A non-resident donee is liable for gift tax on all taxable gifted property located in Korea, and in that case the donor is jointly liable for the tax (Inheritance Tax and Gift Tax Act, Art. 4-2(1)2 and (6)3). The return is due within three months from the last day of the month in which the gift is received (Art. 68(1)).
Where the recipient lives sets the scope of tax
Gift tax is owed by the person who receives the property, the donee, not by the giver. Article 4(1) of the Inheritance Tax and Gift Tax Act makes taxable property or benefits transferred without consideration, gains from acquiring property at a markedly low price, and gains from increases in value after acquisition, among others. Article 4-2(1) then divides the scope according to the donee’s residence. A resident donee is liable on all taxable gifted property; a non-resident donee is liable on all taxable gifted property located in Korea. If a child living abroad receives a Korean apartment, deposit or shares from a parent, that property is in Korea, so being a non-resident does not take it outside the scope. Conversely, where a non-resident receives property located abroad, the scope under this article differs, and whether a given asset is treated as located in Korea follows separate rules by type of property, so it needs individual review. Transactions that change where property sits, such as sending cash from a Korean account to a foreign one, call for the facts to be documented with particular care.
Give to a child abroad and the parent shares the liability
The point most often missed in gifts to non-residents is the donor’s liability. Article 4-2(6) provides that in certain cases the donor is jointly liable for the gift tax payable by the donee, and item 3 lists “where the donee is a non-resident”. Because it sits alongside cases where the donee’s address is unclear or the donee cannot pay, the structure reads as reflecting the difficulty of securing the tax claim in Korea against a non-resident donee. In practice, if the child abroad does not file and pay, the payment obligation can fall on the parent in Korea. The proviso to the same paragraph, however, excludes certain categories from joint liability, such as tax on gains from transfers at a markedly low price or from increases in value after acquisition, so the answer can depend on the form of the transfer. When planning a gift, it is best to settle in advance who will file and who will pay.
The deduction article is worded for gifts received by a “resident”
In gifts between family members living in Korea, the deduction for gifted property shapes the liability considerably. Article 53 provides that where a resident receives a gift from a spouse, KRW 600 million is deducted from the taxable value; from a lineal ascendant, KRW 50 million (KRW 20 million for a minor); from a lineal descendant, KRW 50 million; and from another blood relative within the fourth degree or relative by marriage within the third degree, KRW 10 million. The limit is applied together with amounts deducted in the ten years before the gift. The part to note is the opening of the article: Article 53 frames the deduction around gifts received by a “resident”. If the donee is a child living abroad, computing the tax by simply applying the figures commonly quoted for a child resident in Korea may not fit the wording of the article. Even for the same amount from the same parent, the amount excluded from the taxable value can differ depending on whether the donee is a resident or a non-resident. Whether it applies in a given case must be checked individually together with the donee’s residence status.
The return is due three months from the month-end of the gift
Article 68(1) requires a person liable for gift tax under Article 4-2 to report the taxable value and tax base to the competent district tax office within three months from the last day of the month in which the gift is received. The trigger is the month-end, not the date of the gift. If title passed or funds were transferred on 10 April, the period runs from 30 April, so the return is due by 31 July. For a non-resident donee this is shorter than it sounds. Filing with a Korean tax office from abroad means arranging a Korean contact point and a way to receive documents, and identity or family-relationship documents sometimes have to be prepared overseas. For real estate, material on how the gifted property is to be valued is also needed. If the donee will struggle to handle this from abroad, it is safer to settle who files and which documents are required before the gift agreement. Plan the filing timetable at the same time as choosing the date of the gift.
Resident or non-resident status changes the answer
Everything above turns on whether the donee is a resident or a non-resident: whether the scope is all gifted property or only property in Korea, whether the donor becomes jointly liable, and whether the wording of the Article 53 deduction is met. For reference, Article 1-2(1) of the Income Tax Act defines a resident for income tax purposes as an individual with a domicile in Korea or a place of residence there for 183 days or more, and a non-resident as an individual who is not a resident. Long years abroad or foreign nationality do not settle the question on their own; facts such as whether a centre of life remains in Korea and the pattern of stays often have to be weighed together. For children temporarily abroad for study or work, or about to return to Korea, the determination can change the result. Since the rules that apply may differ depending on whether the gift is made before or after a return, we recommend confirming the donee’s residence status before deciding the amount.