2 days ago
Foreign buyers flagged in 49 cases of apartment-linked tax evasion
Nearly W8tr in Korean apartments bought by foreign nationals since 2022, with 70% of tax evasion tied to wealthy Gangnam districts
South Korea's tax agency has launched a sweeping investigation into foreign ownership of high-end apartments, uncovering 49 cases of tax evasion related to the purchase or ownership of properties.
'We will apply the same level of scrutiny to foreign nationals acquiring apartments in Korea as we do to domestic buyers,' said Min Joo-won, director of investigation at the National Tax Service, during a press briefing held in Sejong on Thursday. 'We are committed to fully tracing the source of funds and imposing proper taxes using all available tools, including financial account tracking and forensic analysis.'
The probe comes as the government tightens regulations to curb speculative demand in the capital region. In June, it imposed stricter measures on Korean nationals, including loan caps and mandatory move-in requirements.
Foreign nationals, largely outside the scope of these regulations, came under closer scrutiny as the NTS launched a targeted review of high-priced apartment purchases.
After analyzing transaction data from 2022 through April this year, the agency uncovered 49 cases of tax evasion. These included 16 involving illicit gift schemes, 20 tied to undeclared income and 13 related to unreported rental income.
Tax evasion in Seoul's wealthiest districts
The 49 individuals collectively own 230 apartments, with 70 percent concentrated in Seoul's wealthiest districts of Gangnam, Seocho and Songpa. Some properties were valued at over 10 billion won ($7.2 million).
The estimated tax losses from these cases range from 200 billion to 300 billion won.
The tax evaders came from 12 countries, with about 40 percent identified as ethnic Koreans. Chinese and American nationals accounted for more than two-thirds of the total.
The agency said it would prioritize cases involving funds transferred through expedient means, such as gifts routed through untraceable overseas accounts.
Many buyers exploited regulatory blind spots by alternating between their foreign resident registration numbers and passport numbers when acquiring property, making it easier to avoid detection. The use of offshore bank accounts further complicated enforcement.
Some also disguised the source of funds by submitting false documents, including financing plans or bank balance certificates, to make it appear the funds were legally theirs.
The investigation also uncovered signs of criminal conduct, including illegal foreign exchange transactions and the use of cryptocurrency. In one case, a corporate loan obtained under the pretense of business operations was misused to purchase a personal apartment.
The NTS pledged active cooperation with foreign tax authorities to ensure proper investigation and enforcement.
'If the source of funds appears to originate overseas or raises money laundering concerns, we will request information from the relevant authorities to fully trace the funds and impose appropriate taxes,' Min said. He added that the agency would work to ensure local tax authorities take proper action if evasion is confirmed abroad.
The NTS said that from 2022 through April this year, foreign nationals purchased 26,244 apartments totaling 7.97 trillion won, with both the number and value of transactions on the rise.
Most purchases were concentrated in the greater Seoul area — Seoul, Gyeonggi Province and Incheon — which accounted for 81 percent of total transaction value and 62 percent of the total units bought by foreigners.
Foreign investment in Seoul was heavily focused on the city's most expensive neighborhoods. About 61 percent, or 1.9 trillion won, of transactions were made in the Gangnam, Seocho and Songpa districts in southern Seoul, as well as Mapo, Yongsan and Seongdong in the north.
In the top three districts, data show that three out of five foreign owners did not reside in their units, suggesting purchases were made for speculative purposes.
