Court Rules "Lotte Family's Investigation Legal Fees Are 'Personal Expenses'... Corporate Tax Imposition Justified"
by Lim Chunhan
Published 17 Apr.2026 20:30(KST)
"Expenses Deemed for Personal Benefit of Controlling Family"
Partial Victory Only for Lotte Shopping in Matters Where Company Was Named as Suspect
Lotte Group affiliates filed a lawsuit seeking recognition of legal expenses incurred in responding to investigations involving Chairman Shin Dong-bin and other family members as company expenses, but the court did not accept their claim.
According to the legal community on April 17, the Seoul Administrative Court's Administrative Division 6 (Presiding Judge Na Jin-i) mostly dismissed the claims in a lawsuit filed by 15 major Lotte affiliates-including Korea Seven, Lotte Shopping, and Lotte Corporation-against 10 local tax offices and the Seoul Regional Tax Office, seeking to overturn corporate tax and related tax imposition measures. The court only partially ruled in favor of Lotte Shopping, and only to a limited extent.
The court determined that these legal expenses were not directly related to company work and were primarily intended to defend the controlling family members as individuals, making them ineligible for tax deductions under the law.
Lotte argued that the prosecution's investigation targeted the affiliates as a whole and therefore required a collective defense. However, the court ruled that, in principle, expenses incurred for investigations into personal misconduct-such as embezzlement and breach of trust-by the controlling family could not be covered by the company.
However, in the case of Lotte Shopping, the court acknowledged the rationality of a portion of the expenses, but only those directly related to matters in which the company itself was named as a suspect.
Previously, from June 2016 to April 2017, the prosecution and the Special Prosecutor for the Choi Soon-sil Scandal investigated Chairman Shin and the controlling family over allegations of corporate misconduct and bribery. Lotte affiliates recorded attorney fees and other legal expenses as corporate costs. However, the Seoul Regional Tax Office determined that these expenses were incurred for personal, not corporate, purposes and thus disallowed them as deductible expenses when calculating corporate tax.
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