A yearly tax, and a tax that waits for a death

The essay begins by setting inheritance tax beside income tax. Income tax is charged regularly, once a year, and a country’s right to tax a non-resident on source income is managed, in a treaty, by a limited rate, so that a cross-border flow of capital is not taxed twice in a raw way. Inheritance tax is charged at the moment of a death, on wealth accumulated over a life. For a non-resident, it is charged on the basis of where the property sits. To avoid taxing the same estate twice, one country may be given priority.

The right to tax may rest on residence, on nationality, or on the situs of the property. Residence and nationality are judged by the decedent or by the heir. When countries use those tests differently, several may tax at once; the essay calls that an overlap of taxing rights. The question then is in what range each country may tax — by residence, by situs, or by some other test. A further difficulty is that “residence” and “situs,” as agreed among countries as a standard for allocating a taxing right, may not mean quite what they mean as a requirement of a country’s own law. If a person’s domestic-law residence, or a property’s situs, seems to lie in more than one place, which one is to be treated as the residence, or the situs, becomes a problem of its own.

When a resident of A takes property in B

International double taxation, as the page defines it, is the same economic event, in the same period, of the same kind of tax, charged by more than one country to the same taxpayer, on a set of facts that crosses a border. Countries differ in the precise tests they use for residence and for situs. Most, the writer says, use both, and tax if either test is met, so a zone in which several countries’ rights overlap is hard to avoid.

The typical case is a resident of country A who takes property in country B: the unlimited tax obligation of the country of residence overlaps the limited obligation of the country of situs. The essay also sorts further cases by whether the property is assumed to lie in the decedent’s country, and by whether residence is judged by the decedent, by the heir, or by both, including cases in which there is no inheritance tax at all, marking an unlimited obligation, a limited one, or none.

A credit capped at the Korean rate, and a tax some would abolish

Korea’s Inheritance and Gift Tax Act, as the page quotes it, provides for a foreign-tax credit. The amount that may be deducted from the Korean inheritance tax is the Korean tax multiplied by the ratio of the tax base of the property that has already been taxed under a foreign law to the Korean tax base, under article 25(1). The credit is capped at the Korean rate. If the foreign inheritance-tax rate is higher, only the ceiling in Korean law is given. Because Korea’s inheritance-tax rate, the writer says, is among the highest in the OECD, the provision has little practical meaning in ordinary work. That comparison is left as the essay states it, not as a 2026 official ranking.

A debate on whether to abolish the tax is recorded. Those who would abolish it say that double taxation can force a firm to lose control, or to shrink, that it invites evasion and devices, that it hinders growth and jobs, and that it is not a fitting means of redistributing wealth. A heavy burden can be avoided by gifts during life, by a gift to a public-interest corporation, or by moving abroad, so that revenue falls and wealth becomes more concentrated. Those who would keep it say that it holds back the handing on of wealth, and a concentration of wealth and power in a few hands, and is needed for fairness and for welfare; that what an heir receives is unearned income, and is not a second tax on what the decedent already paid. The essay also notes a United States view, as it gives it, that a right to inherit is not a basic right, that the institution exists because the state recognises it, and that the tax has been held constitutional.

A further discussion concerns personal deductions in a cross-border estate, and a non-discrimination clause. One view would allow the deduction in the country of residence, which is closer to the heir and better placed to see the personal circumstances that the deduction is meant to protect. To allow it only there, another view says, can have a side effect: if a decedent has to move, property already held in the old country may lose a deduction, and the burden of the tax can itself become an obstacle to moving. The same Korean report, at fuller length, is on CampusDown.

Sources

1. Korean essay on international inheritance tax and double taxation, including the typical overlap when a resident of one country takes property in another.
2. Korea’s Inheritance and Gift Tax Act, article 25(1), as the page quotes the foreign-tax credit and its cap at the Korean rate.
3. Kim Hae-majung, “A study on international inheritance taxation,” Tax Law Studies 26, no. 1 (2020): 215–258.
4. Baek Je-heum, “International inheritance taxation and inheritance-tax treaties,” Tax Law Studies 13, no. 3 (2007): 229–265.
5. Kang In-seok, “A study of international inheritance tax systems,” PhD diss., Kangnam University, 2013; Lee Yu-jin, “A study of international inheritance tax systems,” PhD diss., University of Seoul, 2013; Lee Yu-jin, “The problem of double taxation of inheritance tax when the decedent is a non-resident,” Tax Academic Journal 28, no. 2 (2012): 153–176.
6. Kim Mun-suk, “The form of ownership of inherited property before partition in an international succession,” Private International Law Studies 28, no. 1 (2022): 625–654; Baek Gyeong-yeop, “An international comparison of inheritance and gift tax systems, and implications,” Tax Studies 23, no. 4 (2023): 167–196.

Last updated: 14 November 2026