Korean Gift Tax Ruling at the Seoul Administrative Court

The Seoul Administrative Court ruled that the Korean National Tax Office violated the Korean Tax Law by basing the appraised value for gift tax purposes on the value of an asset three months after the transaction.

Seoul Administrative Court Gift Tax Timing Ruling

The Seoul Administrative Court ruled in July 2025 that the Korean National Tax Office’s decision to impose a gift tax on an appraised value calculated several months after a land transaction was a violation of the Korean Tax Law. The Court opined that the land’s condition changed between the time of the transaction and the appraisal.

Facts

1. A corporation controlled by the plaintiffs purchased land located in Seoul for approximately 4 billion won in April 2020 and completed the registration of the land transfer in May 2020.
2. In an appraisal conducted for a loan in July 2020, the land was valued at approximately 7.2 billion won. The Korean Tax Office regarded this as the market price at the time of sale and imposed gift taxes of roughly 669 million won, 133 million won, and 436 million won on the three plaintiffs.

Ruling of the Seoul Administrative Court

The Court held that the value of the land changed between the time of the transaction and the time of the appraisal, since construction on the land began in late 2019 and progress significantly increased from 2.4% in March 2020 to 46.3% in August of the same year.

The appraisal firm noted to the Court: “There is a possibility of a change in the appraised value due to construction progress between April and July.”

The Court thus ruled that “It is difficult to conclude that the appraised value of the land in this case as of July 2020 is the market price at the time of the sales contract date in April 2020. . . .Considering that a warehouse construction project was carried out on the land in this case between the sales contract date and the appraisal date, the status changed, and that the land was designated as forest land, but the standard land for factory use was selected as the comparative standard land for appraisal, thus, the disposition in this case that imposed gift tax based on the above appraisal value is illegal.”

Options exist if you have a negative disposition by the Korean National Tax Office. The Korean Courts have been willing, in recent years, to overrule dispositions by the Korean National Tax Office. Contact IPG Legal for a free initial consultation.

by Sean Hayes

Sean Hayes is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as a Top Attorney by AsiaLaw, and IPG Legal is consistently ranked Top Dispute Resolution Law Firm for our litigation and arbitration services.

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