Samsung heirs likely to donate over half of Lee's art collection

Samsung Group heirs, including Samsung Electronics Co. Vice Chairman Jay Y. Lee, have tentatively agreed to donate more than half of the late Lee Kun-hee's extensive art collection valued at 2.5 trillion-3 trillion won ($2.2 billion-$2.7 billion), which will render the donated art free from inheritance taxes.

They are considering announcing the donation plan later this month as they are due to pay over 2 trillion won, as part of inheritance taxes estimated at over 12 trillion won, by the end of this month, according to sources with knowledge of the matter on Apr. 16.

They are expected to offer more than half of the 13,000 pieces in the late chairman's collection to national museums in Korea. The art to be donated is worth over 1.5 trillion won ($1.3 billion), based on the recent appraisal, and will be exempt from inheritance taxes. 

The junior Lee and his family, including his two sisters, have inherited over around 23 trillion won worth of stocks, real estate and art from their late father Lee Kun-hee, who passed away in October of last year at the age of 78. Their inheritance taxes are likely to be the highest amount imposed on a South Korean company ever.

Five-month appraisals were recently completed on the art collection by the country's three art associations. They are finalizing their appraisal report.

His 13,000 pieces of art include 112 national treasures; 1,300 pieces from iconic Western artists including Bacon, Chagall, Giacometti, Monet, Picasso and Rothko; and 2,200 pieces of Korean contemporary art. They are valued at 2.5 trillion-3 trillion won at current market prices.

Of the 2,200 pieces of Korean contemporary art, some 1,500 will be donated to national museums at home, while part of the donated art will be displayed at two Samsung-owned galleries.

The late Samsung chairman's lavish art collection has fueled debate about amending the country’s tax system to allow in-kind tax payments from art – in a move to prevent rare items from being sold overseas and to ensure they remain in the country as a part of its public cultural heritage. 

Under current law in South Korea, only real estate and securities can be used to pay tax in kind.

By donating the inherited art, the Samsung heirs are expected to book over 500 billion won in lost sales. If they sell them, they are obliged to pay half of the proceeds in inheritance taxes.

Some industry sources had forecast that Lee's family would put part of the inherited real estate and art collection on the market to fund the tax payment, while borrowing from banks to cover the shortfall.

Write to Soo-Young Seong at syoung@hankyung.com
Yeonhee Kim edited this article.