Private client law in South Korea: overview

A Q&A guide to private client law in South Korea.

The Q&A gives a high level overview of tax; tax residence; inheritance tax; buying property; wills and estate management; succession regimes; intestacy; trusts; co-ownership; familial relationships; minority and capacity, and proposals for reform.

To compare answers across multiple jurisdictions, visit the Private Client Country Q&A tool.

The Q&A is part of the multi-jurisdictional guide to private client law. For a full list of jurisdictional Q&As visit



Tax year and payment dates

1. When does the official tax year start and finish in your jurisdiction and what are the tax payment dates/deadlines?

The tax year for personal income tax in South Korea is the calendar year. Individuals must file an income tax return and pay income taxes by 31 May of the year following the end of the calendar year. Interim income tax for certain income items such as business profits is due from the taxpayer on a semi-annual basis.


Domicile and residence

2. What concepts determine tax liability in your jurisdiction (for example, domicile and residence)? In what context(s) are they relevant and how do they impact on a taxpayer?

Tax liability for income tax in South Korea is determined based on a person's status as a resident or non-resident of South Korea under the South Korean tax laws and applicable tax treaties.

A resident is any individual who has his permanent address in South Korea or a place of residence for one year or more in South Korea under the South Korean tax laws. Any individual other than a resident is treated as a non-resident.

Permanent address

The permanent address is judged by objective facts about a taxpayer's life, such as the existence of a family living together in South Korea and economic ties such as employment or property located in South Korea.

A taxpayer who falls under the following cases is deemed to have a permanent address in South Korea:

  • If he has a job that would require him to reside in South Korea for one year or more.

  • If he has family in South Korea and is likely to reside in South Korea for one year or more in view of his employment or assets held in South Korea.

Place of residence for one year or more

A taxpayer is deemed to have a place of residence for one year or more in South Korea if he has resided in South Korea for more than a year in two consecutive tax years.

A resident individual is subject to income tax on all incomes derived from sources both within and outside the country. Alternatively, a non-resident is liable to pay income tax only on the South Korea source income.

If an individual is treated as a resident both in South Korea and another country that has concluded a tax treaty with South Korea, the tax residency of that individual is determined based on the tie breaker rule under the relevant tax treaty.


Taxation on exit

3. Does your jurisdiction impose any tax when a person leaves (for example, an exit tax)? Are there any other consequences of leaving (particularly with regard to individuals domiciled in your jurisdiction)?

There are no specific provisions dealing with exit tax in South Korea. In the year when a resident becomes a non-resident, he must pay income tax on the income attributable to the period while he was a resident.


Temporary residents

4. Does your jurisdiction have any particular tax rules affecting temporary residents?

Temporary residents, whose permanent address or place of residence lasts no longer than one year in South Korea, must pay taxes as a non-resident on South Korea source income. Only income set out in the Personal Income Tax Law (PITL) is taxable (this includes interest, dividends, real property income, income from leasing of assets, business profits, labour income, capital gains and royalties).


Taxes on the gains and income of foreign nationals

5. How are gains on real estate or other assets owned by a foreign national taxed? What are the relevant tax rates?

For real property income and gains on sale of real property sourced in South Korea, both South Koreans and foreign nationals are taxed in an almost identical way at the same rate. The capital gains tax rate depends on the marginal tax bracket of the taxpayer. Generally, the tax rate varies from 6.6% to 41.8% (including 10% local income surtax). However, a non-resident without a permanent establishment in South Korea must pay withholding taxes on the sales proceeds at the time of sale and later must file a return and pay income taxes by May of the following year just as a resident would.

6. How is income received by a foreign national taxed? Is there a withholding tax? What are the income tax rates?

Taxation depends on residence (see Question 2). A non-resident foreign national must pay income taxes on income specified in the PITL (such as interest, dividends and royalties) derived from sources within South Korea:

  • If the taxpayer is a resident or a non-resident with a permanent establishment in South Korea, the taxpayer must pay income taxes on income earned in a calendar year by the following May on a self-assessment basis. The applicable tax rates are ordinarily between 6.6% and 41.8% (including a 10% local surtax).

  • If the taxpayer is a non-resident with no permanent establishment in South Korea, the taxpayer is subject to South Korean tax by way of withholding tax. For example, interest, dividends, royalties, and so on, sourced in South Korea are subject to withholding tax at a rate of 22% (including a 10% local surtax). However, if there is a double tax treaty, the applicable rate may be reduced to between 5% and 15% under the treaty.

  • Currently, expatriate workers receive the benefit of a special single tax rate of 17% (18.7% including 10% local income surtax). From 1 January 2014 this special income tax regime only applies for five years from the starting date of employment in Korea. However, expatriates who began work in Korea before 2013, even if the period of employment is more than five years, can still benefit from this regime until the end of 2014.


Inheritance tax and lifetime gifts

7. What is the basis of the inheritance tax or gift tax regime (or alternative regime if relevant)?

Estate tax

Estate tax is imposed on all of the decedent's assets with economic value on the date of death. The tax varies based on the residence (PITL) (see Question 2):

  • Resident decedent. Estate tax is charged on the fair market value of all of the decedent's worldwide assets that are subject to tax.

  • Non-resident decedent. Estate tax is charged on the fair market value of the decedent's assets located in South Korea.

Gift tax

Gift tax is charged at the time of gift on the fair market value of the gift. A South Korean resident donee is taxed on gifts received on a worldwide basis. A non-resident donee is subject to gift tax on assets situated in South Korea. However, if a resident gives assets situated outside of South Korea to a non-resident, the resident donor must pay gift taxes except when gift tax is imposed under foreign law. Furthermore, from 2013, if a non-resident receives from a resident gifts comprising certain foreign financial accounts or shares of a foreign company, 50% or more of which assets consist of those located in South Korea, gift tax will be imposed. This rule has been implemented to prevent avoidance of the South Korean gift tax by transferring domestic assets abroad.

Fair market value

The fair market value is the price for the asset at the time of the decedent's death or gift that would ordinarily be reached through bargaining between unrelated parties without limits on the parties' freedom to bargain. An appraisal value or price from previous sales may qualify as fair market value if it meets certain statutory conditions. If fair market value is difficult to determine, the value is appraised through the application of a supplementary appraisal method (for real estate, the value is based on standard prices announced by the government) provided in the Inheritance and Gift Tax Law, which considers the asset's type, size and trading situation. However, for publicly listed shares, the fair market value is equal to the average of the price of the shares two months before the date of gift or death and two months after that date.

For assets outside South Korea that are unfit for the application of South Korean tax law, the value set for purposes of calculating capital gains tax, estate tax or gift tax in the country with the asset is considered the fair market value.

8. What are the inheritance tax or gift tax rates (or alternative rates if relevant)?

Tax rates

The rates for estate tax and gift tax are as follows:

  • 10% for KRW100 million and below.

  • 20% for amounts between KRW100 million and KRW500 million.

  • 30% for amounts between KRW500 million and KRW1 billion.

  • 40% for amounts between KRW1 billion and KRW3 billion.

  • 50% on amounts over KRW3 billion.

In addition, 30% of the total tax amount must be paid as a surcharge on gift or inheritance that skipped a generation (for example, grandfather gifts or bequeaths to grandson).

Tax-free allowance

For resident decedents, the following exemptions are provided:

  • Exemption for spouse. The surviving spouse is entitled to a minimum exemption of KRW500 million (that is, in intestacy, even if the spouse's share is less than the minimum spouse exemption, at least KRW500 million is granted and may be used to reduce the other heirs' shares provided the decedent's estate is not split between heirs). The spouse exemption is limited to the lesser of the spouse's share of the estate and KRW3 billion.

  • Personal exemptions. Exemptions are allowed for certain heirs including decedent's issue, minority children, senior family members and disabled family members. If the exemptions are less than KRW500 million, a lump sum exemption of KRW500 million is allowed. Generally, if the spouse is alive at the time of the decedent's death, no estate tax would be imposed on at least KRW1 billion the sum of KRW500 million minimum exemption for the spouse plus KRW500 million of other personal exemptions.

  • Exemptions for financial assets. KRW20 million to KRW200 million of the decedent's financial assets will not be subject to estate tax.

  • Succession of family business. If a taxpayer inherits a family business in existence for at least ten years, a certain amount (that is, KRW20 billion for businesses ten years old and older, KRW30 billion for businesses 15 years old and older, and KRW50 billion for businesses 20 years old and older) will not be subject to estate tax.

For gift tax, certain amounts are not subject to gift tax depending on the recipient of the gift that is:

  • Up to KRW600 million for gifts to spouses.

  • Up to KRW50 million for gifts to direct descendants (adults).

  • Up to KRW20 million for gifts to direct descendants (minors).

  • Up to KRW5 million for gifts to all other relatives.


For the following, estate tax is not payable as these cases are deemed to further the public good:

  • Properties bequeathed to the South Korean government, local government or other public entity.

  • Land located in cultural properties and protected areas.

  • Direct contributions to non-profit foundations established to support the public good such as education, scholarships, academics, and charity.

  • Indirect contributions to non-profit foundations through a charitable trust to support education and charity.

For gift tax, gifts to non-profit foundations and charitable trusts are exempt from taxation, and up to KRW500 million donated to establish a trust fund by a disabled will be exempt.

Techniques to reduce liability

An example of these techniques may include:

  • Gifting assets during the testator's lifetime.

  • Selling assets but retaining a life interest.

  • Establishing a trust or purchasing through an offshore company.

Lifetime gifts are a method to reduce tax as subsequent increases of value on a gift will escape additional transfer tax. However, as assets gifted within ten years of the death of the decedent or time of bequeathment are added to the taxable base of the estate tax, it is more advantageous to plan the gifts every ten years and ten years in advance of the death or the time of bequeathment.

For real property, when the fair market value is difficult to determine, the value is determined by reference to standard prices announced by the National Tax Service. Such value ordinarily reaches less than 80% of the actual fair market value. Therefore, instead of gifting financial assets whose tax basis is 100% of the value of the asset, gifting real property may allow the taxpayer to pay tax only on parts of the value of the real property.

9. Does the inheritance tax or gift tax regime apply to foreign owners of real estate and other assets?

The scope of assets subject to the estate tax is determined based on the residency of the decedent for tax purposes. If the foreign decedent is a resident, estate tax is imposed on all assets in the estate regardless of their location in Korea or other countries. On the other hand, if the foreign decedent is a non-resident, estate tax is imposed only on bequeathed assets located in Korea. However, the tax residency of the donee determines the scope of assets subject to gift tax (see Question 7).

10. Are there any other taxes on death or on lifetime gifts?

Depending on the type of assets gifted or bequeathed, local taxes including acquisition taxes may be imposed. Generally, the rate will be between 2.3% to 5.75% (including surtax) of the acquisition cost.


Taxes on buying real estate and other assets

11. Are there any other taxes that a foreign national must consider when buying real estate and other assets in your jurisdiction?

Purchase and gift taxes

If a person acquires assets in South Korea, he must pay the following taxes:

  • 0.3% or 0.5% securities transaction tax, which applies to the transfer of shares of a South Korean company.

  • 2.3% to 5.75% acquisition tax (including surtax), which applies to the acquisition and registration of taxable assets such as real estate, ships, aircrafts, motor vehicles, memberships, certain rights and so on.

In addition, a person who becomes a majority shareholder as a result of acquiring more than 50% of shares (including the interests held by related parties) in a South Korean company is deemed to have acquired taxable assets held by the South Korean company and is also subject to a deemed acquisition tax on the book value of the assets in proportion to the percentage of shares acquired.


If real property is purchased and held, holding tax including consolidated real property tax and asset tax will be imposed.

12. What tax-advantageous real estate holding structures are available in your jurisdiction for non-resident individuals?

Tax-advantageous real estate-holding vehicles include real estate investment trusts (REIT) whose management of real estate must be entrusted to an asset management company. If a REIT distributes more than 90% of its distributable income, no corporate income tax will be imposed on such income. Furthermore, the acquisition tax rate for the above structure is reduced by between 30% to 50%.


Taxes on overseas real estate and other assets

13. How are residents in your jurisdiction with real estate or other assets overseas taxed?

South Korean residents are taxed on their worldwide income, regardless of their source including but not limited to:

  • Interest and dividends derived from sources outside South Korea.

  • Rents or royalties from property located outside South Korea, or from any interest in such property.

  • Gains, profits and income from the sale or exchange of real property located outside South Korea and certain shares.


International tax treaties

14. Is your jurisdiction a party to many double tax treaties with other jurisdictions?

South Korea has an extensive network of tax treaties with many jurisdictions around the world (for example, the US and the UK). As of January 2014, South Korea has signed tax treaties with 82 countries.


Wills and estate administration

Governing law and formalities

15. Is it essential for an owner of assets in your jurisdiction to make a will in your jurisdiction? Does the will have to be governed by the laws of your jurisdiction?

The estate of persons who die intestate (without a will) is distributed according to the heir's rank and court's order as provided for in South Korean civil law.

A person can freely dispose of his assets through a will (subject to challenges by beneficiaries (see Question 23)).

Wills are governed by the laws of the state of the testator's citizenship at the time of his death. However, if the will designates laws applicable to the testator based on his habitual residence, or for inheritance related to real property, laws of the state in which the real property is located, such laws will be applicable.

In addition, as for the method of making a will, a method in compliance with the following four types of law is permitted. This is to prevent nullification of wills if there are deficiencies in the method of making the will pursuant to the applicable law (see above):

  • Laws applicable to the testator based on the state of his citizenship.

  • Laws applicable to the testator based on his habitual residence.

  • Laws of the place where the will was made.

  • For wills related to real property, the laws of the state in which the real property is located.

16. What are the formalities for making a will in your jurisdiction? Do they vary depending on the nationality, residence and/or domicile of the testator?

According to South Korean Civil Law, wills must either be made:

  • In handwriting.

  • By an audio recording.

  • By notarised document.

  • By secret document.

  • By a nuncupative will (that is, a will that has been declared orally) that has been transcribed.

The will has no legal effect unless one of the five methods above has been followed.

If a testator is a foreign national, the formalities for making a will can follow the laws of the state of his citizenship or habitual residence.


Redirecting entitlements

17. What rules apply if beneficiaries redirect their entitlements?

A beneficiary may at any time after the death of the testator forfeit his portion of the estate. The forfeited portion is retroactively deemed to not have inherited to him since the death of the testator and therefore will revert to other heirs.


Validity of foreign wills and foreign grants of probate

18. To what extent are wills made in another jurisdiction recognised as valid/enforced in your jurisdiction? Does your jurisdiction recognise a foreign grant of probate (or its equivalent) or are further formalities required?

Validity of foreign wills

Foreign wills can be enforced in South Korea if they are valid under the laws of the foreign jurisdiction (see Question 15).

Validity of foreign grants of probate

Probate recognised as granted by a foreign government will be presumed to be an authenticated document.


Death of foreign nationals

19. Are there any relevant practical estate administration issues if foreign nationals die in your jurisdiction?

If a foreign national dies in South Korea, the estate will be administered under the laws of the foreign national's state of citizenship. Issues may arise with respect to administration of the estate's assets in South Korea and the taxation of these assets.

Assets in South Korea that are part of an estate must be registered. This registration requires submission of various notarised documents including, but not necessarily, a driver's licence or passport. To ensure that estate taxes are paid, South Korean law may require the appointment of a tax administrator who would handle matters related to estate tax.


Administering the estate

20. Who is responsible for administering the estate and in whom does it initially vest?

Responsibility for administering

South Korean law deems each heir the owner of his share of the estate from the time of inheritance to either acceptance or forfeiture of that share and the heir assumes liability for the management of his share until he accepts or forfeits that share.

Furthermore, the court, in response to requests by interested parties or prosecutor, may appoint an estate administrator through whom the court can order measures to preserve the estate even though the heirs already have a duty to manage his share of the estate.

For jointly inherited property, each heir may independently take actions to preserve his share, and actions to manage the property (for example, use and improvement of the property) can only be taken if the heirs with majority share of the property approve.

For wills, the testator can appoint an executor in the will, and can also separately entrust a third party to appoint an executor. If there is no designated executor, the heir becomes the executor. However, if the designated executor does not exist due to death, disqualification or other reasons, the court will appoint an executor in response to the related parties' requests.



See above, Responsibility for administering.

21. What is the procedure on death in your jurisdiction for tax and other purposes in relation to:
  • Establishing title and gathering in assets (including any particular considerations for non-resident executors?

  • Paying taxes?

  • Distributing?

Establishing title and gathering in assets

To establish title and gather the estate's assets, the following procedures must be followed:

  • Register the death. The testator's death must be registered with the relevant government agency in his permanent address within one month.

  • Inquiry into testator's assets. Detailed statements of the testator's financial assets and real property can be obtained from the Financial Supervisory Service and National Geographic Information, respectively.

  • Decision to inherit. The heir may petition the court for forfeiture of his share or limited acceptance (accepting the share with an obligation to pay the estate's debt only up to that share) within three months of the date of the testator's death if the estate has more debts than assets. If the heir fails to petition the court within three months, he will be deemed to have accepted his share of the estate with liability for the estate's debts.

Procedure for paying taxes

The estate tax return must be filed and paid within six months (nine months if the testator or all of the heirs have foreign addresses) of the last day of the month in which the testator died (day of the inheritance) to the head of the relevant tax office.

Distributing the estate

If there is a valid will, the estate will be distributed under that will. If there is no will, the estate may be distributed under a settlement reached between the heirs. However, if no settlement is reached, the executor or the heirs must petition the court to distribute the estate.

22. Are there any time limits/restrictions/valuation issues that are particularly relevant to an estate with an element in another jurisdiction?

When the testator is a foreign national or all of the heirs are outside of South Korea, the deadline for filing an estate tax return is nine months (extended by three months) after the last day of the month in which the testator died. Assets outside of South Korea will be valued in the same way as assets in South Korea for tax purposes. However, if such valuation for foreign assets is inappropriate, the value of the assets for purposes of paying capital gains tax, estate tax, or gift tax in the asset's jurisdiction may be accepted (see Question 7).

23. Is it possible for a beneficiary to challenge a will/the executors/the administrators?

To challenge the will, executor or the administrator of the estate, South Korean civil law provides rules for ensuring heirs receive their legal portions. The testator's spouse and children are entitled to a return of half the estate (calculated by adding the assets gifted and subtracting all debts). The testator's parents and siblings are entitled to a return of one-third of the estate (calculated as above).


Succession regimes

24. What is the succession regime in your jurisdiction (for example, is there a forced heirship regime)?

According to the principle of private autonomy, which dictates respect for property rights, each person may freely dispose of his property and this principle operates after death in the freedom to make a will. However, there are limits on the freedom to make wills (see Questions 23 and 25). Furthermore, even though the heir succeeds to the testator's rights and obligations at the time of testator's death, the law recognises the heir's freedom to forfeit his inheritance.


Forced heirship regimes

25. What are the main characteristics of the forced heirship regime, if any, in your jurisdiction?

While a person may freely dispose of his property by will, the rights of the heirs are also recognised under South Korean civil law. Despite the will, a spouse and children of the testator is entitled to half the estate (calculated by adding the assets gifted and subtracting all debts). The parents and siblings of the testator are entitled to one-third of the estate (calculated as above). However, it is not considered a forced heirship regime as the estate will be distributed by will unless the heir claims his legal shares.

Avoiding the regime

Not applicable (see above).

Assets received by beneficiaries in other jurisdictions

Generally, an heir may claim his legal shares against all assets of a testator including property received by the other heirs in another jurisdiction.


Real estate or other assets owned by foreign nationals

26. Are real estate or other assets owned by a foreign national subject to your succession laws or the laws of the foreign national's original country?

Inheritance is subject to law of the state of the decedent's citizenship at the time of death.

27. Do your courts apply the doctrine of renvoi in relation to succession to immovable property?

South Korean Conflict of Laws recognises the doctrine of renvoi. However, a broad exception exists to limit the application of the doctrine and in practice, courts liberally apply this exception to deny its application. For succession of immovable property, if the applicable law is designated by the will, the doctrine does not apply.



28. What different succession rules, if any, apply to the intestate?

When a person dies intestate, the estate is distributed based on the statutory distribution order and legally entitled intestate shares set out in the South Korean Civil Law. Under the intestacy rule, both children and spouse are granted a priority but the spouse's shares are increased by 50% (see Question 37).

29. Is it possible for beneficiaries to challenge the adequacy of their provision under the intestacy rules?

It is possible for beneficiaries to challenge the adequacy of their legal shares under the intestacy rules. Generally, the beneficiaries receive legal shares determined in accordance with the intestacy rules. The beneficiary can argue that his or her share of contribution should be added to the legal share, if one or more beneficiaries either:

  • Supported the intestate for a considerable period of time by living together with the intestate, taking care of the intestate and so on.

  • Contributed to maintaining or increasing the intestate’s assets.



30. Are trusts (or an alternative structure) recognised in your jurisdiction?

Type of trust and taxation

Trusts are generally recognised and viewed as transparent vehicles so the beneficiaries rather than the trusts are taxed depending on the income category. There are exceptions to this general rule. Under the exception, any income and gains derived by the trust is re-characterised as dividend income and taxed to the beneficiaries of the trust at the time of distribution.

Residence of trusts

Residence of a trust is determined by Corporate Income Tax Law and PITL. If a corporate-type trust’s headquarters or main office or the place of effective management for the trust’s business is located in South Korea, such a trust may be considered a Korean resident corporation. However, in many cases, a trust is not a separate legal entity and therefore is not an entity for tax purposes.

31. Does your jurisdiction recognise trusts that are governed by another jurisdiction's laws and are created for foreign persons?

South Korean trust law only regulates and recognises the trusts established in South Korea and does not have separate regulations for the trusts established under the law of another jurisdiction.

32. What are the tax consequences of trustees (for example, of an English trust) becoming resident in/leaving your jurisdiction?

If a trustee of an English trust becomes a South Korean tax resident, it is subject to tax on its worldwide income (for example, trustee fees (see Questions 2 and 13)).

However, the income and gains derived by the English trust are not necessarily subject to Korean tax as a result of the trustee becoming a South Korean tax resident. The income and gains derived by the English trust are taxed in South Korea depending on whether the English trust is:

  • Considered a separate taxable entity.

  • Disregarded for Korean tax purposes.

If the English trust is disregarded, the tax consequences of the income and gains derived by the English trust depend on the tax residency of the beneficiaries and whether they have a permanent establishment in Korea (see Questions 6 and 13). The tax residency of the trustee of the English trust does not have a direct impact on the taxation of income and gains derived by the English trust.

33. If your jurisdiction has its own trust law:
  • Does the law provide specifically for the creation of non-charitable purpose trusts?

  • Does the law restrict the perpetuity period within which gifts in trusts must vest, or the period during which income may be accumulated?

  • Can the trust document restrict the beneficiaries' rights to information about the trust?

Purpose trusts

A trust is divided into public trust and private trust depending on whether the settlor's intended purpose of trusts is for public interests or private interests.

Under trust law, public trust is defined as academics, religion, ritual, charity and other public benefits. All the other trusts that are not public trusts are private trusts.

Unlike the private trusts regulations, there is a separate regulatory regime for public trusts taking into consideration its public characteristics.

South Korea does allow the creation of private purpose trusts (that is, non-charitable or for the public benefit) where there are no beneficiaries.

Perpetuities and accumulations

There are no specific provisions on perpetuities.

Beneficiaries' rights to information

A trust agreement may limit the beneficiaries' rights to information.

34. Does the law in your jurisdiction recognise claims against trust assets by the spouse/civil partner of a settlor or beneficiary on the dissolution of the marriage/partnership?

Under South Korea's Civil Law, only assets jointly accumulated by both spouses are subject to distribution on dissolution of marriage. Claims for trust assets of a trust whose beneficiary includes only one spouse are not subject to distribution.

However, trust assets can be subject to distribution if the other spouse's contribution in the formation and maintenance of the rights to trust assets is recognised.

35. To what extent does the law of your jurisdiction allow trusts to be used to shelter assets from the creditors of a settlor or beneficiary?

Trust assets are protected from attachment, garnishment or any other enforcement measure. However, if a debtor establishes a trust with the knowledge that it is detrimental to its creditors, the creditors may claim the dissolution of trust as well as rescission.



36. Are charities recognised in your jurisdiction?

There is no answer content for this Question, as it is a new addition to the template that did not exist at the time of writing.

37. If charities are recognised in your jurisdiction, how can an individual donor set up a charity?

There is no answer content for this Question, as it is a new addition to the template that did not exist at the time of writing.

38. What are the benefits for individuals when setting up charitable organisations?

There is no answer content for this Question, as it is a new addition to the template that did not exist at the time of writing.


Ownership and familial relationships


39. What are the laws regarding co-ownership and how do they impact on taxes, succession and estate administration?

Korean Civil Law classifies co-ownerships into three categories:

  • Gong-Yu. Under Gong-Yu, each co-owner maintains its own independent interests.

  • Hap-Yu. Under Hap-Yu, the type of co-ownership where a title is held by a partnership organised for a common purpose and the transfer of interests is restricted.

  • Chong-Yu. Chong-Yu is a co-ownership held by an unincorporated association. Under Chong-Yu, each member of the association does not own independent interests.

The type of co-ownership significantly influences the tax liability, inheritance or estate administration. Under Gong-Yu, each owner is responsible for management and taxes in proportion to his own interests.


Familial relationships

40. What matrimonial regimes in trust or succession law exist in your jurisdiction? Are the rights of cohabitees/civil partners in real estate or other assets protected by law?

In intestacy, a spouse becomes a joint distributee with their children. After the estate's property is equally divided among joint distributees, the spouse's shares are increased by 50% for the purpose of estate distribution. Generally, cohabitees do not have inheritance rights (civil partners are not recognised under Korean law (see Question 42)). However, if there are no heirs and a cohabitee contributed to supporting the decedent during his life, the cohabitee or civil partner may be entitled to a share of the estate.

41. Is there a form of recognised relationship for same-sex couples and how are they treated for tax and succession purposes?

South Korea's Civil Law does not recognise same sex marriage. Accordingly, there is no specific provision for same-sex couples under tax law or estate law.

42. How are the following terms defined in law:
  • Married?

  • Divorced?

  • Adopted?

  • Legitimate?

  • Civil partnership?


Marriage means a formal union between a man and woman for cohabitation purposes, which is socially accepted and recognised by the law.


Divorce is the legal dissolution of a marital status, which takes effect through an agreement or a divorce proceeding.


Adoption means an agreement between the adoptee (generally a minor) and adopter who wants to establish an adoptive relation. The adoptee, from the time of adoption, is afforded the same legal treatment as a person born to a legally married couple (legitimate child).


Legitimate means a person who is born to a legally married couple. Unlike an extramarital child, a legitimate child’s parent-child relationship is recognised without any particular process.

Civil partnership

Civil partnership is not recognised under South Korean civil law (see Question 41).



43. What rules apply during the period when an heir is a minor? Can a minor own assets and who can deal with those assets on the minor's behalf?

A minor below the age of 19 has no legal capacity to act on his own. Generally, the minor cannot take any independent legal action unless his parent or legal guardian provides consent. However, an exception is recognised if the minor can get the parent or legal guardian to expressly allow the disposition. The right to possess assets is not restricted, therefore, the minor can hold inherited assets.


Capacity and power of attorney

44. What procedures apply when a person loses capacity? Does your jurisdiction recognise powers of attorney (or their equivalent) made under the law of other jurisdictions?

A person's loss of capacity may be declared by the court order on a claim filed by his family members or close relatives. While the determination of capacity is generally based on the law of the state of a person's citizenship, the court may decide the capacity of a foreign person who resides in South Korea under South Korean law.

Law in relation to statutory power of attorney (unlike that of general powers of attorney) is a mandatory regulation. Therefore, under South Korean law it takes priority over the law in the foreign jurisdiction even when it is agreed the foreign law is the governing law.


Proposals for reform

45. Are there any proposals to reform private client law in your jurisdiction?

Under the recently enacted FFAR Rule South Korean residents must file an annual report to the relevant tax office for their financial accounts held with overseas financial institutions, if the total value of these accounts exceeds KRW1 billion.

The tax amendments provide that non-compliant residents who do not report foreign financial accounts must clarify the source of those funds. The amendments establish a new provision that imposes 10% penalties for unaccounted funds when the violator does not comply with the Korean tax authorities' request to clarify the source. This provision will be applicable to foreign financial accounts held in and from 2014 .


Online resources

South Korea Ministry of Government Legislation


The official website of the South Korea Ministry of Government Legislation, which provides original language text of Korean laws and regulations. The website is also available in English.

South Korean National Tax Law Information System


The information within the official website of South Korea National Tax Law Information System is provided by the South Korean National Tax Service. The website contains tax information including original language text of tax laws and rules, rulings and court cases. The website is also available in English.

Contributor profiles

Kyu Dong Kim

Yulchon LLC

T +82 2 528 5542
F +82 2 528 5228

Professional qualifications. Delaware, US, CPA, 2000

Areas of practice. International tax; individual/corporate tax planning; tax disputes.

Recent transactions

  • Representing high net worth individuals, private equity funds, trusts and non-profit organisations in various tax disputes (tax investigation and administrative appeals) involving their overseas investments.

  • Advising high net worth individuals and institutional investors in structuring their assets outside South Korea.

Yong Whan Choi

Yulchon LLC

T +82 2 528 5709
F +82 2 528 5228

Professional qualifications. South Korea, Attorney, 2007

Areas of practice. International tax litigation.

Recent transactions. Dealing with international tax litigation, trust tax consulting, estate and gift tax related tax litigation.

Yu Jeong Kang

Yulchon LLC

T +82 2 528 5825
F +82 2 528 5228

Professional qualifications. South Korea, CPA, 2006

Areas of practice. International tax; individual tax; estate and gift tax.

Recent transactions. Advising clients on individual taxes, estate and gift taxes, and on the integration of these matters with the client's business objectives.

Jeong-mo Koo

Yulchon LLC

T +82 2 528 5948
F +82 2 528 5228

Professional qualifications. New York, US, Attorney, 2014

Areas of practice. International tax.

Recent transactions. Dealing with international tax litigation, trust tax consulting, estate and gift tax related tax compliance.

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