Family Business Succession Gift Tax Calculator

What is the family business succession gift tax special taxation?

Korea’s family business succession gift-tax special taxation lets an 18-or-older resident child who receives shares in a family business (an SME or mid-size company) that a parent aged 60+ has run for 10+ years, and who takes over that business, pay gift tax at a low special rate instead of the general progressive gift tax (10% to 50%).
It is set out in Article 30-6 of the Restriction of Special Taxation Act and supports transferring a business to the next generation while the founder is still alive (an inter-vivos gift).

Two things are central.
First, KRW 1 billion is deducted from the gift tax base.
Second, the rate is 10% (20% on the portion of the tax base above KRW 12 billion).
Compared with the 50% top rate of general gift tax, the burden is dramatically lower.

Korea-based, 2026 rules. This calculator reflects the Restriction of Special Taxation Act Article 30-6 and its Enforcement Decree Article 27-6 (in force from 2026-07-01). It is a reference estimate for Korean gift tax and does not replace professional filing advice.

The three requirement groups

All three groups below must be satisfied.
If even one group fails, the special rate cannot be used and general gift tax applies, so each must be checked carefully.

1. Business requirements

The business must be an SME or a mid-size enterprise whose main line of business is an eligible industry under the Enforcement Decree.
A mid-size enterprise must have average revenue under KRW 500 billion over the three fiscal years before the year of the gift.

• A large company with average revenue of KRW 500 billion or more over the prior three years is excluded.
• Some industries, such as real-estate leasing, may be excluded from the eligible-industry list.
• The parent must have run the business continuously for 10+ years for it to count as a family business.

2. Requirements for the donor (parent)

The parent must be 60 or older on the gift date and must have run the business continuously for 10+ years.
This operating period sets the cap on the gift tax base eligible for the special taxation.

• The parent must be 60+ on the gift date. This is a gift-specific condition that does not exist in the family business inheritance deduction, which supports post-death succession.
• The parent and related parties combined must have held at least 40% (20% for a listed company) of total shares continuously for 10+ years.
• During the operating period the parent must have served as CEO for either at least 50% of the period, or at least 5 of the last 10 years before the gift date.

3. Requirements for the recipient (child)

The recipient child must be an 18-or-older resident and must actually take over and participate in running the business.
Executing the succession within the statutory deadlines is key.

• The recipient or their spouse must work in the business by the gift tax return deadline.
• The recipient or their spouse must become CEO within 3 years of the gift date.
• The gift tax return deadline is the end of the third month after the month in which the gift is received.

How the special rate and cap are calculated

The cap on the gift tax base eligible for the special taxation rises with how long the parent ran the business.
The actual eligible base is the smaller of the family-business asset value and this cap.

Base cap by operating period (Article 30-6(1))

• 10 to under 20 years: KRW 30 billion
• 20 to under 30 years: KRW 40 billion
• 30 years or more: KRW 60 billion

Special gift tax formula

Taxable amount = min( family-business asset value , period cap )
Tax base = taxable amount − KRW 1 billion
Gift tax = tax base × 10% (20% on the part above KRW 12 billion)

• The family-business asset value is the business-related portion of the gifted shares, excluding the non-business asset ratio.
• After deducting KRW 1 billion, a tax base of KRW 12 billion or less is taxed entirely at 10%; the part above KRW 12 billion is taxed at 20%.
• If the asset value exceeds the cap, the excess is not eligible and is taxed under general gift tax rules.

For example, receiving shares of a business run for 30 years (family-business asset value KRW 20 billion) gives a taxable amount of KRW 20 billion within the KRW 60 billion cap.
After the KRW 1 billion deduction, the KRW 19 billion base is taxed at 10% on KRW 12 billion (KRW 1.2 billion) and 20% on the excess KRW 7 billion (KRW 1.4 billion), for KRW 2.6 billion of special gift tax.
The same amount under general gift tax (progressive 50%) would be roughly KRW 9.5 billion, so the special taxation saves about KRW 6.9 billion.

How to use this calculator

Step 1. Enter the business details

Choose SME or mid-size enterprise, and enter the average revenue over the prior three years and whether it is listed.
Revenue of KRW 500 billion or more excludes the business, so enter it accurately.

Step 2. Enter the donor (parent) details

Enter whether the parent is 60+, the operating period, the largest-shareholder ratio and holding period, and the CEO tenure.
The 30/40/60 billion cap shows automatically based on the operating period.

Step 3. Confirm the recipient (child) conditions

Select yes/no for 18+ resident status, working by the return deadline, and CEO appointment within 3 years.
The recipient’s spouse meeting the conditions also counts.

Step 4. Enter the asset value and calculate

Enter the family-business asset value in units of 100 million won and press Calculate.
The pass/fail of each group, the special gift tax, and the saving versus general gift tax appear at once.

How is it different from the inheritance deduction?

The gift special taxation supports an inter-vivos gift while the parent is alive, whereas the family business inheritance deduction (Inheritance and Gift Tax Act Article 18-2) supports succession after death.
The two are the twin pillars of business succession, and in practice they are designed together to time the handover.

• The gift route has a 60+ donor requirement; the inheritance deduction assumes death, so it has no such requirement.
• The gift route deducts KRW 1 billion from the base and taxes it at 10%/20%; the inheritance deduction removes up to KRW 60 billion of asset value from the base.
• Shares received under the gift route are added back to the estate when the donor later dies, but can be settled with the inheritance deduction at that stage if the conditions are met.
• The recipient’s CEO appointment deadline differs: within 3 years for the gift route, within 2 years of the return deadline for the inheritance deduction.

Pitfalls people often miss

The parent-60 and child-18 age tests

If the donor parent is under 60 on the gift date, the special taxation cannot apply.
The recipient child must also be an 18-or-older resident, so both ages must be checked when timing the succession.

If the parent is just short of 60, a few months can decide eligibility, so the gift timing should be adjusted carefully.

CEO appointment within 3 years of the gift

The recipient or their spouse must work in the business by the return deadline and become CEO within 3 years of the gift date.
Merely receiving the shares without joining management causes the special taxation to be denied.

Keep evidence of the appointment date and manage the schedule so the 3-year deadline is not missed.

The 5-year post-management recapture

Even after receiving the special taxation, if within 5 years of the gift the recipient breaches the post-management conditions without justifiable cause, the reduced gift tax plus interest is recaptured.
The large reduction is granted on the premise that the recipient keeps running the business.

• Recapture applies if the recipient stops working in the business or suspends/closes it.
• Not keeping the CEO role until 5 years after the gift can trigger recapture.
• Recapture applies if the gifted shareholding decreases.
• A conviction for tax evasion or accounting fraud related to management can deny or recapture the special taxation.

Frequently asked questions

Q. How exactly do the KRW 1 billion deduction and 10% rate apply?

A. KRW 1 billion is first deducted from the taxable amount to get the tax base.
A tax base of KRW 12 billion or less is taxed entirely at 10%; above KRW 12 billion, the excess is taxed at 20%.

Q. What if several children each receive a share?

A. If two or more residents receive shares and take over the business, the shares are treated as if one person received them all; the tax is computed once and then apportioned by shareholding ratio.
So the deduction and low-rate band are not duplicated per person.

Q. What happens to the gifted shares when the donor dies?

A. Shares received under the special taxation are added back to the estate regardless of timing and settled through inheritance tax.
If the inheritance stage meets the family business inheritance deduction conditions, it is adjusted there, so designing the two together is advantageous.

Q. Can it be combined with the startup fund gift special taxation?

A. A person who receives the family business succession gift special taxation cannot also apply the startup fund gift special taxation (Article 30-5).
You must choose the one that fits the situation.

Q. Can I file directly from this result?

A. This is a reference judgment tool.
Actual filing requires evidence of the industry, asset composition, shareholding structure, and engagement history, so consult a tax professional.

Tips and cautions

Check parent-60 and 10-year operation first: these two conditions are the starting point, and the operating period drives the cap (KRW 30/40/60 billion).
Distinguish the 40% and 20% tests: the threshold is 40% for unlisted and 20% for listed companies, held continuously for 10+ years.
Plan the recipient’s CEO appointment within 3 years: missing the 3-year appointment or the by-deadline engagement denies the special taxation.
Compare with general gift tax: the 10%/20% special rate saves a great deal versus the progressive 50%, so the calculator’s comparison helps decision-making.
Do not forget the 5-year post-management: leaving the business, suspension/closure, share reduction, or losing the CEO role triggers recapture with interest.

Calculate your family business succession gift tax now

Verify the business, donor (parent), and recipient (child) conditions one by one, and estimate the period-based cap, the special gift tax, and the saving versus general gift tax.

Based on the Restriction of Special Taxation Act Article 30-6 and Enforcement Decree Article 27-6, 2026 rules.

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