Korea Embraces Art-for-Tax Payments: A New Era for Cultural Asset Management
Jason Yim / Published October 9, 2024 10:35 PM
Jason Yim
일출도, Lee Man Ik, Courtesy of Courtesy of Ministry of Culture, Sports and Tourism
For the first time in its history, South Korea has begun accepting artworks as payment for inheritance taxes, marking a significant step forward in the integration of art and cultural heritage into the nation’s economic and tax systems. This historic decision aims to preserve important cultural assets within the country while offering a flexible alternative for taxpayers facing large inheritance obligations.
The Ministry of Culture, Sports and Tourism recently approved four paintings for this purpose, following a comprehensive appraisal by a panel of seven experts from both public and private sectors. These works were among 10 pieces initially submitted to the National Tax Service’s Seocho District Office in January. The selected artworks include two “Portrait” paintings (2007) by Zeng Fanzhi, a renowned Chinese artist with a record-breaking auction history; “Sunrise” (1991) by Lee Man-ik, the artistic director of the 1988 Seoul Olympics; and “Aggregation 08-JU072 BLUE” (2008) by Chun Kwang-young, famed for his three-dimensional mulberry paper assemblages.
The newly accepted artworks will become part of the collection at the Museum of Modern and Contemporary Art, Korea (MMCA). The Ministry of Culture indicated that these pieces could be featured in future exhibitions, adding value to the museum’s programming and enriching the cultural landscape of the nation.
This move follows the 2023 amendment to Korea's Inheritance Tax and Gift Tax Act, which was revised to allow non-monetary assets, including artworks and cultural artifacts, to be used to settle inheritance taxes. Before this change, only real estate and financial securities were accepted as in-kind payments. To qualify for this scheme, the inheritance tax liability must exceed 20 million won (approximately $14,800), and the tax amount must be higher than the total value of the inherited financial assets.
two “Portrait” paintings (2007) by Zeng Fanzhi, Courtesy of Ministry of Culture, Sports and Tourism
The push for this "art-for-tax" system gained momentum in 2020 when the Kansong Art Museum auctioned two state-designated Buddhist treasures to address its financial difficulties, largely driven by high inheritance tax obligations. The debate was further fueled in 2021 when the heirs of late Samsung Group Chairman Lee Kun-hee donated his massive art collection—23,181 pieces in total—to offset a staggering $11 billion inheritance tax bill.
Experts in the art industry view this initiative as a strategic move to strengthen the domestic art scene by ensuring that valuable artworks remain within South Korea’s borders. By preventing the sale of culturally significant pieces to international buyers, the law is expected to bolster the collections of local museums and cultural institutions.
Internationally, South Korea's adoption of this policy aligns it with other countries like the UK and France, which have long allowed the use of important cultural assets as payment for taxes. France, in particular, has been a pioneer in this field, establishing the Musée Picasso in Paris through art donations facilitated by its "acceptance in lieu" system. Similarly, the UK's Tate and National Gallery have benefited greatly from this practice, alongside institutions like the Louvre and Musée d’Orsay in France.
Industry insiders anticipate that South Korea’s implementation of this system will catalyze similar policies in other nations, setting a precedent for how governments can leverage cultural heritage to address financial challenges. By integrating art into the economic fabric, South Korea not only preserves its artistic legacy but also sets a global example of innovative tax reform.
As the domestic art market continues to grow, the new law is expected to have a lasting impact, creating opportunities for artists, collectors, and institutions to contribute to the cultural wealth of the nation in unprecedented ways. This move could transform how cultural assets are perceived—not just as decorative pieces, but as strategic tools that play a vital role in national heritage and financial planning.
The introduction of the art-for-tax scheme is more than just a financial innovation; it reflects a broader cultural philosophy that values art as an integral component of society. By turning tax liabilities into opportunities for cultural enrichment, South Korea is redefining the relationship between its citizens, the state, and its shared artistic legacy.
Sayart / Jason Yim, yimjongho1969@gmail.com
일출도, Lee Man Ik, Courtesy of Courtesy of Ministry of Culture, Sports and Tourism
For the first time in its history, South Korea has begun accepting artworks as payment for inheritance taxes, marking a significant step forward in the integration of art and cultural heritage into the nation’s economic and tax systems. This historic decision aims to preserve important cultural assets within the country while offering a flexible alternative for taxpayers facing large inheritance obligations.
The Ministry of Culture, Sports and Tourism recently approved four paintings for this purpose, following a comprehensive appraisal by a panel of seven experts from both public and private sectors. These works were among 10 pieces initially submitted to the National Tax Service’s Seocho District Office in January. The selected artworks include two “Portrait” paintings (2007) by Zeng Fanzhi, a renowned Chinese artist with a record-breaking auction history; “Sunrise” (1991) by Lee Man-ik, the artistic director of the 1988 Seoul Olympics; and “Aggregation 08-JU072 BLUE” (2008) by Chun Kwang-young, famed for his three-dimensional mulberry paper assemblages.
The newly accepted artworks will become part of the collection at the Museum of Modern and Contemporary Art, Korea (MMCA). The Ministry of Culture indicated that these pieces could be featured in future exhibitions, adding value to the museum’s programming and enriching the cultural landscape of the nation.
This move follows the 2023 amendment to Korea's Inheritance Tax and Gift Tax Act, which was revised to allow non-monetary assets, including artworks and cultural artifacts, to be used to settle inheritance taxes. Before this change, only real estate and financial securities were accepted as in-kind payments. To qualify for this scheme, the inheritance tax liability must exceed 20 million won (approximately $14,800), and the tax amount must be higher than the total value of the inherited financial assets.
two “Portrait” paintings (2007) by Zeng Fanzhi, Courtesy of Ministry of Culture, Sports and Tourism
The push for this "art-for-tax" system gained momentum in 2020 when the Kansong Art Museum auctioned two state-designated Buddhist treasures to address its financial difficulties, largely driven by high inheritance tax obligations. The debate was further fueled in 2021 when the heirs of late Samsung Group Chairman Lee Kun-hee donated his massive art collection—23,181 pieces in total—to offset a staggering $11 billion inheritance tax bill.
Experts in the art industry view this initiative as a strategic move to strengthen the domestic art scene by ensuring that valuable artworks remain within South Korea’s borders. By preventing the sale of culturally significant pieces to international buyers, the law is expected to bolster the collections of local museums and cultural institutions.
Internationally, South Korea's adoption of this policy aligns it with other countries like the UK and France, which have long allowed the use of important cultural assets as payment for taxes. France, in particular, has been a pioneer in this field, establishing the Musée Picasso in Paris through art donations facilitated by its "acceptance in lieu" system. Similarly, the UK's Tate and National Gallery have benefited greatly from this practice, alongside institutions like the Louvre and Musée d’Orsay in France.
Industry insiders anticipate that South Korea’s implementation of this system will catalyze similar policies in other nations, setting a precedent for how governments can leverage cultural heritage to address financial challenges. By integrating art into the economic fabric, South Korea not only preserves its artistic legacy but also sets a global example of innovative tax reform.
As the domestic art market continues to grow, the new law is expected to have a lasting impact, creating opportunities for artists, collectors, and institutions to contribute to the cultural wealth of the nation in unprecedented ways. This move could transform how cultural assets are perceived—not just as decorative pieces, but as strategic tools that play a vital role in national heritage and financial planning.
The introduction of the art-for-tax scheme is more than just a financial innovation; it reflects a broader cultural philosophy that values art as an integral component of society. By turning tax liabilities into opportunities for cultural enrichment, South Korea is redefining the relationship between its citizens, the state, and its shared artistic legacy.
