Nearly 42% of the luxury homes owned by corporations are being used as residences or vacation homes for their owners, according to the National Tax Service (NTS). The agency is investigating 50 companies suspected of tax evasion through the personal use of corporate housing, including the use of fictitious payroll and false invoices.
On August 25, the NTS announced it has launched tax audits on these 50 companies, with the total amount of suspected tax evasion estimated at approximately 1.9 trillion won.
A comprehensive review of 2,639 corporate-owned homes, each exceeding 85 square meters in area and valued over 900 million won, revealed that 1,097 homes (42%) were confirmed to be used by the owners or their families for personal purposes.
Among the properties, 1,157 were held for rental purposes, while 385 were designated as employee housing. The NTS is also analyzing the usage of the remaining corporate homes alongside the reporting records of the owning companies.
In many cases where personal use was confirmed, additional signs of tax evasion, such as the payment of fictitious payroll and receipt of false invoices, were detected. The NTS has prioritized the investigation of companies with significant allegations.
The targets of the investigation include 28 companies that provided luxury homes to owners or their families at no cost or at a low price, five companies that used corporate names to evade multiple housing and loan regulations, and 17 companies that used vacation condos and villas exclusively for owners.
One company acquired a luxury home in the Hanam-dong area of Yongsan for over 20 billion won and spent 10 billion won on expansion and renovation using corporate funds. The owner and their children were found to own a separate home valued at 30 billion won nearby while also using the corporate housing for personal purposes.
This company reportedly paid the owner approximately 15 billion won, which is ten times the average salary of top earners in the same industry. It is also accused of paying about 5 billion won in fictitious payroll to family members who did not work and disguising the outflow of about 5 billion won as loans to defunct companies.
Instances of evading real estate taxes and financial regulations through corporate structures have also been uncovered. One owner acquired a planned redevelopment apartment in Banpo-dong, becoming a two-home owner, and then transferred their existing home valued at 4 billion won to a company they control to qualify for the one-home tax exemption. They continued to reside in that home without paying rent.
Another company acquired a 10 billion won apartment in Hanam-dong while the owner family already owned two apartments in Gangnam. The family was found to be living in the corporate housing while avoiding multiple housing tax regulations.
Cases where condos and vacation homes were reported as employee welfare facilities but were exclusively used by the owners are also under investigation. One foreign company provided a 60 billion won single-family condo, with a nightly rate of 3 million won, as a private vacation home for the owner family and covered about 2 billion won in renovation costs for an apartment owned by the owner in Gangnam.
Another company acquired a luxury condo in a golf resort in Pyeongchang for about 3 billion won, claiming it as an employee welfare facility to receive a value-added tax deduction, while it was actually used by the owner family. This company is also accused of processing the purchase of luxury goods and precious metals for the owner family as corporate expenses.
The NTS plans to investigate the outflow of corporate funds and their usage through temporary storage, account inquiries, and digital forensics. They will also verify whether the outflowed funds contributed to the wealth accumulation of the owner family.
Profits attributed to the owner family will be subject to income taxation, and if tax evasion or the receipt of false invoices is detected, the NTS plans to file charges under the Tax Offenses Punishment Act.
While personal use has been confirmed in the comprehensive review, the NTS will continue to analyze corporations not included in this investigation. The scope of verification will also expand to include instances of providing corporate housing for children studying abroad or supporting their education expenses.
* This article has been translated by AI.
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