Lee Kun-hee from Samsung with his wife Hong Ra-hee.
The family of the late Lee Kun-hee, son of the Samsung founder and former CEO of the company, has to pay about 9 billion euros in inheritance tax. A hefty sum, so to ease the pain, the family relies on their own, rich art collection: they donate 23,000 works from Lee’s private collection to two state museums.
There are a number of valuable antiques and masterpieces by Picasso, Monet and Dalí, among others. Well-known Korean artists such as Park Soo-keun, Lee Jung-seop and Kim Whan-ki could also count the top man as enthusiasts.
It is the largest amount ever paid in inheritance tax in South Korea, according to AP news agency, and three times the total wealth tax the country collected in 2020.
By donating the artworks, his wife and children have to pay less to the government, because donated art is not taxed. The family also donates 745 million euros to medical causes, such as cancer prevention in children and research into vaccines.
Under Lee Kun-hee, Samsung Electronics grew into one of the largest electronics companies in the world. His assets amounted to more than 17.6 billion euros. After his death in October last year, the Samsung offspring were given six months to think about how they would deal with the tax rules that the gigantic wealth will have to deal with. By giving away part of that capital, there is ‘only’ an inheritance tax of 8.9 billion euros.
‘A Portrait of Dora Maar’, by Picasso, is said to be one of the donated works of art from Lee Kun-hee’s private collection.
Normally, fifty percent tax is paid on the inherited assets, but in the case of a family business such as Samsung, the tax is another ten percent higher. They pay this inheritance tax in six installments over five years, probably by borrowing money from the bank with shares as collateral. In addition, the company is likely to pay higher dividends to shareholders, including the family.
Controversial
The generous donations mainly seem to be an attempt to repair the image damage of father and son Lee. Lee Kun-hee was twice convicted of corruption and tax avoidance, but was pardoned. He is also said to have dubious relationships with powerful politicians. His son and successor Lee Jae-yong has been in prison for bribery since January this year. He also has a chance to be released earlier.
