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After spending four decades building a successful precious metals export business, a man sought a way to transfer his wealth to his child without incurring taxes and ultimately turned to an offshore trust.
By moving his assets into a trust abroad and naming his child as the beneficiary, the man believed the structure would shield the assets from gift taxation. He assumed that because the assets were legally held under the name of the trustee rather than himself or his child, they were safely out of sight.
His peace of mind, however, was short-lived. By analyzing a wide range of information and data, including foreign exchange records, the National Tax Service (NTS) uncovered that his child was the true beneficiary, ultimately hitting the family with billions of won in back taxes. The man’s attempt to hide behind the veil of an offshore trust ultimately collapsed.
Moving forward, this type of tax evasion will become significantly harder. Starting this year, a new foreign trust reporting system comes into full effect.
