Samsung heirs sell Itaewon villa to cover massive inheritance tax

In South Korea, the heirs of the late Samsung chair Lee Kun-hee sold a luxury villa located in the upscale Itaewon district for 22.8 billion won (approximately £13 million). This sale was finalized on June 13, 2023, and is a strategic move to help address the largest inheritance tax bill in South Korea’s history, estimated at around 12 trillion won (US$9 billion). Lee Kun-hee passed away in October 2020, and his estate has been under scrutiny as the family navigates the complexities of this overwhelming tax obligation. The villa, owned jointly by Lee's widow, Hong Ra-hee, and their three children—Lee Jae-yong, Lee Boo-jin, and Lee Seo-hyun—was originally purchased in 2010 for 8.28 billion won. The family experienced a substantial increase in value with the recent sale, amounting to a 175% gain. This notable property transaction reflects the Samsung family's ongoing efforts to liquidate significant assets, including high-value real estate and shares in various Samsung affiliates, to fulfill their inheritance tax responsibilities. The South Korean government permits the heirs to pay this substantial tax through an approved installment plan spanning six years. Since 2021, the family has not only been offloading properties but has also sold shares and secured loans backed by stocks to raise funds. The tax system in South Korea is one of the most demanding within the OECD, levying rates that can go up to 50% on inherited assets and increasing even further when shares accompanied by management control rights are inherited. The societal implications of the Samsung family's asset liquidation extend beyond their individual financial wellbeing and resonate throughout South Korean culture, particularly given the country's inheritance tax landscape. Reports have indicated that an overhaul of South Korea's inheritance tax system is on the horizon, with plans slated for 2028 aimed at creating a more equitable tax structure by shifting to an inheritance acquisition system. This anticipated change reflects the ongoing debate and considerations for tax fairness, particularly among families with multiple heirs, who currently face disproportionately high tax burdens compared to single-heir households.