Sharp Increase in Minor Gifts Skipping Parental Generation: "Average Gift of 139.52 Million KRW per Person"

Last Year, Minor Gift Amounts Totaled 2.3504 Trillion KRW
Direct Gifts from Grandparent Generation to Grandchildren Total 1.0117 Trillion KRW

[Asia Economy Reporter Naju-seok] The inheritance of wealth through gifts to minors more than doubled last year. The phenomenon of wealth being passed directly from grandparents to minors, bypassing the parents, has notably accelerated.

According to the 'Recent 5-Year Status of Gifts to Minors' submitted by the National Tax Service to Go Yong-jin, a member of the Democratic Party of Korea, the amount of gifts to minors last year was 2.3504 trillion KRW, more than twice the previous year (2020, 1.0617 trillion KRW). According to this data, the number of minors who reported gift tax last year was 20,706, more than double the previous year (10,056). Go's office explained, "It appears that gifts were made in advance to young grandchildren or children due to rising asset values and strengthened real estate taxation."

Assemblyman Goh Yong-jin

Looking at the gifted assets, real estate such as land and buildings surged 139% to 885.1 billion KRW compared to the previous year (370.3 billion KRW). Financial assets such as deposits also increased by 115% to 808.6 billion KRW from 377 billion KRW the previous year. Stocks rose 93% to 502.8 billion KRW from 260.4 billion KRW the previous year. The total gifted assets received amounted to 2.3504 trillion KRW, averaging 113.51 million KRW per person. The gift tax paid amounted to 460.7 billion KRW. The effective tax rate against the tax base was 17.1%.

‘Generation-skipping gifts,’ where gifts are made directly from grandparents to grandchildren, account for 42% (7,251 people) of minors who received gifts. The gifted assets amounted to 1.0117 trillion KRW, nearly half of the total gifted assets to minors. On average, generation-skipping gifts to minors amounted to 139.52 million KRW per person. Although generation-skipping gifts are subject to surcharge taxation to prevent tax avoidance and strengthen wealth inheritance, the trend is increasing.

Considering that 4,105 minors received generation-skipping gifts in 2020, the number increased by 77% last year. The gift amount also rose by 82% last year compared to 554.6 billion KRW in 2020. Go's office stated, "Generation-skipping gifts allow wealthy individuals to estimate two taxes as one, serving as a ‘legal tax-saving’ channel," adding, "The effective tax rate (final tax amount/tax base) for generation-skipping gifts to minors is 19.6%, only about 27% higher than the general effective tax rate of 15.4% for gifts to minors."

Go emphasized, "Gifts to minors and generation-skipping gifts are rapidly increasing every year," and warned, "The current generation-skipping surcharge taxation is not functioning properly and has become a means for the wealthy to pass on their wealth."

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