We would like to bring to your attention an important tax issue that may affect many of our clients who are U.S. citizens or green card holders but continue to hold assets in Korea. Korea’s estate and gift tax system is considered among the highest globally, with tax rates that exceed those of most OECD countries, making proactive planning particularly important.

Even if you reside in the United States, Korea may still impose estate or gift tax on assets considered to be located in Korea. These typically include Korean real estate, shares of Korean companies, and financial accounts maintained with Korean institutions. In contrast, assets located outside Korea—such as U.S. real estate, U.S. bank accounts, and U.S. retirement accounts—are generally not subject to Korean estate or gift tax.

One of the most significant differences between the U.S. and Korean systems is the level of exemption. While the U.S. provides a lifetime estate and gift tax exemption exceeding $13 million per individual, Korea offers only a limited exemption of approximately KRW 200 million (about $150,000) for nonresidents. Gift tax exemptions are also minimal and apply on a per-recipient basis. As a result, a substantial portion of Korean assets may be subject to tax.

Korean estate and gift tax rates are progressive and can reach as high as 50%, with even higher effective rates in certain cases involving large shareholdings. Compounding this issue, there is no estate or gift tax treaty between the United States and Korea, which means that exposure to double taxation may arise, although foreign tax credits may provide partial relief.

Many individuals assume that relocating to the U.S. or holding assets through U.S. entities or trusts will eliminate Korean tax exposure. In practice, this is often not the case. Korean tax rules are largely based on the location of the asset, and certain structures may not be effective without careful planning.

If you currently hold assets in Korea, advance planning is required to minimize potential Korean estate and gift tax exposure.