One line answer: Family businesses that have been in operation for more than 30 years can be deducted through the family business inheritance deduction under Article 18-2 of the Inheritance Tax and Gift Tax Act. Up to 60 billion wonInheritance tax can be deducted from the taxable value up to , and in the case of prior gifting, it is subject to special taxation under Article 30-6 of the Restriction of Special Taxation Act. 10-20% low tax rateis possible.

Strategy 1: Family business inheritance deduction (up to KRW 60 billion)

It is the most powerful tax saving tool. Article 18-2 of the Inheritance Tax and Gift Tax Act.

Requirements: The deceased has been in business for more than 10 years + holds more than 50% of the CEO's position + is the largest shareholder + has a combined family share of more than 40% (20% for listing).

caution: Maintain 40% of assets, 90% of employment, and shares for 5 years after death. In case of violation, an amount equivalent to interest will be collected.

Strategy 2: Special taxation of gift tax for family business succession (10-20% low rate)

Article 30-6 of the Restriction of Special Taxation Act. Through prior gifting, the valuation risk at the time of inheritance is distributed.

• Gift property value limit 60 billion won (Proportional to period of operation)
• After deducting 1 billion won 10% low rate taxation (20% of excess of 6 billion won)
• Obligatory 7 years after death (engagement in family business, maintenance of shares)
• Settlement upon commencement of inheritance (gift tax already paid is deducted)

Strategy 3: Pre-organization of title trust

If you do not liquidate title trust stocks before succession, you will face the following risks.

• Gift tax (Article 45-2 of the Inheritance Tax and Gift Tax Act) → Up to 50% gift tax
• Exclusion of family business inheritance deduction
• Litigation risk to trustee in case of dispute

Upon voluntary liquidation of the title trust in 2024 Special 50% reduction in additional taxapplies.

Strategy 4: Advance donation at the time of low valuation

Valuation of unlisted stocks is conducted in accordance with Article 54 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act. Net profit/loss value × 3 + Net asset value × 2 ÷ 5It is calculated as .

• Immediately after temporary operating loss → net profit/loss value decreases → valuation decreases
• Immediately after large-scale facility investment → Debt increases → Net asset value decreases
• Economic downturn → Industry average decline → Correction possible

caution: Manipulating the evaluation carries a high risk of collection due to denial of the calculation of unfair acts (Article 35). You should take advantage of natural moments in your normal business flow.

Strategy 5: Inheritance/gift combination design

The key is to tie gift (during life) and inheritance (after death) into a single roadmap.

1. Stage 1 (early 60s): Advance gift within the special taxation limit (KRW 30 billion)
2. Stage 2 (late 60s): Adjustment of valuation through differential dividends and stock purchases
3. Stage 3 (after 70s): Inheritance of remaining shares + family business inheritance deduction

Combining these three steps A total of over 90 billion wonYou can legally reduce your tax base (based on 30 years or more of business).

Example simulation (25 years of operation, valuation KRW 80 billion)

※ Simple example. For actual application, consultation with the Korea Family Business Succession Association is recommended on a case-by-case basis.

Taxes should be “designed,” not “reduced.” The five strategies must be combined into a single roadmap for maximum effectiveness.