Corporate-Owned Homes Used by Owners? National Tax Service Cracks Down on 'High-Priced Residence Tax Evasion'

The National Tax Service has launched a comprehensive inspection of expensive residences owned by corporations. The aim is to scrutinize whether there has been tax evasion, such as cases where homes registered as company housing under a corporate name are actually being occupied by the owner’s family.

On April 12, Kwanghyun Lim, Commissioner of the National Tax Service, stated in a post on social networking service (SNS), "We will verify corporate-owned residences that are classified as non-business real estate."

Apartment complex in Seoul. Photo is not directly related to the content of the article. Photo by Yonhap News Agency

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The investigation will target high-priced residences with an officially assessed value exceeding 900 million won and those larger than the national housing size standard. As of last year, it was found that approximately 1,600 corporations collectively owned 2,630 such units.

The combined officially assessed value of these residences is about 5.4 trillion won, with an average price of around 2 billion won. Among them, there are more than 100 residences valued over 5 billion won, and some cases include ultra-high-end apartments worth more than 10 billion won.

The National Tax Service is focusing on the purposes for which corporations own these high-priced residences. Commissioner Lim emphasized, "We need to check whether residences declared as company housing for employees are actually being used by the owner’s family, or if assets held for investment purposes have been reported as being for business use."

He added, "If the residence is indeed used as employee housing or for rental business purposes, there is no issue. However, if the owner’s family has been living there rent-free and evading taxes, this constitutes tax evasion through the use of non-business real estate."

This measure is in line with the recent direction of government policy. On April 9, President Lee Jaemyung stated at the National Economic Advisory Council that "excessively holding assets that are not immediately needed is problematic" and instructed officials to consider strengthening the burden of ownership for such properties.

A post by Kwanghyun Lim, Commissioner of the National Tax Service, on social networking service (SNS) on the 12th. Screenshot of Kwanghyun Lim's Facebook.

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President Lee also remarked, "From now on, we must make it impossible to profit from speculative real estate operations by any means," adding, "Only then will the industrial and economic system function properly."

The National Tax Service plans to conduct a full inspection of the 2,630 identified high-priced residences first, and, if necessary, expand the scope of investigation to lower-priced properties. If evidence of tax evasion is found, the agency will launch tax audits and collect the corresponding taxes.

Additionally, the agency announced that in the future it will broaden the inspection scope to include other non-business real estate assets such as land owned by corporations, and will continue to monitor their actual usage.

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