Korean Inheritance & Gift Tax Instalment Calculator

Korean inheritance and gift tax must be paid in cash even when what you inherited is a house or land. Having assets but no cash to pay the tax is so common that the law provides two ways to pay over time. Split payment lets you pay part on the filing deadline and the rest within 2 months, with no interest. Annual instalment payment lets you pledge collateral and pay each year over up to 10 years for inheritance tax or 5 years for gift tax, with a surcharge added. Enter the kind of tax, the amount payable, the instalment period you want and the surcharge rate, and this calculator tells you whether split payment and annual instalments are available and, if so, how much is due at each date.

The answer is not a total but a schedule of who pays what when, which is why the instalment table is the heart of the calculator. The two schemes cannot be combined: once annual instalments are approved, split payment is unavailable. So the calculator first sorts out which scheme the tax amount qualifies for, then shows both side by side.

Heirs who have inherited mostly property and cannot pay the tax at once, ahead of filing. The inheritance tax return is due six months from the end of the month in which the death occurred, and within that time you must decide whether to pay in one go, in two parts, or over several years; the instalment application goes in with the return. Seeing the instalment amounts and surcharges helps decide whether anything has to be sold and what to pledge as collateral.

People planning a gift use it too. For gift tax the instalment period is half that for inheritance tax, and because each instalment must exceed a set amount, a small tax bill will not support the period you ask for. The calculator shows how many years a given tax amount can be spread over before you settle on the size of the gift.

Split payment is governed by 상속세 및 증여세법 제70조제2항 and 시행령 제66조제2항. It is available when the tax exceeds ₩10,000,000; the amount that can be deferred is the excess over ₩10,000,000 when the tax is ₩20,000,000 or less, and up to half the tax when it exceeds ₩20,000,000. The rest is paid on the filing deadline and the deferred part within 2 months. Annual instalments are governed by 제71조 of the same act: the tax must exceed ₩20,000,000 and collateral must be provided, the period may be up to 10 years for inheritance tax and 5 for gift tax, and each instalment must exceed ₩10,000,000.

Under 시행령 제68조제1항 each instalment is the tax divided by the period plus one, because one payment falls on the filing deadline and the rest follow yearly: a 10-year period means 11 payments. Under 제72조 and 시행령 제69조 a surcharge is charged on the tax still outstanding at a rate equal to the national tax refund interest rate in the 국세기본법 시행규칙, which changes from year to year. The calculator defaults to 3.1% a year as at the date checked and lets you edit it. The first instalment carries no surcharge because it is paid on the deadline; from the second, a year's surcharge is applied to the balance before that payment. In practice the surcharge is computed by days and split into periods if the rate changes; this table treats each gap as one year at a single rate.

The calculator's default is inheritance tax of ₩150,000,000 paid over 10 years. The tax exceeds ₩20,000,000, so under split payment you would pay half, ₩75,000,000, on the deadline and the other ₩75,000,000 within 2 months with no interest. Under annual instalments the tax is divided into 11 payments of ₩13,636,364 each. The first, on the deadline, carries no surcharge; the second carries 3.1% of the outstanding ₩136,363,636, or ₩4,227,273. As the balance falls the surcharge shrinks, down to ₩422,727 on the final payment, for a total surcharge of ₩23,250,000 and ₩173,250,000 paid in all.

Gift tax of ₩30,000,000 with a 5-year application comes out differently. Each instalment must exceed ₩10,000,000, so two payments of ₩15,000,000 is the most the amount allows and the period is cut to 1 year, with a single surcharge of ₩465,000 on the second payment. Gift tax of ₩15,000,000 does not exceed ₩20,000,000, so annual instalments are unavailable and only split payment applies: ₩10,000,000 on the deadline and ₩5,000,000 within 2 months.

The most common mistake is thinking a 10-year instalment plan means ten payments. There are eleven, one on the deadline and one each year after, and each is correspondingly smaller. The next is assuming the period you apply for will be granted as is: because every instalment must exceed ₩10,000,000, a smaller tax bill shortens the period. Collateral is often overlooked as well; inherited Korean property is commonly pledged, and without collateral no approval is given.

Some try to use both schemes, but they are mutually exclusive: with annual instalments approved, split payment is off the table. Leaving the surcharge rate at an old value is another error, since it changes yearly and should be set to the refund interest rate for the year of application. Finally, this calculator works on ordinary inherited assets. Assets covered by the family business succession deduction have their own instalment period of up to 20 years, so the result here does not apply to them.