Korea’s business succession policy aims to support family-owned businesses, such as restaurants, in transferring ownership to the next generation without excessive tax burdens. Traditionally, inheritance and gift taxes could reach up to 50%, posing a major challenge for owners wishing to pass their business to their children. Recognizing the economic value of sustaining long-standing businesses, the government has introduced special tax relief measures. These include the ‘gagyeopseunggye’ system, which allows for substantial tax reductions and even exemptions under certain conditions. The policy is designed to encourage continuity and growth of small enterprises across generations.
The policy primarily impacts owners of businesses operated for at least ten years, including restaurants and other eligible sectors. For example, a 25-year-old sundae soup restaurant in Seoul, with annual sales exceeding 2 billion KRW, can benefit from these measures. Owners can choose between inheritance (after death) or gifting (while alive), each with distinct tax implications. By leveraging the gagyeopseunggye system, the business value—often tens of billions of KRW—can be transferred with minimal tax liability. The policy also supports branding and expansion through the ‘hundred-year business’ certification for enterprises operating over thirty years.
Implementation requires owners and successors to meet specific criteria, such as formal employment records, age requirements, and business registration codes. For inheritance, the successor must have worked in the business for at least two years prior to the owner’s death. For gifting, the owner must be over sixty, and the successor must become CEO within five years. The government provides guidance on combining inheritance and gifting strategies to optimize tax benefits. Certification and legal preparation are encouraged to ensure eligibility and maximize support.
Frequently asked questions include: What are the main requirements for tax relief? Owners must have operated the business for at least ten years and successors must meet age and employment criteria. How can a business qualify for the hundred-year certification? After thirty years of operation, owners can apply to the Ministry of SMEs and Startups for official recognition, which provides branding and financial support. What steps should owners take now? Register successors as employees, verify business codes, consider corporate conversion, and maintain proper documentation to prepare for succession.
Korea’s business succession policy is a robust solution for family-owned restaurants facing high inheritance and gift taxes. By meeting legal requirements and leveraging government programs, owners can transfer business value with greatly reduced tax burdens. The combination of tax relief and certification support encourages sustainable growth and generational continuity. Early legal and administrative preparation is critical to maximize benefits and avoid pitfalls. This policy is a positive step for small business resilience and economic stability.