On Wednesday, the heirs of South Korea’s Samsung corporation revealed plans to pay more than $10 billion USD (about $12.3 billion CAD) in death taxes, including contributing Picasso and Monet artworks, in one of the world’s largest-ever inheritance tax settlements.
Late Samsung Electronics Chairman Lee Kun-Hee was South Korea’s richest person when he died last October at 78. He left behind an estimated 22 trillion won ($24 billion CAD) in assets. South Korea’s strict inheritance tax laws (50 percent) and high tax rates have resulted in a hefty bill for the heirs, including Samsung’s Vice Chairman, Lee Jae-Yong, who is presently serving a prison sentence for embezzlement, bribery and other offences.
According to local law, the Lees have up to five years to pay the inheritance tax in full, which they plan to do in six installments, the first of which is due this month, said Samsung in a statement. This inheritance tax bill is the country’s highest-ever at 12 trillion won ($13.3 billion CAD). “It is our civic duty and responsibility to pay all taxes,” said the Lee family in the statement.
The late chairman left behind a collection of antiques and artworks estimated to be worth between two and three trillion won ($2 to $3.3 billion CAD). According to Samsung, about 23,000 pieces from this collection will be donated, including 14 National Treasures to be displayed at the National Museum of Korea. The collection includes works from artists like Marc Chagall, Pablo Picasso, Paul Gauguin, Claude Monet and more.
In addition to artwork, the family will donate 1 trillion won ($1.1 billion CAD) to health causes, with 50 percent of the money to be spent on building the country’s first specialist infectious diseases hospital.
Samsung promised to pay off the inheritance tax though it did not specify how exactly the heirs will come up with such a large sum.
According to Mike Cho, a business professor at Korea University in Seoul who has long researched generational control transfers among South Korea’s largest conglomerates, the Lee family’s first payment alternative will be to sell some Samsung stock and acquire a loan. In contrast, subsequent payments may be funded entirely by dividend payouts from the family’s Samsung holdings.