Police have referred a company and a woman in her 40s to prosecutors on charges of evading tax obligations by placing real estate in a nominal trust and then transferring the position of truster, a scheme designed to avoid the comprehensive real estate holding tax.
Seoul's Dongdaemun Police Station said on the 23rd that it referred the company and its chief executive, identified only as A, to prosecutors on Sept. 2 without detention on charges of violating the Real Estate Real Name Act for the purpose of avoiding the holding tax.
Police opened the investigation after receiving a complaint from the Uichang District Office in Changwon, South Gyeongsang Province, based on a planned inspection conducted by the National Tax Service last year. An analysis of the suspects' past tax records and property ownership histories found that A committed the offense in 2022 out of concern that the company where she served as chief executive would face an excessive holding tax bill.
Police believe A learned of the scheme through an internet search, and that the trust agreement under which the company designated A as trustee amounted to nothing more than a nominal trust in which only the title was held in trust. Police also confirmed that the suspects exploited a provision under which the holding tax is calculated and levied on the basis of the truster, transferring that status to an acquaintance with a lighter tax burden.
Police decided to refer the company that originally owned the property as well, applying the joint penalty provision of the Real Estate Real Name Act on the grounds that it had neglected its duty of care and supervision. The investigation found that A, who had paid close to 10 million won annually in holding tax through 2022, paid less than 100,000 won from 2023.
Police said they will continue strict enforcement against illegal real estate activity, including tax evasion using irregular methods, under a special crackdown plan on real estate crime.