The Samsung Succession and Art Donations: The Necessity of Tax Incentives in Preserving and Expanding the Cultural Heritage of South Korea

Authors

Sophia Do, University of Miami School of Law

Abstract

Until recently, South Korea’s laws did not allow the donation of art as a form of inheritance tax payment. In fact, there has been a general lack of tax benefits on art donations in the country. Experts often attribute this deficiency to two reasons: the lack of a national and widespread art appraisal system and the traditional view that such tax laws benefit only the rich. The tide, however, turned in 2020. Two national events provided the impetus for tax law reform that allows the donation of art as a form of inheritance tax payment: the Samsung succession and the Kansong Art Museum auction. Because South Korean inheritance taxes are amongst the highest in the world (up to fifty percent) and are levied against the beneficiary, not the estate, based on the value of the inheritance, inheritors of art facing significant tax bills must make a choice: sell the art (often overseas) or donate it to art museums essentially for free. Some, unfortunately, resort to a third choice, and destroy the art altogether. Tax incentives and disincentives can therefore decide the fate of certain artworks and alter the scope of art that enters into the collection of art museums. Tax laws can decide whether the people of South Korea have access to a certain part of their cultural heritage. The events of 2020 shed light not only on the direct impact tax laws can have on the preservation of the country’s cultural heritage but also on the fact that the recent reforms fell short of addressing the necessity of tax benefits on art donations. While artworks can now be used as a form of inheritance tax payment, payment is limited to the taxes levied on the art. Such a form of payment is also only allowed when payment with financial and real estate assets is first determined to be inadequate and the valuation of the art is approved by the Ministry of Culture. No deduction or credit applies yet to voluntary donations. These limitations stand in stark contrast to the tax benefits that are permitted in the United States. In the U.S., charitable contributions of art to qualified organizations can lead to itemized deductions on income or estate taxes as well as potential exemptions from capital gains taxes and the federal gift tax. Although such benefits are not immune to criticism and abuse, there are no doubt meritorious: they promote philanthropy and allow important works of art to be preserved and displayed for generations to come. This Note therefore proposes that the South Korean public will benefit from more legislative reform that allows similar tax benefits on art donations as in the U.S. The introduction of income and estate tax deductions for qualifying donations, combined with national and institutional safeguards—such as a national art appraisal agency with independent, qualified appraisal mechanisms—offers an effective means to incentivize donations and democratize cultural ownership.

Recommended Citation

Sophia Do, The Samsung Succession and Art Donations: The Necessity of Tax Incentives in Preserving and Expanding the Cultural Heritage of South Korea, 33 U. MIA Int’l & Comp. L. Rev. 201 (2025)
Available at: https://repository.law.miami.edu/umiclr/vol33/iss1/7