the property) and the donee are in Korea, the donee pays the gift tax, and if the donee is in a foreign country, the donor pays the gift tax.
Items subject to gift tax include real estate, cash, gold, silver, bonds, and stocks, and expensive artworks are currently excluded.
Gift tax calculation method
Tax base tax rate Progressive deduction amount
10% below KRW 100 million None
500 million won or less 20% 10 million won
1 billion won or less 30% 60 million won
3 billion won or less 40% 160 million won
Over KRW 3 billion 50% KRW 460 million
gift tax calculation formula
Gift tax = (gift amount – deduction limit) x tax rate – progressive deduction amount
Example of gift tax calculation – What if parents donated 1.05 billion won to their children?
Tax base for gift tax: KRW 1.05 billion (gift amount) – KRW 50 million (deduction limit) = KRW 1 billion
Calculated gift tax: KRW 1 billion x 30% (tax rate) = KRW 300 million – KRW 60 million (progressive deduction) = KRW 240 million
Final gift tax: KRW 240 million – KRW 7.2 million (tax deduction of 3% within the period) = KRW 232.8 million
Gift amount – deduction limit = tax base. Since the tax rate is applied by substituting the tax base, the gift tax to be paid is calculated by multiplying the tax base by the tax rate and then subtracting the progressive deduction amount.
Since the gift amount and tax rate are proportional, the larger the amount, the higher the gift tax. However, gift tax is not imposed if the tax base is less than KRW 500,000.
If grandparents donate property to their grandsons and granddaughters, a separate premium tax is imposed because the parents were omitted during the gifting process. For the reason of the omission of the household, the existing gift tax + 30% of the surcharge tax is added, and if the donor is a minor and the amount of the property exceeds 2 billion won, a larger gift tax is imposed by adding the existing gift tax + 40% of the surcharge tax. However, if the parents are deceased, the premium tax is excluded.
stock gift tax
Listed stocks are items that help reduce gift tax, and are characterized by constant change in value, not changing like cash. The average of the final market value for a total of 4 months, 2 months before and after the gift date, is considered as the gift value.
It is much more profitable because you can give it at a low price and sell it at a high price to earn a profit. In addition, if the stock price rises after the gift, there is an advantage that no additional gift tax is incurred on the increase.
Penalty tax on gift tax report
Reason for imposition Penalty tax amount
General non-reporting General non-reporting tax amount x 20%
Fraudulent non-filing Fraudulent non-filing Tax amount x 40%
General under-reporting General under-reporting Tax amount x 10%
Falsely under-reported Falsely under-reported tax amount x 40%
A quick gift tax return is a shortcut to preventing additional taxes. The recipient must file a report with the competent tax office within 3 months of the last day of the month to which the date of donation falls. If you voluntarily pay by the filing deadline, you can receive a 3% tax reduction.
For gift tax reporting, visit the local tax office offline or apply online through the Home Tax website of the National Tax Service. In the past, Hometax login was used as a joint certificate, but it is possible to log in simply with simple authentication. Go to Hometax, go to 「Gift Tax」 in 「Report/Payment」 at the top, select 「Regular Report」, and proceed with the procedure.
If the gift tax amount is too large, it can be replaced with real estate or divided. There are two types of installment payment, which is paid in two installments, and annual installment payment, which is paid over a long period of time.