188 Companies Receiving Family Business Succession Tax Credit Last Year 'Record High'

Inheritance Tax Subjects Increased 2.4 Times Compared to 2019
Average Wealth of Inheritance Tax Payers 2.14 Billion KRW
Real Estate Gift Proportion Falls Below 50%

The number of companies that succeeded family businesses last year and received inheritance tax deductions increased by 27.9% to 188, compared to 147 in 2022, marking the highest number of companies benefiting since the system's implementation.

The National Tax Service (NTS) disclosed inheritance and gift tax statistics reflecting this on the 20th.

First, the support effects from tax law revisions and family business succession significantly increased family business successions. Since 2022, the NTS has actively supported family business succession by conducting 'Family Business Succession Tax Consulting' to help excellent small and medium enterprises (SMEs) aspiring to succeed family businesses grow into prestigious long-established companies. As a result, over two years (2022?2023), the average number of family business inheritance tax deduction cases was 168, a 66.3% increase compared to the previous three-year average (2019?2021, 101 cases). The average annual deduction amount was 590.4 billion KRW, a 76.3% increase compared to the previous three years. In particular, comparing the 2023 family business inheritance tax deduction scale to 2019, the number of cases increased 2.1 times and the deduction amount increased 3.5 times, both reaching record highs.

The number of inheritance tax subjects increased 2.4 times compared to 2019. Last year, the number of inheritance tax subjects was 19,944, a 2.4-fold increase from 8,357 in 2019. The finalized tax amount was 12.3 trillion KRW, 4.4 times higher than 2.8 trillion KRW in 2019. The number of inheritance tax subjects rose from 1,720 in 2003 to exceed 10,000 for the first time in 2020, then nearly doubled in three years to approach 20,000. Looking at the trend in finalized tax amounts, it increased about threefold from 462.3 billion KRW in 2003 to 1.363 trillion KRW in 2013, then increased ninefold between 2013 and 2023.

The number of inheritance tax filings decreased. Last year, 18,282 people reported a total inheritance property value of 39.1 trillion KRW, with both the number of filers and the value of inherited property decreasing compared to 2022. Compared to 2019, both the number of filers and the value of inherited property increased, but the average inherited property value per person slightly decreased to 2.14 billion KRW. Since the statistics began in 2003, the number of inheritance tax filers had increased annually until 2022, making this the first year with a decrease compared to the previous year.

The inheritance property value range with the highest number of filers last year was the 1 billion to 2 billion KRW range, accounting for 42.9% of all filers. The number of filers in the 1 billion to 2 billion KRW range was 7,849 (42.9%), with tax amounts totaling 600 billion KRW (9.2%), averaging 74.48 million KRW per person. The range with the highest tax amount was the 10 billion to 50 billion KRW inheritance property value range, with 428 filers (2.3%), tax amounting to 2.2 trillion KRW (34.1%), and an average of 5.08 billion KRW per person.

By type of inherited property, real estate accounted for the highest proportion at 68.8%. Among inherited property values last year, the proportion of buildings (47.6%) was the highest since the statistics began in 2017, and it was the first time to exceed 40%.

The number of gift tax filings and the value of gifted property decreased for the second consecutive year. Last year, the number of gift tax filings was 164,230, and the value of gifted property was 27.3 trillion KRW, both decreasing compared to 2022. The NTS analyzed that the overall decrease in gift tax filings was due to a reduction in real estate gifts.

Last year, the number of gift tax filings for minors (under 20 years old) was 13,637, with gifted property valued at 2.1 trillion KRW. Among minors, 45.5% received gifts valued at 50 million KRW or less, while there were also 63 cases (0.5%) of gifts exceeding 3 billion KRW. Minors most frequently received financial assets (32.2%), whereas adults most frequently received buildings (32.4%).