High-earning pro gamers have begun unwinding the practice of receiving salaries through personal corporate entities. So far, there have been no tax penalties or league sanctions imposed due to this structure. However, with rumors circulating in the industry that the National Tax Service is looking into esports players' tax affairs, a proactive movement is underway to address the structure before issues arise.
According to reporting on October 15, a significant number of high-earning LCK players have been receiving their salaries through corporate entities established under their own names rather than as individuals. It is reported that many players on top-tier "western" teams earning salaries exceeding 500 million to 1 billion won opted for this method. Under this structure, the team pays wage-like compensation to the entity established by the player, and receives a tax invoice from that entity.
Inven has identified at least three such cases. An industry insider noted, "The actual number is likely much higher."
The driver behind players choosing corporate entities lies in the tax rate gap. As a simple example, consider a player earning a salary of 500 million won. If received as personal earned income, subtracting the earned income deduction (up to 20 million won) leaves a taxable base of approximately 480 million won, falling into the 40% tax bracket. Adding local income tax brings total taxes to approximately 183 million won, or roughly 36% of the salary. Assuming that same 500 million won is collected as corporate revenue and retained entirely as profit, corporate tax rates of 10% on the first 200 million won and 20% on the remaining 300 million won apply. Even including local income tax, the tax comes out to 88 million won—a difference of nearly 100 million won.
Of course, because this simple calculation only considers statutory tax rates, the actual tax bill may differ when accounting for deductions or corporate operating expenses. It also assumes the funds remain within the corporation. If a player withdraws money from the corporate entity as a salary or dividend, personal income tax is levied once again. Experts explain that the real financial advantage stems from expense processing, income distribution, and controlling the timing of taxation rather than the tax rates alone. This is why concerns have persistently lingered in parts of the industry that this structure could eventually become problematic.
A tax audit involving a prominent player raised alarm bells. Although that specific case was not directly linked to corporate salary arrangements, its disclosure prompted many player agencies to consult tax accountants regarding their players' tax setups. During these consultations, advisers reportedly warned that maintaining the current structure could lead the National Tax Service to view it as tax evasion rather than legal tax minimization. Separately, two LCK players were reported to have been audited by tax authorities, though it remains unconfirmed whether those audits were tied to corporate salary payouts.
To be clear, no players restructuring their pay structure have been found guilty of tax evasion or handed tax penalties. Rather, it is a preemptive measure to mitigate risk before problems emerge. Representatives for several high-profile players have already initiated the unwinding process through accounting firms.
■ 'Substance' Is Key... League Reviews Contracts, Pay Method Is Between Parties
Incorporating or accepting payments through a corporate entity is not in itself illegal. The key lies in the actual contractual relationship and nature of activities. Under Article 14 of the Framework Act on National Taxes—the principle of substance over form—tax authorities evaluate to whom the income actually accrues and the economic reality of the transactions, rather than relying solely on written contracts or payment names.
Applying this principle to how LCK players operate creates potential legal exposure. Players typically sign exclusive contracts with their organizations, live together in team houses, and complete structured training and scrim schedules. They take direction from head coaches and coaching staff, attending matches and official events designated by the team. Tax experts warn that if such players receive their salaries through personal corporations, tax authorities may reclassify those payments as personal earned income rather than corporate revenue.
Tax compliance also directly intersects with a player's league standing. The official LCK Rulebook permits penalties if a player impacts the league negatively, such as becoming the subject of a criminal investigation. The rules explicitly specify that this includes investigations by tax authorities into suspected violations of tax laws or the Punishment of Tax Offenses Act. Under the league's Penalty Index, criminal acts can carry fines of up to 100 million won alongside up to permanent suspensions or disqualification from LCK participation, with a long 72-month statute of limitations. If a matter is deemed severe, the LCK office can issue temporary suspensions even before official investigation results are concluded.
However, the LCK office narrowed its interpretation of this clause in May. The league clarified that sanctions apply only to severe illegal acts involving criminal liability or equivalent severity; standard administrative procedures such as tax reassessments or paying back taxes are generally not considered grounds for league penalties. Thus, while a tax audit resulting merely in additional tax payments would not lead to disciplinary action, criminal charges or formal investigations into tax evasion could derail a player's career. The mere publicity of such issues carrying the risk of a league-level investigation adds further pressure on players.
The league office is involved starting at the player contracting stage. To protect player rights and prevent unfair contracts, the LCK reviews agreements between teams and players. According to the rulebook, all player contracts require league approval, during which the office can verify basic terms, such as whether the contracting party listed is an individual or a corporate entity. If contract terms are found to violate laws or league regulations, the office can request modifications from the team.
However, the contract review procedure must be distinguished from the actual salary payment and settlement process. League approval is merely a procedural step to safeguard players and maintain fair league operations; it does not make the league office a party to the contract, nor does it grant authority to oversee or enforce individual contractual performance. How, in what proportion, and to whom salary payments are disbursed are matters decided and executed by mutual agreement between the team and the player.
For the league office, as a non-party, to unilaterally dictate or force changes to payment methods would exceed its authority. It is not that the office refuses to intervene, but rather that institutional limits govern the scope of third-party involvement.
■ A New Variable for Offseason... 'Payment Method' Joins 'Salary Figures' at Negotiation Table
This movement is expected to emerge as a new variable in the upcoming offseason. Typically, the transfer market opens immediately following the conclusion of the World Championship (Worlds). Transitioning from corporate payments back to individual payroll could reduce a player's net take-home pay for the same gross contract figure, as options for expensing and controlling tax timing through corporate entities disappear. Consequently, players may demand post-tax compensation guarantees during contract extension or transfer negotiations to maintain their net earnings.
As a result, teams may have to spend more to retain the same players, which in turn could inflate their overall spending figures and luxury tax obligations under the Sporting Financial Regulations (SFR). Industry observers anticipate a new paradigm where payment methods take center stage at the negotiation table alongside salary amounts.
The demand for corporate restructuring has also created new business opportunities within the agency industry. Some player agencies are reportedly connecting players concerned about tax exposure with affiliated tax accounting firms to assist with the unwinding process, collecting fees in return.
Experts advise using this occasion to fundamentally re-examine the practice of corporate compensation structures. Attorney Si-won Heo of Yoon & Yang LLC drew parallels between this situation and the recent controversies surrounding single-person corporate entities set up by celebrities. Attorney Heo explained, "For a pro gamer to establish a corporate entity to perform related business activities is not inherently illegal, and if the corporation genuinely provides services while recognizing revenues and expenses, there is no issue."
He added, however, "If the corporation performs no actual operations while serving merely to park income, claim unnecessary personal expenses as corporate costs, and distribute funds to the individual as dividends or salary whenever desired, there is a distinct risk that tax authorities will classify it as tax evasion."
Regarding the industry-wide unwinding trend, Heo remarked, "It appears players are seeking to liquidate their corporate entities and return to receiving salaries directly as individuals. While this does not automatically prove wrongdoing, it suggests players themselves assessed that their current setups carry tax risk."
Attorney Heo also noted that the practical benefits pro gamers derive from corporate entities are minimal. "From a player's tax perspective, receiving salary directly versus through an entity ultimately makes little tax difference," he stated. He added, "Unlike entertainers who incur high ancillary operational expenses, pro gamers have most of their expenses covered by their teams, meaning the financial benefits gained from corporate expense deductions are negligible."
He emphasized that the primary motives behind these setups are income splitting across corporate employees or controlling tax payment timing. However, hiring family members as nominal employees who do not perform legitimate work presents clear legal infractions. "There is no compelling reason to needlessly establish a corporation just to collect player salaries," Heo advised. "Operating a corporate entity is advisable only when a legitimate organizational structure is required to manage non-gaming activities, such as sponsorships and commercial endorsements."
While LCK player salaries have surged alongside the growth of the league, standards surrounding payment methods have failed to keep pace. Payment structures remain governed by private agreements between teams and players, and while the league office can verify contract terms, it cannot directly intervene in execution. Ultimately, primary responsibility for rectifying these structures rests with the contracting parties—the teams and the players.
Observers point out that with players taking the initiative before major issues erupt, now is the time for teams and players to review contract and compensation structures comprehensively, and for the league to consider measures to support that transition.
