South Korea’s Super-Rich Flock to U.S. to Escape High Inheritance Taxes

As South Korea’s super-rich turn to U.S. investor immigration to avoid inheritance and gift taxes reaching up to 60%, more individual investors are also flocking to U.S. stocks.

On Sunday, the U.S. Department of State announced that the U.S. Consulate in South Korea issued 365 investor immigration (EB-5) visas last year (based on the U.S. fiscal year), more than double the 171 visas issued in 2022. In June alone, 105 investor immigration visas were issued, far exceeding the average level.

In the current year’s rankings for U.S. investment immigration visas, South Korea placed fifth, trailing China, Vietnam, India, and Taiwan.

Analysts suggest that South Korea’s super-rich are looking to leave due to the heavy inheritance and gift tax burden, turning to countries with lower tax rates. Although the U.S. does not have particularly low inheritance tax rates (with a maximum rate of 40%), it offers ample deductions, and the investment immigration visa can be relatively easily obtained by paying the required fees, especially for those considering their children’s educational environment.

Many South Koreans are also eyeing Singapore, which imposes no inheritance tax. In contrast, South Korea’s inheritance tax rates—up to 60% for major shareholders—are among the highest in the world.

Korean capital is rapidly entering U.S. markets. The Korea Securities Depository reports that Korean-owned U.S. stocks reached a record $101.37 billion on Thursday, the highest since tracking began in January 2011.

The most popular stock among Korean investors in the U.S., known as Seohak ants, was Tesla, with holdings amounting to $16.7 billion. Nvidia was next at $13.8 billion, Apple at $4.6 billion, and Microsoft at $3.6 billion.

South Koreans invested an additional $7 billion in U.S. stocks in just a week, rising from $91.07 billion on October 31. This wave of investment follows former President Trump’s recent electoral victory, which has revived interest in U.S. stocks amid expectations of corporate tax cuts. The U.S. Federal Reserve’s recent rate cut, spurring investor risk appetite, is also a key driver.

Meanwhile, the Korean stock market continues struggling despite the recent decision to abolish the financial investment income tax. The Korea Exchange reported that individual investors sold a net $250 million in Korean securities over two days on November 6 and 7.