How a company transaction can create a shareholder gift benefit
Giving assets to a family company or paying its debts can improve the value attributable to its shareholders even when they receive no cash directly.
Reviewing only the company’s corporate tax can therefore overlook a shareholder gift-tax issue.
This calculator allocates transaction benefits after attributed corporate tax and separately checks each shareholder’s review threshold.
It is intended for controlling shareholders, family shareholders and finance staff preparing an asset gift or debt settlement.
A percentage allocation is not final gift tax.
The tool separates formula amounts, conditional gift benefits and the comparison cap against a hypothetical direct gift.
Default figures are fictional and confirmations start unchecked.
All amounts are KRW and all rules are Korean 2026 rules.
The 30% company test and KRW 100 million shareholder test
Company and relationship conditions
Inheritance and Gift Tax Act Article 45-5 covers a company where the controlling shareholder and relatives hold at least 30% directly or indirectly.
The provider must be a related party of the controlling shareholder; familiarity or an ordinary business relationship is insufficient.
Confirm controlling-shareholder status under Decree Article 34-5(1) and its incorporated rules.
Individual benefit condition
Decree Article 34-5(5) limits the deemed-gift rule to each relevant shareholder’s benefit of at least KRW 100 million.
Do not combine the group’s benefits into one threshold test.
Exactly 30% and exactly KRW 100 million are included.
The threshold is not a deduction from the benefit.
Use verified, nonduplicated direct and indirect holding percentages.
The tool does not resolve ownership chains, controlling status or family relationships automatically.
You may list only selected controlling/family shareholders; unlisted group holdings are reported.
Listed holdings cannot exceed the combined group percentage.
Supported transactions and the dissolution exception
- Asset gifts: Enter the verified gift value under the applicable valuation rules.
Book value or purchase cost may differ from that value; retain the valuation evidence.
- Debt waiver, assumption or payment: Enter the verified benefit the company receives.
Align the contract, outstanding balance, waiver terms and actual payment records.
- Ordinary dissolution: Exclude debt items when the company is being dissolved with no residual assets distributable to shareholders.
Merger/demerger dissolution is outside this exception, and asset-gift items are not also excluded.
Up to eight items must belong to one provider and one gift date.
Combining different donors or dates can change donor attribution and tax comparisons.
Capital transactions such as share issues, cancellations and mergers, bargain/premium transactions, loans and services are outside this calculator’s scope.
That does not mean those transactions are legally exempt; their own provisions require review.
Determining attributed corporate tax
The calculator never assumes an average corporate-tax rate.
Enter a professionally verified attributed amount or calculate the allocation from verified annual figures under Decree Article 34-5(4).
Direct mode uses tax already attributed to this transaction, while allocation mode starts with the relevant annual tax amount.
Allocation formula
C = T × min(G ÷ Y, 1)
- G: transaction benefit after excluding qualifying dissolution debt
- T: corporate tax after credits and reductions, excluding corporate tax on land transfers
- Y: annual income under Corporate Tax Act Article 14
- C: corporate tax attributed to this transaction
The allocation fraction cannot exceed 1.
Do not add local corporate income tax or use a tax figure before the required credits and reductions.
With zero income or a loss, automatic allocation remains pending; obtain a verified direct amount instead.
Unconfirmed records leave corporate tax, net benefit and the shareholder threshold pending, not zero.
Attributed tax exceeding the transaction benefit is flagged for correction.
From company net benefit to each shareholder
Benefit allocation
Company net benefit N = G − C
Shareholder formula benefit B = N × r
Gross benefit share = G × r
Corporate-tax share = C × r
Distance to the threshold
Threshold gap = B − KRW 100,000,000
Company net required = KRW 100,000,000 ÷ r
Convert the entered percentage into ratio r.
For a 0% holding, the required company net is not applicable.
The formula amount allocates the entered numbers; the conditional gift benefit also reflects confirmed eligibility.
Do not determine filing obligations from formula amounts while the assessment is pending.
Failure to meet this provision or its threshold does not establish exemption under other gift provisions or taxes.
Amounts display up to two decimal places, but the threshold comparison uses unrounded precision.
Tax-return rounding and payable tax require separate review.
Comparing the cap with a hypothetical direct gift
Act Article 45-5(2) and Decree Article 34-5(9) compare the direct-gift tax equivalent with corporate tax attributable to the shareholder.
The hypothetical direct-gift amount is gross transaction benefit times the holding, before corporate-tax deduction.
Using the net-benefit share for that calculation would change the comparison basis.
Verify both tax inputs first
A = verified gift tax before this cap
D = verified tax on a direct gift of the gross benefit share
L = max(0, D − C × r)
Tax comparison after cap = min(A, L)
Reduction above cap = A − min(A, L)
A Korean tax adviser should verify consistent donor attribution, prior gifts, deductions and prior-tax credits.
The prior-gifts field is a record, not an automatically aggregated taxable base or a deduction instruction.
Recording past gifts does not complete the tax review, and an unknown tax amount must not be entered and confirmed as zero.
Other input changes clear shareholder tax confirmations because the previously reviewed tax basis may have changed.
The result compares the statutory cap; it is not final payable tax including filing credits, penalties or other adjustments.
Step-by-step review
- Enter the date and provider, then verify the group holding and related-party relationship.
The transaction date is the starting point for reviewing the gift date.
- Enter the verified benefit for each asset or debt item.
For a dissolving company, confirm the dissolution cause and residual assets first.
- Enter attributed corporate tax or annual allocation inputs and confirm the records.
Taxable annual income is not necessarily accounting net profit.
- Enter selected shareholder holdings and prior-gift records.
Review the after-corporate-tax benefit and individual threshold, then optionally add the two verified tax figures.
- Check pending reasons and unlisted holdings before saving or printing.
Distinguish assumed inputs from evidence-backed figures in the adviser’s review pack.
Worked example: KRW 500 million and a 40% holding
Benefit allocation
Gross benefit KRW 500,000,000 less corporate tax KRW 100,000,000 gives company net benefit KRW 400,000,000.
At 40%, the shareholder formula benefit is KRW 160,000,000, corporate-tax share KRW 40,000,000 and gross benefit share KRW 200,000,000.
The benefit is KRW 60,000,000 above the threshold, but the review flag requires all eligibility checks to be confirmed.
Independent cap arithmetic
For an independent formula check, assume A is KRW 20,000,000 and D is KRW 70,000,000.
L is KRW 30,000,000 and the capped comparison remains KRW 20,000,000.
If D is instead KRW 30,000,000, it is below the corporate-tax share, so L and the capped comparison are zero.
These assumed tax inputs are not tax amounts automatically calculated from the preceding property values.
With gross benefit KRW 250,000,000, verified zero corporate tax and a 40% holding, the benefit is exactly KRW 100,000,000 and meets the threshold.
Gross benefit KRW 249,999,999 falls below it.
In allocation mode, gross benefit KRW 500 million, annual tax KRW 200 million and income KRW 1 billion give attributed tax KRW 100 million.
If income is KRW 250 million, the fraction is capped at 1 and attributed tax is KRW 200 million.
Repeated transactions, scenarios and pending information
Act Article 43(2) requires review of benefits from the same transactions within the preceding year.
A current transaction below KRW 100 million may therefore produce a different result after aggregation.
Article 43(1) also requires review of the largest benefit where gift provisions overlap.
This tool does not automate complex aggregation: leave confirmation unchecked if repeated transactions or overlapping provisions exist or remain unknown.
Holding scenarios are arithmetic references
The calculator shows holdings five percentage points below and above the current value, bounded by 0–100%.
Company net benefit stays fixed; controlling status, relatives and the group holding test are not reassessed.
This does not calculate taxes on a share transfer or recommend a tax-saving transaction.
Scenario amounts remain conditional references when the evidence is incomplete.
Pending reasons distinguish missing corporate-tax records, an unknown relationship, unresolved debt-dissolution status and dates outside the supported range.
This edition uses the decree effective 2026-10-01 for transactions or planning scenarios through 2026-12-31.
Earlier dates and other years need their applicable rules reviewed separately.
Recheck legislative changes before carrying out a planned transaction.
Frequently asked questions
Is only the amount above KRW 100 million a gift benefit?
No.
The inclusive KRW 100 million test is an applicability threshold, not a subtraction from the benefit or a gift deduction.
Is a shareholder below 30% automatically excluded?
No.
The 30% test uses combined direct and indirect holdings of the controlling shareholder and relatives.
Each shareholder’s allocated benefit is then tested separately.
Does a company loss automatically mean exemption?
No.
A loss alone does not resolve the review.
Automatic allocation requires positive annual income; for losses or zero income, obtain a professionally verified attributed corporate-tax amount.
Can I split debt waivers across dates and test each separately?
Review the preceding-year aggregation requirement under Article 43.
Separate below-threshold outputs cannot establish the outcome without that review.
Why are prior gifts not automatically used to calculate tax?
Donor attribution, aggregation, deductions and prior-tax credits require verification.
Prior gifts are saved as records, and the cap uses two separately verified gift-tax inputs.
Are all transactions excluded during dissolution?
No.
Only qualifying debt waiver, assumption or payment is excluded for ordinary dissolution with no residual assets.
Asset gifts and merger/demerger dissolution require separate treatment.
Does a zero capped comparison mean no filing is needed?
That conclusion is not automated.
The amount compares two verified tax inputs and attributed corporate tax; filing duties, other gift rules and penalties require separate review.
Does the English page use the same Korean rules?
Yes.
Both languages call the same pure calculation function, use KRW and apply the same 2026 Korean rules.
The English version does not apply a foreign gift-tax system.
Official sources and update dates
Verified 2026-10-01 through the National Law Information OPEN API.
The current Inheritance and Gift Tax Act is ID 001561 / MST 276123, with an overall effective date of 2026-01-02.
The current decree is ID 003814 / MST 290845, promulgated and effective 2026-10-01.
The API lists 2025-10-01 as the individual effective date for Act Articles 45-5 and 43; distinguish an article’s date from the overall statute edition.
After amendments, recheck ownership, thresholds, corporate-tax adjustments, dissolution exceptions and the direct-gift cap.
Expanded capital-transaction rules and case-specific judicial interpretations are not automated here.
Prepare the review report with supporting records
Collect share registers, ownership chains, provider relationships, valuations and debt contracts, corporate-tax adjustments, past transactions and gift-tax calculations.
The TXT report includes inputs, confirmation states, excluded debt, corporate tax, shareholder allocations, caps and pending reasons.
Saving or printing does not confirm that advice or filing has been completed.
Record who checked the evidence and when.
Enter the transaction and prepare a shareholder review