Han River Views and Up to 20 Billion Won: Crackdown on "Emperor Residences" Used at Executives' Whim

[Anchor]

It has been revealed that more than four out of ten high-priced homes owned by corporations are being used for the personal purposes of company owners. Owners or their children were found to be living in them for free. The National Tax Service has announced intensive tax audits on these "emperor residences."

Reporter Chae Heesun has the details.

[Reporter]

This is a luxury apartment complex in Yongsan-gu, Seoul.

A small-to-medium-sized enterprise owns an apartment here under a corporate name. However, an investigation by the National Tax Service confirmed that the actual residents were not employees, but the married couple of the owner's child.

National Tax Service Commissioner Lim Kwang-hyun disclosed the results of a comprehensive inspection on approximately 2,600 high-priced corporate-owned housing units with a publicly notified price of 900 million won or more via social media.

Excluding rental use and employee dormitories, 1,097 units—or 42% of the total—were found to have been used for the personal purposes of company owners.

The average publicly notified price of the housing units subject to inspection exceeded 2 billion won, with 12 units valued at over 10 billion won, and the most expensive one surpassing 20 billion won.

The companies caught this time ranged in scale from small-to-medium enterprises to large conglomerates.

Under current tax laws, the maintenance and management costs of residences used by executive shareholders or their relatives cannot be processed as corporate expenses.

Nevertheless, irregular free residency has become a customary practice in some parts of the industry, and Commissioner Lim pointed out that some companies provided ultra-luxury apartments with Han River views or in Gangnam and Yongsan as private residences for owners or their children while keeping it an open secret from regular employees.

[National Tax Service Official: (Because they used it for free) the child did not pay rent, so they must pay income tax on that equivalent amount. Corporate tax also increases because they would have earned 10 million won a month in rent had it not been for the related party (the child). This connects not just to expenses, but to revenue as well.]

During this investigation, cases were also identified where owners transferred high-priced homes to corporations to evade multi-home regulations, or secured luxury condos worth over 10 billion won under corporate names for private use.

The National Tax Service plans to conduct strict tax audits on corporations with confirmed suspicions and expand verification to the overall private use of corporate funds.

(Video Tape Recorded by Lee Jae-young | Video Edited by Yeojin Ahn | Design by Hwang Se-yeon)
※ Please note: This article was translated by AI and may contain errors.