Singapore VCC insights

Korean Family Office in Singapore: What Korea Still Taxes After the Family Moves

By VCC Editorial Team · Published 10 November 2026

Short answer: A Korean family office in Singapore does not, by itself, take a family outside Korean tax. Korea still taxes a resident decedent’s worldwide estate at up to 50%, the heir-based reform has not been enacted, and Korean CFC rules can reach a Singapore company or trust. Singapore helps only when residence genuinely moves.

This article is general information only and is not legal, tax or investment advice. For matters needing legal advice, we work with a panel of experienced Singapore law firms.

Families weighing a Korean family office in Singapore often start from the wrong end. Singapore offers no estate duty, a single family office (SFO) framework run by the Monetary Authority of Singapore (MAS) and fund incentives under sections 13O and 13U of the Income Tax Act 1947. But Korea’s inheritance and gift tax, its controlled foreign corporation (CFC) rules and its offshore reporting decide most of the outcome, and they follow the person and the shareholding, not the office. This guide sets out the Korean rules, the reform that is still only proposed, and the realistic role of a Singapore SFO, trust or variable capital company (VCC). Korean sources were checked on law.go.kr, elaw.klri.re.kr and english.mofe.go.kr, and Singapore sources on mas.gov.sg and iras.gov.sg, on 10 November 2026.

Does a Korean family office in Singapore take the family outside Korean inheritance tax?

No. A Singapore office changes where investments are managed. It does not change the tax residence of the person who dies, and Korean inheritance tax turns on that person’s residence at death.

Article 3 of the Inheritance Tax and Gift Tax Act taxes “all the inherited property” of a resident decedent, wherever it sits, and only property in Korea for a non-resident. Shares in a Singapore company or VCC are inside a Korean-resident decedent’s estate. Under Article 9, property the decedent placed in trust is also treated as inherited property, subject to specified exceptions, so a Singapore trust settled by a Korean resident is not automatically outside the estate. Article 29 credits foreign inheritance tax, but IRAS confirms Singapore has no estate duty for deaths on or after 15 February 2008, so there is normally nothing to credit (see our explainer on Singapore estate duty).

What are Korea’s inheritance and gift tax rates on 10 November 2026, and has the heir-based reform been enacted?

The rates are unchanged, with a top rate of 50%. The proposed move to an inheritance-acquisition (heir-based) tax has not been enacted. Korea still taxes the estate as a whole.

Article 26 applies the following schedule to the inheritance tax base (the taxable estate after deductions). The text below is from the version of the Act on law.go.kr shown as in force from 2 January 2026.

Inheritance tax base	Tax
Up to KRW 100 million	10% of the tax base
Over KRW 100 million, up to KRW 500 million	KRW 10 million plus 20% of the excess over KRW 100 million
Over KRW 500 million, up to KRW 1 billion	KRW 90 million plus 30% of the excess over KRW 500 million
Over KRW 1 billion, up to KRW 3 billion	KRW 240 million plus 40% of the excess over KRW 1 billion
Over KRW 3 billion	KRW 1.04 billion plus 50% of the excess over KRW 3 billion

Article 27 adds a 30% surcharge where property passes to a lineal descendant other than a child, such as a grandchild. The surcharge rises to 40% for a minor grandchild receiving more than KRW 2 billion.

On reform, the Ministry of Economy and Finance (now the Ministry of Finance and Economy) published an explainer on 24 March 2025 confirming that Korea uses the estate-based method and seeking views on moving to an inheritance-acquisition tax, which would tax each heir on what that heir receives. As at 10 November 2026 the Act still computes tax on the whole estate, and the Ministry’s 2026 Tax Revision Bill of 3 August 2026 does not list the switch. Treat the heir-based model as proposed, not law. The same Bill proposes stricter family business succession relief, including a 30-year operating requirement (up from 10 years); that too is not yet enacted.

When is a Korean principal a resident or non-resident for inheritance tax?

A person is resident if they have an address in Korea, or a place of residence there for 183 days or more. Leaving Korea ends worldwide inheritance tax reach only if the person is genuinely non-resident on the day they die.

Article 2(8) leaves the detailed tests to Presidential Decree, so the question is factual: where the family, home, business and assets are centred. The Income Tax Act uses a parallel 183-day test for income tax.

Non-residence is not all favourable. Article 18 gives every estate a KRW 200 million basic deduction, but the lump-sum deduction in Article 21 (the larger of KRW 500 million or the basic and other personal deductions combined), the spouse deduction in Article 19 and the financial property deduction in Article 22 apply only where a resident dies. A non-resident’s Korean shares, real estate and deposits remain taxable with fewer deductions, so a family that keeps a Korean listed holding company stays exposed on those shares.

Issue	Decedent resident in Korea	Decedent non-resident
Property taxed (Article 3)	Worldwide estate, including Singapore company shares, VCC shares and settled trust property	Property located in Korea only
Lifetime gifts added back (Article 13)	Gifts to heirs within 10 years, and to others within 5 years	Only gifts of property in Korea
Deductions	Basic, lump-sum, spouse, financial property and others	Basic KRW 200 million deduction; most others restricted to resident decedents
Foreign tax credit (Article 29)	Available for foreign inheritance tax on foreign property	Not relevant to foreign property

Whether a departure charge applies to the principal’s shareholdings is a separate income tax question, outside the scope of this article. Our comparison of home-country exit taxes for families moving to Singapore deals with departure charges.

How are gifts made before or after the move taxed?

Gift tax follows the donee’s residence, with a separate charge on the donor for some offshore gifts. Moving the children first does not, on its own, take gifts outside Korean tax.

Under Article 4-2(1), a resident donee pays gift tax on all donated property. A non-resident donee pays only on donated property in Korea. Article 4-2(6) makes the donor jointly liable where the donee is non-resident, subject to listed exceptions. Separately, Article 35 of the Adjustment of International Taxes Act, as set out in the Korea Legislation Research Institute (KLRI) English translation, makes a resident donor liable to Korean gift tax when they give foreign property to a non-resident. The exemption requires both an unrelated donee and a foreign gift tax, so a Korean-resident parent giving Singapore assets to a child in Singapore remains within Korean gift tax.

The 10-year add-back in Article 13 also brings early gifts by a parent who dies resident back into the estate.

Will Korea’s CFC rules apply to a Singapore holding company, 13O fund or trust?

Often, yes, while the shareholders remain Korean-resident. A Singapore investment company or fund that pays little tax is a likely CFC. Korea also looks through foreign trusts.

Article 27 of the Adjustment of International Taxes Act (version in force from 2 January 2026, Act No. 21215) applies to a foreign company whose actual tax burden does not exceed its actual income multiplied by 70% of the top rate in Article 55 of the Corporate Tax Act. If a related Korean resident holds at least 10%, directly or indirectly with related persons, the company’s distributable retained earnings are deemed paid to that resident. Article 27(3) treats each trust property of a foreign trust as a separate foreign company where a Korean resident holds the beneficial interest. The 2026 Bill proposes a 15% effective tax rate test instead, aligned with the global minimum tax; it is not yet law.

Two features matter. A fund exempt under 13O or 13U will usually have a low actual tax burden on investment income, which is what the Korean test measures. And the active business carve-out in Article 28 does not help much. Article 29(1) switches the carve-out off for companies in sectors including finance and insurance and real estate, subject to conditions in the Presidential Decree. It does the same for companies whose main business is holding shares or bonds, or investing in investment trusts or funds. Article 34 requires Korean shareholders to file the CFC’s financial statements and a retained earnings computation with their own return.

A Singapore exemption may therefore simply move the tax to the Korean shareholder each year, and the same applies to a VCC. Our guide to the Japanese family office in Singapore shows how a comparable CFC regime works for Japanese families.

What must still be reported to the National Tax Service after relocating?

While a person is a Korean resident, they must report foreign financial accounts and, under the current rules, offshore trusts. Reporting stops being required only once residence genuinely ends.

Under Article 53 of the Adjustment of International Taxes Act (KLRI translation), residents and domestic corporations whose aggregate foreign account balance exceeded a threshold set by Presidential Decree at any month-end must report the accounts between 1 June and 30 June of the following year. Bank, securities, derivatives and virtual asset accounts are covered, including a Singapore account opened for the family office. The 2026 Bill refers to existing “offshore trust reporting requirements” and proposes raising the maximum fine for not submitting an offshore trust statement from KRW 100 million to KRW 1 billion.

Information also flows the other way: Article 24 of the Korea-Singapore agreement covers exchange of information on “taxes of every kind and description”, not only income taxes.

What does the Korea-Singapore tax treaty change, and what does it not?

The treaty settles dual residence for income tax and limits some Korean taxes on income. It does nothing for inheritance or gift tax.

The agreement was signed on 13 May 2019, entered into force on 31 December 2019 and took effect from 1 January 2020. Article 2 limits it to taxes on income: in Korea, income tax, corporation tax, the special tax for rural development and local income tax; in Singapore, income tax. Article 4(2) resolves dual residence by permanent home, centre of vital interests, habitual abode, nationality and then mutual agreement, but inheritance tax residence is tested under the Korean Act alone. Article 26 denies treaty benefits where obtaining them was one of the principal purposes of an arrangement.

What can a Singapore SFO, trust or VCC realistically do for a Korean family?

Singapore works well as an operating base once the family has decided to relocate. It is a weak tool for reducing Korean tax while the principals stay Korean-resident.

Under the MAS framework in force from 15 June 2026, a qualifying SFO need only notify MAS, keep an account with a MAS-licensed bank and file an annual return; existing SFOs have until 15 June 2027 to comply. For a section 13O, 13OA or 13U fund, MAS’s FAQs (updated 14 September 2026) confirm that the fund may hold family operating businesses, but those holdings do not count towards the minimum assets under management in designated investments, and the capital deployment requirement is the lower of 10% of those assets or S$10 million. A family with large Korean group shareholdings should model the conditions on the liquid portfolio alone. Our 13O versus 13U decision guide sets out the choice.

A practical sequence for a Korean family looks like this:

1. Settle residence first: decide who will genuinely move and document the change in home, family life and economic interests, with the right Singapore pass (see our sister site on Singapore employment and residence passes).
2. Map the Korean exposure that does not move: Korean-situs assets and gifts within the last 10 years.
3. Test each Singapore entity and trust against Article 27 for every Korean-resident holder or beneficiary, under both the current 70% test and the proposed 15% test.
4. Build Korean reporting into the calendar: June account reports, CFC filings and offshore trust statements.
5. Only then choose the vehicle (private company, VCC or Singapore trust) and apply for 13O or 13U where the conditions can be met without relying on operating businesses.

A Singapore trust adds governance and succession planning but does not neutralise Korean deemed-inheritance or CFC rules for a Korean-resident settlor or beneficiary. Our article on the taxation of trusts in Singapore covers the Singapore side, and Raffles Corporate Services can coordinate the Singapore set-up with the family’s Korean advisers.

Frequently asked questions

Has Korea adopted an inheritance-acquisition tax?

No. The government sought views on an heir-based model in 2025, but the Act on law.go.kr still taxes the estate as a whole.

If a Korean principal moves to Singapore, when does worldwide inheritance tax stop?

Only if the principal is non-resident under the Korean Act at death: no Korean address and no place of residence there for 183 days or more. Korean-situs assets remain taxable.

Is a Singapore 13O fund a CFC for Korean shareholders?

It can be. If its actual tax burden is at or below the Article 27 threshold and a related Korean resident holds 10% or more, retained earnings can be deemed distributed. Investment holding activity does not qualify for the active business carve-out.

Does the Korea-Singapore tax agreement prevent double inheritance tax?

No. It covers taxes on income only, and Singapore has no estate duty, so the real question is Korean exposure.

Sources

• Inheritance Tax and Gift Tax Act (상속세 및 증여세법), version in force 2 January 2026, National Law Information Center (law.go.kr)
• Adjustment of International Taxes Act (국제조세조정에 관한 법률), version in force 2 January 2026, law.go.kr
• Ministry of Finance and Economy, 2026 Tax Revision Bill, 3 August 2026
• IRAS, Singapore-Korea Agreement for the Elimination of Double Taxation (ratified text)
• MAS, Revised Framework for Single Family Offices to take effect on 15 June 2026

Raffles Corporate Services helps Korean and other Asian families with VCC incorporation, family office set-up and ongoing compliance in Singapore, working alongside their home-country tax advisers. Email hello@rafflescorporateservices.com or Call/SMS/WhatsApp +65 8501 7133, or visit Raffles Corporate Services.

Last reviewed: 10 November 2026. The Editorial Team, Variable Capital Companies Act.