Is there a way to reduce the gift tax burden when succeeding to a family business?

The special gift tax treatment for family business succession is a system that can dramatically lower the gift tax burden, and if certain requirements are met, a low gift tax rate applies instead of the ordinary gift tax rate when family business shares are received as a gift.

Specifically, up to a gift value of family business shares of 60 billion won, after deducting 1 billion won, a gift tax rate of 10% applies, and a rate of 20% applies only to the portion of the tax base exceeding 6 billion won.

However, not everyone can be granted this; the requirements concerning the donor, the donee, and the family business must all be met.

The donor must be aged 60 or older, must have managed the company for 10 years or more, and must hold a certain shareholding, while the donee must be a child aged 18 or older and must satisfy the family business engagement requirements, such as taking office as a representative director within a certain period after the gift.

In addition, post-obligations are also important, such as maintaining the company for five years after the gift, holding the shares, and retaining the position of representative director; if these are not observed, the gift tax that was reduced may be collected again, so caution is required.

Therefore, when preparing for family business succession, it is important to establish a plan by considering not only the gift tax rate but also the burden of post-management and the future inheritance tax.

Therefore, it is important to establish a strategy that minimizes the gift tax burden through the advice of a tax attorney.