Seoul Administrative Court rules overseas gambling site winnings are taxable income

The Seoul Administrative Court ruled against a gambler identified only as A in a suit seeking to cancel a comprehensive income tax assessment, YTN reported on May 29, 2023. The court held that money won on an overseas gambling site is income and that the tax bill was lawful¹.

The gambling dates to 2013 and the following year. A converted game money with a credit card, placed bets on overseas gambling sites, and cashed out winnings, but did not file a tax base return in the process, according to the report¹.

A appealed to the tax tribunal, which dismissed the claim, and then filed suit¹.

The court rejected A's argument that losing more than was won meant no taxable income arose. The panel said the costs spent on bets that did not hit and the revenue gained from bets that did have no causal relationship¹.

The report does not state the exact date of the ruling, the court division that heard the case, or whether A plans to appeal. Those points have not been reported¹.

What it means for players

The ruling concerns tax on gambling winnings in South Korea and how winnings from offshore gambling sites are treated there. The court's position is that a player's overall loss across bets does not cancel the tax on amounts actually received, because the losing bets and the winning bets are treated as separate events with no causal link¹.

For anyone who has cashed out from an overseas site while resident in South Korea, the practical point is that the amount received back can be assessed as other income even when total deposits exceeded total withdrawals. How taxable winnings are calculated and whether gambling losses can be deducted are separate questions the ruling did not resolve in A's favor.

The case also sits alongside the wider question of declaring gambling winnings on a tax return and the penalties for not declaring them. A did not file a tax base return for the period in question, which is how the assessment arose¹.

What happens next

The report gives no information on further appeals or on any change to tax office practice following the ruling. A's earlier claim to the tax tribunal was dismissed before the court case¹.