USA-South Korea Cross Border Inheritance Tax Guide
Last updated: 3 Oct 2025
United States × South Korea: Inheritance & Gift Tax — No Treaty
The United States and South Korea have no bilateral estate/gift tax treaty. Double-tax mitigation relies on the US foreign death tax credit (IRC §2014, certified on Form 706-CE) and Korea’s national Inheritance & Gift Tax Act. Korea levies progressive IHT up to 50% (effectively 60% for certain controlling shareholdings); the statutory basic deduction is KRW 200 million. For nonresident non-citizens (NRNCs), the US taxes only US-situs assets and requires Form 706-NA if US-situs value exceeds $60,000.
IRS confirms the **treaty list** (Korea not included); US allows a **foreign death tax credit** under §2014 (with **Form 706-CE**). NRNC estates file **706-NA** if US-situs assets exceed **$60,000**. Korean law provides a **KRW 200m basic deduction** and high rates; reforms to a **recipient-based system** have been proposed for **2028** (pending legislation). :contentReference[oaicite:0]{index=0}
At a glance
No US–KR estate/gift treaty
- US provides a unilateral foreign death tax credit (IRC §2014) for foreign taxes on foreign-situate property in the US gross estate.
- Korea taxes per national law (no treaty override).
Why it matters
- KR has **high rates** (to **50–60%** on some controlling shareholdings).
- Correct situs classification + documentation (certified assessments, proof of payment) are essential to claim credits.
What taxes can bite?
| Country | Tax & trigger | Scope highlights |
|---|---|---|
| United States | Federal estate tax (Form 706 for citizens/domiciliaries; 706-NA for NRNCs) | Citizens/domiciliaries: worldwide estate. NRNCs: **US-situs** assets; filing threshold **$60,000** of US-situs property. :contentReference[oaicite:1]{index=1} |
| South Korea | Inheritance & Gift Tax (national) | Progressive up to **50%** (effectively **60%** for certain controlling stakes); **KRW 200m** basic deduction. :contentReference[oaicite:2]{index=2} |
Relief in practice (no treaty)
- US side — IRC §2014 credit: Estates of US citizens or residents may claim a **credit for foreign death taxes** paid to a foreign country on property situated in that country and included in the US gross estate (file **Form 706-CE** for certification). Limits apply **per country and overall**. :contentReference[oaicite:3]{index=3}
- US NRNC estates: For nonresident non-citizens, the US taxes only **US-situs** assets; the §2014 credit generally concerns US citizens/residents. Confirm applicability before claiming. :contentReference[oaicite:4]{index=4}
- Korea side: No treaty with the US; relief depends on KR domestic rules. Solid **situs evidence**, **valuations**, **assessments**, and **payment proofs** are critical to support any credit claim on the US side and to reconcile bases. :contentReference[oaicite:5]{index=5}
Paper trail: date-of-death valuations (per asset), situs proofs (e.g., share register, bank domicile), certified KR assessment & receipt, translations, FX documentation.
US rules: citizens/domiciliaries vs. NRNCs
| Topic | US citizens / domiciliaries | NRNCs (nonresident non-citizens) |
|---|---|---|
| Estate tax scope | Worldwide assets (Form 706). Foreign death tax **credit** possible under §2014 (with 706-CE). :contentReference[oaicite:6]{index=6} | Only **US-situs** assets; **file 706-NA** if US-situs value **> $60,000**. :contentReference[oaicite:7]{index=7} |
| Gift tax scope | Worldwide gifts (Form 709; annual exclusions/UC credits apply). :contentReference[oaicite:8]{index=8} | Gift tax generally on **US-situs real/tangible** property; **intangibles excluded** (e.g., stock of US corps) per **IRC §2501(a)(2)**. :contentReference[oaicite:9]{index=9} |
Korea: rates & deductions (quick facts)
| Item | Rule | Source |
|---|---|---|
| Top rate | 50% (effectively up to 60% for certain controlling shareholdings) | WSJ/Reuters coverage of KR practice. :contentReference[oaicite:10]{index=10} |
| Basic inheritance deduction | KRW 200,000,000 (resident or non-resident decedent) | Statute (EN). :contentReference[oaicite:11]{index=11} |
| System reform | Proposed shift to recipient-based model (target 2028, pending) | Reuters. :contentReference[oaicite:12]{index=12} |
Situs drivers (high level)
| Asset | Typical situs | Notes |
|---|---|---|
| Immovable property | Where located | Primary taxing right generally at situs. |
| Tangible movables | Physical location at death/transfer | Document location at the key date. |
| Bank claims / deposits | Debtor location (bank) | Statements & bank domicile evidence. |
| Shares / stock | Place of incorporation | US corp → US-situs; KR 주식회사 → KR-situs (for estate tax context). |
Worked example (illustrative)
- Decedent: US citizen (domiciled in California).
- Heir: Adult child resident in Seoul.
- Assets:
- KR-situs listed shares: KRW 2.0 billion
- US brokerage (US-situs securities): $1.2 million
- Assumptions (illustrative only): Ignore debts/reliefs other than KR basic deduction; FX rounded; no state death duties.
Simplified illustration. Actual outcomes depend on valuations, shareholding status, deductions, FX, and timely filings (US 706 + 706-CE; KR return).
FAQ
Is there a US–Korea inheritance/estate tax treaty?
No. The IRS treaty list for estate/gift tax does not include Korea. :contentReference[oaicite:13]{index=13}
Can a US estate claim credit for Korean inheritance tax?
Yes, for estates of US citizens or residents under IRC §2014 on foreign-situate property included in the US gross estate; certification via Form 706-CE. Limits apply. :contentReference[oaicite:14]{index=14}
What about NRNC decedents?
NRNC estates are taxed by the US only on **US-situs** assets; a return (**Form 706-NA**) is generally required if US-situs value exceeds **$60,000**. :contentReference[oaicite:15]{index=15}
Do NRNCs owe US gift tax on US stocks?
Generally **no** — **intangibles** (e.g., stock of US corporations) are excluded for NRNC donors under **IRC §2501(a)(2)**. Gifts of **US real/tangible** property are taxable. :contentReference[oaicite:16]{index=16}
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We model US × KR exposures, compute §2014 credits, and coordinate synchronized filings (US 706/706-NA/706-CE; KR returns).