[Changes in 2022] Easing of Inheritance Tax Burden on Family Businesses... 'Microscope' on Overseas Real Estate and Virtual Assets

Government Publishes 'Changes in 2022'

[Sejong=Asia Economy Reporter Kim Hyunjung] Starting next year, mid-sized companies with sales of 400 billion KRW will also be included in the business succession tax deduction. The deduction limit to ease the inheritance burden for farmers will be raised to 2 billion KRW, expanding the range of beneficiaries. On the other hand, the taxation system for overseas real estate and overseas virtual assets will be strengthened, and a dedicated manager will be newly established to conduct regular investigations on acquisition and ownership of farmland, which has been subject to speculation controversies.

The government published "Changes in 2022" containing these details on the 31st.

The Ministry of Economy and Finance will raise the deduction eligibility for business succession support for mid-sized companies from the current sales of 300 billion KRW to 400 billion KRW, effective from January 1 next year. As part of support for farming heirs, the related deduction limit has been increased from 1.5 billion KRW to 2 billion KRW. To ease the burden of inheritance tax payment, the installment payment period will be extended to 10 years. To expand inheritance tax benefits for parental support, the cohabiting housing inheritance deduction, which previously applied only to direct descendants, will now also include the spouses of direct descendants.

Taxation on overseas real estate and overseas virtual assets will be strengthened. To enhance offshore tax base management, residents and domestic corporations will be required to submit data on their overseas real estate holdings. Previously, data submission was only required at acquisition, investment operation (leasing), or disposal stages. Failure to submit data or submitting false data will result in a fine of up to 100 million KRW. The fine will be imposed starting from January 1, 2023, for failure to comply with data submission obligations.

Additionally, the Ministry of Economy and Finance will add virtual asset trading accounts to the list of reportable overseas financial accounts to secure tax base information related to overseas virtual assets held by residents and domestic corporations. Residents or domestic corporations whose account balance exceeds 500 million KRW on a specific day at the end of each month must report overseas financial account information to the tax office in charge of their tax jurisdiction between June 1 and 30 of the following year. This will apply to overseas financial account reporting obligations arising after January 1 next year.

The Ministry of Agriculture, Food and Rural Affairs will strengthen farmland management, which has been subject to speculation controversies this year. The Korea Rural Community Corporation will establish and start operating a farmland bank manager in February next year. The manager will continuously investigate and manage acquisition, ownership, and usage status of farmland nationwide and support local government farmland administration by providing education and consulting to local government officials.

From April 15, the farmland register, which was previously prepared by individual, will be completely reorganized based on land parcels. Accordingly, small-scale farmland under 1,000 square meters, which was previously excluded, will now be included. The issuance review of farmland acquisition qualification certificates for farmland acquisition will also be strengthened. When acquiring farmland for weekend or experiential farming purposes, a weekend or experiential farming plan must be submitted. Additionally, the number of co-owners per parcel will be limited to seven or fewer, and when acquiring shared ownership, documents specifying the location of farmland owned by each owner must be submitted.

This content was produced with the assistance of AI translation services.