Startup Fund Gift Tax Special Taxation Calculator

Estimate Korea’s startup fund gift-tax special taxation (Restriction of Special Taxation Act Article 30-5): when a resident child aged 18+ receives cash from a parent aged 60+ to start an eligible SME, the gift tax base is capped at KRW 5 billion (KRW 10 billion if 10 or more new employees are hired), a KRW 500 million deduction applies, and a flat 10% rate replaces the 10-50% progressive gift tax. Covers the donor/recipient and startup-use tests (start within 2 years, spend within 4 years, special application by the filing deadline), the recapture of the reduced tax plus interest (0.022% per day, about 8.03% per year) on violations, and the unconditional addition to the estate for inheritance tax regardless of elapsed time.

Tax scenario inputs

Enter Korea-related tax assumptions in KRW. The model uses a simplified effective-rate estimate.

Taxable transfer value

₩500,000,000

Estimated gross tax

₩50,000,000

Net tax after adjustment

₩50,000,000

After-tax amount

₩950,000,000

Effective rate

5%

This English page is a simplified Korea-related tax planning estimate. It does not reproduce official forms, progressive brackets, exemptions, local surtaxes, filing classifications, or eligibility decisions. Confirm current Korean rules before filing, paying, investing, or restructuring.

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What is the startup fund gift tax special taxation?

The startup fund gift-tax special taxation lets a parent hand down money in advance so that a child can start a small or medium enterprise (SME), taxing that gift at a low rate instead of the heavy general gift tax.
It is set out in Article 30-5 of Korea’s Restriction of Special Taxation Act: when a resident aged 18 or older receives a startup fund from a parent aged 60 or older, KRW 500 million is deducted from the gift tax base and a flat 10% rate applies to the remainder.
Compared with the general gift tax, which is progressive from 10% up to 50%, the burden is far lower.

This calculator checks whether the requirements are met under the 2026 rules and compares the special gift tax with the general gift tax to show the saving.
It also surfaces the biggest traps of this regime: the recapture and interest charged if the post-management rules are broken, and the unconditional addition of the fund to the estate for inheritance tax.

Korea-based, 2026 rules. This calculator reflects the Restriction of Special Taxation Act Article 30-5 and its Enforcement Decree Article 27-5 (2026 current law). It is a reference estimate for Korean gift tax and does not replace professional filing advice.

Key requirements for the special taxation

The requirements are strict, and if even one is not met, the general gift tax applies instead.
All of the conditions below must be satisfied to use the KRW 500 million deduction and the 10% rate.

1. Donor and recipient requirements

  • • Recipient (child): must be a resident aged 18 or older on the gift date.
  • • Donor (parent): must be 60 or older on the gift date. If the parent has died, that deceased parent’s own parent (the grandparent) is included.

2. Startup and fund-use requirements

  • • Eligible industry: the child must start an SME in one of the industries listed in Article 6(3) of the Act. Some sectors, such as real-estate leasing, are excluded.
  • • Type of asset: land, buildings, shares and other assets subject to capital gains tax (Income Tax Act Article 94(1)) are excluded — the fund must be cash, deposits, and the like.
  • • Start within 2 years: the business must be registered within 2 years of the gift date.
  • • Spend within 4 years: the entire fund must be used for business assets or lease deposits and rent within 4 years of the gift date.
  • • Special application: a startup-fund special-taxation application must be filed by the gift tax return deadline. Without it, the special taxation cannot be applied.

How is the gift tax calculated?

1. Cap on the tax base

There is a cap on the gift tax base eligible for the special taxation.
The base cap is KRW 5 billion, rising to KRW 10 billion if the startup creates 10 or more new jobs.
Any amount above the cap is taxed under the general gift tax.

2. KRW 500 million deduction, then 10%

The tax base is the fund minus the KRW 500 million deduction.
A flat 10% rate is applied to that base.

Example: a KRW 1 billion startup fund

Gift tax value = KRW 1 billion

Tax base = 1 billion − 500 million (deduction) = KRW 500 million

Special gift tax = 500 million × 10% = KRW 50 million

General gift tax (for comparison) = about KRW 225 million

→ about KRW 175 million saved

3. Multiple gifts are aggregated

If the fund is received in two or more gifts, or separately from each parent, the taxable values are added together.
In effect, the KRW 500 million deduction applies only once to the whole startup fund.

How to use this calculator

Step 1: Enter the startup fund

Enter the fund (cash, etc.) in KRW and choose whether the startup creates 10 or more new jobs.
The cap becomes KRW 5 billion or KRW 10 billion depending on hiring.

Step 2: Check the requirements

Answer yes or no for the donor/recipient and startup/use conditions.
Answering honestly shows immediately which requirement is missing.

Step 3: Review the special gift tax

Pressing calculate shows the special gift tax, the general gift tax, and the saving.
If the fund exceeds the cap, a note on the general tax for the excess appears too.

Step 4: Check recapture and estate risk

Enter the elapsed years to simulate the recapture including interest.
Read the inheritance-tax note as well when planning for the long term.

Break the rules and the interest is recaptured too

In exchange for the upfront tax cut, the authorities track for a long time whether the fund is actually used for the business.
In the following cases, the reduced gift tax and interest are recaptured together (Article 30-5(6)).

  • • Not starting the business within 2 years of the gift.
  • • Using the fund to run a business outside the eligible industries.
  • • Not using the entire fund for its purpose within 4 years of the gift.
  • • Disposing of the fund (or property acquired with it) for non-business use, or closing the business, within 10 years of the gift.

The interest is the assessed gift tax multiplied by the period from the day after the filing deadline to the day the violation occurs, times a daily rate of 22 per 100,000 (about 8.03% per year).
The longer the time that passes, the heavier the interest, so keeping the requirements matters a great deal.

Watch the inheritance tax addition especially

Another feature of this regime is its link to inheritance tax.
While an ordinary prior gift is added to the estate only if made within 10 years of death (5 years for non-heirs), the startup fund is added to the inheritance tax base regardless of the period between the gift and the date of death (Article 30-5(9)).

In other words, no matter how long ago it was received, the startup fund is never left out of the inheritance tax calculation.
The gift tax already paid on the fund is credited against the inheritance tax due, but if that credit exceeds the inheritance tax, the difference is not refunded.

Also, a resident who uses the startup fund special taxation (Article 30-5) cannot also use the family business succession gift-tax special taxation (Article 30-6), so it is wise to compare the two before deciding.

Frequently asked questions (FAQ)

Q. Can I gift real estate as the startup fund?

A. No. Land, buildings, shares and other assets subject to capital gains tax (Income Tax Act Article 94(1)) are excluded from the startup fund special taxation.
You should gift cash or deposits and use them for business assets or lease deposits and rent.

Q. Is there no tax at all for a gift of KRW 500 million or less?

A. Because KRW 500 million is deducted from the tax base, a fund of KRW 500 million or less leaves a base of zero and no special gift tax arises.
You still need to meet the conditions, including the special application, and the amount is still added to the estate at inheritance.

Q. Can I use both the startup fund and the family business succession special taxation?

A. No. A resident who uses the startup fund special taxation (Article 30-5) cannot use the family business succession gift-tax special taxation (Article 30-6).
Choose the more favorable regime depending on whether you are starting a new business or taking over an existing family business.

Q. When is the 10-new-jobs condition useful?

A. Creating 10 or more new jobs raises the cap from KRW 5 billion to KRW 10 billion.
For a large startup where the fund exceeds KRW 5 billion, meeting the hiring condition lets the special taxation apply to a larger amount.

Q. Can I file directly based on this result?

A. This calculator is a reference tool based on Restriction of Special Taxation Act Article 30-5 and Enforcement Decree Article 27-5 (2026 current law).
The scope of the fund, industry classification, usage statements and post-management are complex, so consult a tax professional before filing.

Tips and cautions

  • Do not miss the special application: it must be filed by the gift tax return deadline; miss it and the special taxation is lost even if every other condition is met.
  • Keep a usage statement: you must submit a startup-fund usage statement, and failing to do so triggers a penalty (0.3%).
  • No filed-return credit: unlike general gift tax, the startup fund special taxation does not allow the 3% credit for filing a return.
  • Plan for the long term: because the fund is unconditionally added to the estate, weigh future inheritance tax, not just the gift tax, when judging whether it pays off.
  • Confirm the industry first: eligibility hinges on the industry. Check whether it falls under Article 6(3) before starting the business.

Calculate your startup fund gift tax now

Check eligibility, the special gift tax, the saving, and the recapture risk all at once.

Calculations follow Restriction of Special Taxation Act Article 30-5 (2026 current law); consult a tax professional before filing.