2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The imposition of corporate tax of 2,416,282,370 (including additional tax) imposed on the Plaintiff on March 2, 2015 by the head of the ○○ Tax Office on the Plaintiff on June 1, 2015, and the imposition of corporate tax of 1,559,954,750 (including additional tax), corporate tax of 1,559,954,750 (including additional tax), corporate tax of 2011, corporate tax of 1,449,862,60 (including additional tax), corporate tax of 2012, and the imposition of corporate tax of 1,219,389,79,790 (including additional tax) shall be revoked.

A. The Plaintiff is a company established on November 7, 2005 by a credit card information processing company located in the United States for the purpose of providing settlement service, such as credit cards, in Korea.

(B) On November 16, 2005, the Plaintiff acquired 630,00 shares (total issued shares 1,136,000 shares) of 92G 20,00 shares (80,000 shares) for 63,150 won per share and 58,000 won (hereinafter referred to as “the first share acquisition”) for 20G 9,000 shares owned by the said company (hereinafter referred to as “the Plaintiff’s shares”) from HF 2,16,00,000 shares (hereinafter referred to as “the 2G shares acquisition”). The Plaintiff acquired shares from HF 2,000,000 shares (hereinafter referred to as “the 2G shares acquisition shares”). The Plaintiff acquired shares of 207,00,000 shares from EF 158,1425,70,000 shares (the 19,01%) and acquired shares of 2G shares from H investment associations, etc.

D. On March 24, 2014, the director of the regional tax office: (a) deemed that the instant goodwill does not constitute depreciable assets under Article 24(4) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 22184, Jun. 8, 2010; hereinafter “Enforcement Decree”); and (b) on March 24, 2014, the Plaintiff’s goodwill depreciation costs of KRW 1,675,998,910 as deductible expenses incurred in relation to the business year of 2008, reduced the business year of 2008 from KRW 1,708,341,562 to KRW 32,342,652.

E. The head of ○○○ Tax Office, on the same ground as the head of ○○○ Regional Tax Office, additionally imposed corporate tax of KRW 5,027,95,350 on the Plaintiff’s operating right depreciation cost for the business year 2009, and revised and notified the Plaintiff of KRW 2,416,282,370 (including additional tax) for the business year 2009, March 2, 2015. In addition, the Defendant also imposed corporate tax of KRW 1,559,954,750 (including additional tax), corporate tax of KRW 1,449,862,60 (including additional tax), corporate tax of KRW 1,460 for the business year 2012, corporate tax of KRW 1,219,389,79 (including additional tax) for the business year 201 through 2012 (hereinafter referred to as “instant disposition”).

F. The Plaintiff filed an appeal with the Tax Tribunal as of April 28, 2015 regarding the disposition of imposition by the head of the ○○ Tax Office, but received a decision of dismissal on August 13, 2015. The Plaintiff filed an appeal with the Tax Tribunal as of June 25, 2015 regarding the Defendant’s respective disposition of imposition. However, the Plaintiff filed the instant lawsuit on November 9, 2015 without having received a decision within 90 days from the date of the appeal.

[Ground of recognition] Facts without dispute, Gap evidence 1 through 6, Eul evidence 5 through 9 (including branch numbers; hereinafter the same shall apply), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

According to the provisions of Article 23(1) and (2) of the former Corporate Tax Act (amended by Act No. 9267 of Dec. 26, 2008; hereinafter referred to as the "Corporate Tax Act") and Article 24(1)2(a) and (4) of the Enforcement Decree of the Corporate Tax Act, business rights, which are depreciable assets, shall be paid in consideration of (1) business rights, (2) business rights, which are depreciable assets, are valuable due to the trade name, transaction relations, and other trade secrets, etc. of the merged corporation, and (3) the requirements for succession are satisfied.

(1) In the case of the instant goodwill, Article 24(4) of the Enforcement Decree does not provide for the time when the cost of the instant goodwill is to be paid (the view that only where shares are merged within two years after the acquisition of shares, the acquisition price of the combined shares can be recognized as the cost of merger and at the same time, the payment of the cost of the goodwill can be recognized as the payment of the cost of the acquisition of shares when the acquisition of shares can be evaluated as part of the merger process. Therefore, the Plaintiff can be deemed to have paid the cost of the instant goodwill when the acquisition of shares is merged. As such, the Plaintiff can be deemed to have paid the cost of the instant goodwill. (2) At the time of the first acquisition of shares, EFG continued to increase the sales and net profit of the instant EFG by holding major customers, such as BB,CC, DD Corporation, etc., and the acquisition price of the instant goodwill by requesting the Plaintiff to assess the net asset value of the EFG 16G 200,000,00 won.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

1) Requirements for goodwill under the Corporate Tax Act

Article 23 (1) of the Corporate Tax Act provides that depreciation costs of fixed assets shall be included in deductible expenses within the scope of the amount calculated as prescribed by the Presidential Decree only when a domestic corporation appropriates them as deductible expenses for each business year. Article 23 (2) provides that "fixed assets under paragraph (1) shall be assets prescribed by the Presidential Decree, such as buildings, machinery, equipment and patent rights except land." Article 24 (1) 2 of the Enforcement Decree provides that intangible fixed assets such as goodwill shall be included in the scope of depreciable assets. In the case of a merger among the goodwill under paragraph (1) 2 (a), Article 24 (4) of the Enforcement Decree provides that "Where the merged corporation evaluates and succeeds to the evaluation of the assets of the merged corporation, the goodwill calculated by the merged corporation shall be counted as depreciable assets only if it is worth business due to the trade name, transaction relations, and other trade secrets of the merged corporation, etc. of the former Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Ministry of Strategy and Finance No. 187, Feb. 28, 2011>

According to the above provision, in order to be recognized as a business right which is depreciable assets, (1) evaluation of the assets of the merged corporation should be succeeded to, and (2) business value should be worth due to the trade name, transaction relationship and other trade secrets of the merged corporation, and (3) payment should be made for the value of the business.

2) Whether the Plaintiff succeeded to the instant business by evaluating the instant business rights

(1) The Plaintiff’s business accounting value of the EFG stocks held by the Plaintiff at the time of the instant merger is not paid for the acquisition of new stocks or for a merger. The Plaintiff succeeded to the assets and liabilities of the EFG according to the book value stated in the Plaintiff’s consolidated financial statements. (2) As seen earlier, the Plaintiff asserted that the acquisition price of the stocks calculated at the time of the merger and the net asset value of the EFG (the Plaintiff’s 26 pages) was “net asset value assessed as the fair value.” However, it is difficult to view that the 2G net asset value of the EFG company at the time of the instant merger as the valuation of the 10G net asset value at the time of the instant merger, rather than the valuation of the net asset value of the 10G net asset value at the time of the instant merger and the 10G net asset value at the time of the instant merger and the 2G net asset value at the time of the instant merger and acquisition of the 10G net asset value at the time of the instant merger and 2G net asset value.

3) Whether the Plaintiff paid the price for the instant goodwill

In principle, whether a “price for the value of business” under Article 24(4) of the Enforcement Decree has been determined depending on whether or not there has been payment for the value of business of the merged company at the time of the merger with the merged company. If the merged company acquired shares of the merged company in advance and did not pay for the shares of the merged company while the merged company was merged with the merged company, in light of the substance of the actual transaction, the acquisition of shares of the merged company can be recognized as payment for the value of business. However, if the acquisition of shares of the merged company cannot be seen as a merger with the existing shareholders of the merged company, it is difficult to recognize the “price for the value of business” (see Supreme Court Decision 93Nu1395, Dec. 14, 1993). In light of the fact that the Plaintiff acquired shares of the merged company in advance at the time of the merger with the acquisition of shares of the merged company and the acquisition of shares of the merged company during the merger with the acquisition of shares of the merged company for a considerable period of time between the merger and the acquisition of shares.

The above conclusion leads to the same conclusion from the perspective of liquidation income of the merged company. As seen earlier, in cases where the merged company acquired the shares of the merged company in advance and did not pay for the shares of the merged company in the course of the merger of the merged company, the acquisition price of the shares paid by the merged company would constitute liquidation income from the standpoint of the merged company, but if the acquisition price of the shares of the merged company cannot be seen as a merger of the merged company, the acquisition price of the shares paid by the merged company would not constitute liquidation income of the merged company. This means a close relationship between the acquisition price paid by the merged company in the course of the acquisition of the shares of the merged company and the acquisition price of the shares of the merged company constitutes liquidation income of the merged company.

Therefore, in cases where “the acquisition value of the stocks of the merged corporation is not included in the cost of the merger because the stocks of the merged corporation were acquired at the second anniversary of the acquisition of the stocks of the merged corporation without the issuance of new stocks, and thus the corporate tax on the liquidation income of the merged corporation is not levied (see Article 80(2) of the Corporate Tax Act), the amount paid when acquiring the stocks of the merged corporation does not constitute the cost of the business right acquired by the merger, and thus, the business right appropriated by the merged corporation cannot be deemed as depreciable assets under Article 24(1)2(a) and (4) of the Enforcement Decree (see Supreme Court Decision 2012Du6247, Jul. 24, 2014).”

The fact that the Plaintiff merged the EFG at the expiration of two years after the Plaintiff acquired the shares of the EFG and retired the shares of the EFG without issuing new shares. As a result, the corporate tax on the liquidation income of the EFG was not imposed. According to the foregoing legal doctrine, the amount that the Plaintiff paid when acquiring the shares of the EFG does not constitute the consideration for the goodwill acquired by the merger.

4) Sub-determination

Therefore, since the Plaintiff cannot be deemed to have succeeded to the instant goodwill by evaluating the instant goodwill, and cannot be deemed to have paid the price for the instant goodwill, the instant goodwill is not a depreciable asset. The instant disposition based on the same premise is lawful. The Plaintiff’s assertion cannot be accepted.

3. Conclusion

The plaintiff's claim is dismissed as it is without merit, and the costs of lawsuit shall be borne by the plaintiff who has lost. It is so decided as per Disposition.