High-salaried pro gamers have begun phasing out the practice of receiving their salaries through personal corporate entities. There have not yet been any cases where tax penalties or league sanctions were imposed due to this structure. However, as rumors circulate in the industry that the National Tax Service (NTS) is looking into the tax issues of pro gamers, a movement is growing to address the matter before it becomes a problem.
According to findings on the 15th, a significant number of high-salaried LCK players have been receiving their salaries through corporate entities under their own names rather than as individuals. It is reported that many players belonging to so-called top-tier "Western" teams with annual salaries exceeding 500 million to 1 billion won opted for this method. Under this structure, the team pays salary-like funds to the corporation established by the player and receives a tax invoice from the entity.
Inven has identified at least three such cases. An industry insider said, "It is very likely much higher than that."
Behind the players' choice of corporate entities lies the difference in tax rates. Taking a player with an annual salary of 500 million won as a simple calculation example, if received as individual earned income, the tax base after subtracting the earned income deduction (maximum 20 million won) is approximately 480 million won, which falls into the 40% tax bracket. Adding local income tax brings the total tax to about 183 million won, roughly 36% of the annual salary. Assuming the same 500 million won is received as corporate revenue and retained entirely as profit, a 10% corporate tax rate applies to the first 200 million won, and a 20% rate applies to the remaining 300 million won. Even including local income tax, the amount is 88 million won—a difference of nearly 100 million won.
Of course, because this calculation applies tax rates alone, the actual tax liability may differ when accounting for tax deductions or corporate operating expenses. It also assumes that the money remains inside the corporation. If the player takes money out of the corporate entity as a salary or dividend, income tax is assessed at that point. Experts explain that the actual benefits stem more from expensing costs, income splitting, and controlling tax timing rather than the tax rates themselves. This is why concerns have persistently been raised in parts of the industry that this structure could eventually become an issue.
What triggered alarm was a tax audit involving a famous player. Although it was not an issue directly related to the corporate payment structure, after it became known, many agencies sought consultations with tax accountants regarding their players' tax matters. During these consultations, opinions were reportedly expressed that if the current structure is maintained, the National Tax Service could view it as tax evasion rather than tax avoidance. Separately, two LCK players were reported to have been audited by tax authorities, though it has not been confirmed whether this was due to corporate payment structures.
Tax evasion charges have not been confirmed nor have tax penalties been issued against the players moving to resolve the issue. It is a preemptive measure to mitigate risk before problems arise. Representatives of several famous players have already begun the process through accounting firms.
■ Key lies in 'substance'... League checks contracts, payment method remains matter of mutual agreement
A player establishing a corporate entity or receiving money through a corporate entity is not illegal in itself. The key is the actual contractual relationship and nature of activity. Under the substance-over-form doctrine in Article 14 of the Framework Act on National Taxes, tax authorities examine to whom the income actually accrues and what the economic substance of the transaction is, rather than looking solely at the contract or named payee.
Applying this principle to how LCK players operate creates potential issues. Players typically enter into exclusive contracts with their teams, live in team gaming houses, and undergo training and scrims at fixed times. They operate under the direction of head coaches and coaches and participate in matches and official schedules designated by the team. Tax experts view that if such players receive their salary through personal corporate entities, there is a risk that tax authorities may deem the money to be personal earned income of the player rather than corporate revenue.
Tax issues also intersect with players' league activities. The official LCK rulebook stipulates that penalties can be imposed if a player becomes subject to a criminal investigation or negatively impacts the league, explicitly noting that this includes instances where tax authorities conduct an investigation into alleged violations of tax laws or the Punishment of Tax Offenses Act. Under the Penalty Index, criminal offenses carry potential fines of up to 100 million won alongside up to permanent suspension from play or LCK qualification revocation, with a long statute of limitations of 72 months. If deemed severe, the LCK Secretariat can issue a temporary suspension even before investigation results are released.
However, the LCK Secretariat narrowed its interpretation of this clause last May. It clarified that the rule applies only to severe illegal acts carrying criminal liability or equivalent gravity, and that ordinary administrative procedures such as tax reassessments or additional tax payments are unlikely to be subject to league sanctions. This means that if a tax audit ends with additional payment, it will not lead to disciplinary action, but if it escalates into criminal charges for tax evasion or a formal law enforcement investigation, a player's career could be jeopardized. The mere fact that an issue becomes public also poses a burden to players, as it alone can trigger an investigation by the league.
The league secretariat is involved starting from the player contracting phase. To protect player rights and prevent unfair contracts, the LCK reviews contract terms between teams and players. Under the rulebook, all player contracts must be approved by the secretariat, and during this process, the secretariat can verify basic matters such as whether the contracting party named in the document is a corporation or an individual. If contract terms are deemed to violate laws or regulations, the secretariat may request amendments from the team.
However, the contract review process must be distinguished from the actual salary payment and settlement procedures. The secretariat's review is merely a procedure to protect players and ensure fair league operations; it does not mean the secretariat becomes a party to the contract or holds authority to manage or supervise the execution of individual contracts. How, in what proportion, and to whom the salary is paid are matters decided and executed by mutual agreement between the team and the player.
If the secretariat, which is not a party to the contract, were to arbitrarily dictate or mandate changes to these terms, it would constitute an overreach of authority. It is not that the secretariat is refusing to get involved, but rather that institutional limits define how far a third party can intervene.
■ Emerging as a new offseason variable... 'Payment method' joins 'salary amount' on negotiation table
This movement is also expected to emerge as a key variable in the upcoming offseason. Typically, the transfer window opens immediately after the World Championship (Worlds). Switching from corporate to individual receipt can reduce a player's take-home pay even with the same contract figure, as room for expensing costs or adjusting tax timing through a corporate entity vanishes. It cannot be ruled out that player representatives will demand compensation on a post-tax basis to match previous income levels during contract extension or transfer negotiations.
As a result, teams will have to spend more to retain the same player, which could lead to increased expenditures under the Sporting Financial Regulations (SFR) and heavier luxury tax burdens. Observers suggest that a new dynamic could unfold where payment methods, alongside salary amounts, become key negotiation points.
The demand for restructuring has also created new business opportunities in the agency industry. It is reported that some agencies are connecting players worried about tax risks with partner tax accounting firms to assist with the transition, taking commission fees in return.
Experts advise that this opportunity should be used to re-examine the corporate payment structure itself. Siwon Huh, a partner attorney at Yoon & Yang LLC, viewed this issue as having the same nature as the recent single-person corporate entity controversies among celebrities. Attorney Huh explained, "Establishing a corporate entity for a pro gamer to carry out related activities is not illegal in itself, and there is no issue if the corporation provides actual services while recognizing revenue and expenses."
However, he pointed out, "If the structure involves channeling income into the entity first without the corporation performing actual tasks, deducting various unnecessary expenses as corporate costs, and then paying out money to the individual as dividends or salary whenever desired, there is a risk of it being evaluated as tax evasion."
Regarding the industry's restructuring movement, he noted, "It appears they are moving back to liquidating corporate entities and receiving salaries directly as individuals. While one cannot definitively conclude there is guilt, it seems they judged for themselves that there was a risk of challenges being raised."
Attorney Huh assessed that the actual benefits pro gamers gain through corporate entities are not substantial. He said, "From the player's perspective, receiving salary directly versus through a corporate entity produces little difference tax-wise in the end result." He added, "Unlike celebrities who incur high incidental expenses, pro gamers operate under a structure where the team covers related costs, so the gain from corporate expensing would not be significant."
Ultimately, what they aim for is income splitting among corporate officers or controlling when income accrues; however, if family members are nominally hired as officers without actually performing work, it clearly becomes problematic. Attorney Huh advised, "There is no reason to needlessly set up a corporate entity to receive a salary. Operating a corporate entity is advisable only when there is a genuine need for an organization to manage non-gaming activities such as commercials."
While LCK player salaries rose steeply alongside the growth of the league, standards regarding how these payments are remitted failed to keep pace. The payment method is an area left to mutual agreement between teams and players, and while the league secretariat can verify contract terms, it cannot directly intervene in the execution process. Primary responsibility for correcting the structure rests with the contracting parties—the teams and the players.
With players taking the first step before issues escalate, observers point out that now is the time for teams and players to review their overall contract and remuneration structures, and for the league to consider ways to support the process.
