Determination of the Enforcement Decree and Residence of the Income Tax Act

Litigation costs shall be borne by the plaintiff.

The following facts are not disputed between the parties, or may be acknowledged by considering the whole purport of the pleadings in each entry in Gap evidence 1-2, Eul evidence 1-1-2, and No. 1-4.

A. During 2002 and 2003, the Plaintiff withheld interest income tax by applying 10% of the limited tax rate pursuant to the "the Convention between the Government of the Republic of Korea and the Government of New Zealand for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (hereinafter "Tax Convention") and filed a return on and paid to the Defendant by the Defendant by paying 180,547,439 won as deposit interest to the customer account ○○○, a non-resident with the nationality of New Zealand under the Income Tax Act (hereinafter "Act").

B. The Defendant rendered the instant disposition to pay 15% interest income to a resident under Article 129(1) of the Act on the ground that ○○ constitutes a non-resident, not a non-resident under the law, at the rate of 15% (14% as at the present rate before the Act was amended by Act No. 7319, Dec. 31, 2004; January 1, 2005; and the current rate of 14% prior to its entry into force). On October 10, 2005, the interest income tax initially reported and paid by the Plaintiff to the Plaintiff was deducted as the tax payable and paid as interest income tax for the year 2,43,470, and the amount of 8,259,620 won reverted to the year 203.

2. Whether the disposition is lawful;

A. The plaintiff's assertion

(1) The fact that ○○○ has a permanent domicile in New Zealand, such as holding a house in New Zealand and exercising the right to vote while living with its children. The fact that ○○○○ has reported the residence of 2002 and 2004, which is the taxable period of the instant disposition, and that the spouse’s ○○ and ○○ are currently separate from her spouse, so it cannot be deemed that her family living together with ○○ is staying in the Republic of Korea. Article 4(3) of the Enforcement Decree of the Act provides that “where her family living with ○○ and her family living together with her family living together with her family living together with her family living together with her family living together with her family living together with her family living together with her family living together with her family living together with her family living together with her family living together with her family living together with her family living together with her family living together with her family living together with her family living together with her family living together with her family living together with her two years.

(2) Ultimately, since ○○ cannot be seen as a domestic resident, the instant disposition should be revoked in an unlawful manner.

(b) Relevant statutes and tax agreements;

It is as shown in the attached Form.

C. Determination

(1) (A) An individual who has a domicile in Korea or has a domicile in Korea for not less than one year is liable for tax payment under the Act (Article 1(1)1 of the Enforcement Decree of the Act), and his domicile is determined based on objective facts regarding living relationship, such as the existence of his family members living together in Korea and of assets located in Korea (Article 2(1) of the Enforcement Decree of the Act). The term “resident” means a place where he resides in Korea for a long period other than his domicile and where no close general living relationship, such as his domicile, arises (Article 2(2) of the Enforcement Decree of the Act). The term of his residence in Korea is from the date following the date of his entry into Korea until the date of his departure (Article 4(1) of the Enforcement Decree of the Act). If the period of his residence in Korea is more than one year, it shall be deemed that he has a domicile in Korea for not less than one year (Article 4(3) of the Enforcement Decree of the Act). In determining whether an individual has a domicile or residence in Korea, it should be determined in view of his family relations with other foreign countries under tax laws.

(B) On the other hand, Article 4(2) of the Tax Convention provides that, with respect to the determination of the status of an individual who is a resident of both Contracting States, "if the individual has a permanent residence available to him/her in both Contracting States, his/her personal and economic relationship shall be deemed to be a resident of the most closely related Contracting States (in the case of serious interests)," and subparagraph (b) of the same Article provides that "if it is impossible to determine a Contracting State with a focus on the important interests of the person or it does not have a permanent residence available to him/her in either Contracting State, he/she shall be deemed to be a resident of the Contracting State with which he/she is habitually living, and subparagraph (c) of the same Article provides that "if the person is habitually living in both Contracting States, or does not have any habitual address in either Contracting State, he/she shall be deemed to be a resident of the State with which he/she is a national."

(2) (A) With respect to this case, the term of residence in the Republic of Korea under Article 4(3) of the Enforcement Decree of the Act refers to a case where the period of residence in the Republic of Korea is not less than one year for not less than two taxable periods without a interruption of the period of residence in the Republic of Korea, and there is no basis to regard that the period of residence in the Republic of Korea is over one year, and the total period of the period of residence in the Republic of Korea repeated entry and departure is not less than one year over two taxable periods, and it does not constitute a case where the period of residence in the Republic of Korea is more than one year over two taxable periods, and even if a foreign resident is a foreign resident who belongs to the place of work in the Republic of Korea and is paying taxes,

(B) However, according to the evidence Nos. 5, 9-1 through 3, 10-12, 15-21, 12-1, 22-2, and 23 of the Evidence Nos. 5, 10-1 through 12, 15-21, 12-1, and 23 of the Evidence No. 1, it is recognized that: (a) Cho○○ moved to New Zealand for the purpose of permanent residence; (b) ownership of a house in New Zealand; (c) ownership of a house in New Zealand; (d) is registered as an elector in New Zealand; (d) is employed in New Zealand; (e) was granted by the New Zealand authority; (d) was granted a taxpayer tax number; and (e) obtained

However, comprehensively taking account of the overall purport of Gap evidence Nos. 1-2, Gap evidence Nos. 3, Gap evidence Nos. 5-8, Eul evidence Nos. 2-7 and Eul evidence Nos. 1-2, and Eul evidence Nos. 1-2 and 7, Cho Jong-○ stayed in Korea for the period of 310, 2001, 302, 309, and 335 days after entering the Republic of Korea with the nationality of the Republic of Korea, and continuously leaving the Republic of Korea, and his children reside in New Zealand, but his father is residing in ○○-dong, Seoul, ○○-dong, without his occupation, and it is difficult to view the plaintiff's residence in Korea for ○○-dong, Seoul, ○○-dong, and ○○-dong, and thus, it is difficult to view the plaintiff's residence in New Zealand as his principal residence in Korea for 20 years or more, and thus, it is difficult to view that ○○-○ was a corporation with no business performance report.

(C) Therefore, Article 4(2)(a) of the Tax Convention cannot be applied since the Plaintiff appears to have no permanent residence available to any Contracting State, and Article 4(2)(b) of the Tax Convention is deemed to be Korea and Article 4(2)(b) of the Tax Convention shall be applied to the State where the Plaintiff is habitually living. Even if the Plaintiff is not habitually living in Korea and New Zealand, the Plaintiff is a national of the Republic of Korea and the Plaintiff shall be subject to Article 4(2)(c) of the Tax Convention. Therefore, the Plaintiff’s above assertion is groundless.

(Indivate)

Therefore, the instant disposition that the Defendant reported ○ as a resident under the law is legitimate.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

Related Acts and subordinate statutes and tax agreements

Income Tax Act

Article 1 (Tax Liability)

(1) Any individual who falls under any of the following subparagraphs, shall be liable to pay the income tax on his income under this Act:

1. Any private person who has a domicile in Korea or has a temporary domicile in Korea for not less than one year (hereinafter referred to as "resident");

2. Any person who is not a resident (hereinafter referred to as "non-resident") and has income from domestic sources;

○ Article 127 (Liability for Withholding)

(1) Any person who pays the following income or revenue amount to a resident or nonresident in Korea, shall collect the income tax on such resident or nonresident through withholding under the provisions of this Section:

1. Interest income amount;

○ Article 129 (Withholding Tax Rate) (amended by Act No. 7319 of Dec. 31, 2004)

(1) The income tax to be withheld by the withholding agent shall be the tax amount calculated by applying the tax rates under the following classifications (hereinafter referred to as “collection tax rates”):

1. The following tax rates on the interest income amount:

(c) 15/100 on other interest income amount;

Enforcement Decree of the Income Tax

○ Article 2 (Determination on Domicile and Place of Residence)

(1) The address under Article 1 of the Act shall be judged by the objective facts of living relationship, such as the existence of a family living together with the family living together in Korea and of the property located in Korea.

(2) The term "place of abode" in Article 1 of the Act means the place where a person has resided for a long time besides his/her address, and in which no close general living relationship is formed as the address.

(3) Where an individual residing in Korea falls under any of the following subparagraphs, he shall be deemed to have an address in Korea:

1. When a person has an occupation which requires him to continually dwell in Korea for 1 year or longer; and

2. When a person has a family living together in Korea, and is considered to dwell in Korea continuously for 1 year or longer judging from his occupation and property status; and

(4) In case where a person living or working overseas falls under one of the following subparagraphs, he shall be considered to have no address in Korea:

1. When a person has an occupation which usually requires him to continually dwell abroad for 1 year or longer; and

2. When a person with a foreign nationality or citizenship under the foreign laws, who has no family living together with him in Korea, and is not deemed to return home again and mainly dwell in Korea in view of his occupation and property status.

○ Article 4 (Calculation of Dwelling Period)

(1) Dwelling period in Korea shall be from the day following of entrance to the date of departure.

(2) When an individual who has a residence in Korea enters Korea again, and the purpose of departure is deemed clearly temporary, in view of the residence, location of assets, etc. of his family living together, the period of departure shall be deemed to be the period of his residence in Korea.

(3) If the period of residence in Korea is one year or more over two taxable periods, the temporary domicile in Korea shall be considered to have been established in Korea for one year or more.

Article 4 of the Convention between the Government of the Republic of Korea and the Government of New Zealand for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with

1.For the purposes of this Convention, the term "resident of a Contracting State" means a person liable to pay taxes in that State on account of address, domicile, location of head office or principal office, place of management, or any other basis of a similar nature, in accordance with the laws of that State. This term does not include, however, persons liable to pay taxes only for source income in that Contracting State.

2.If an individual is a resident of both Contracting States under the provisions of paragraph 1, his status shall be determined as follows:

(a)the person shall be deemed to be a resident of a Contracting State which has a permanent residence available to him;

If that individual has a permanent residence available to him in the Contracting States, he shall be deemed to be a resident of the Contracting State most closely related to his personal and economic relations (the central point of interest).

(b)where it is impossible to determine a Contracting State with a focus on the important interest of the person or it does not have a permanent residence available to that Contracting State, it shall be deemed to be a resident of the Contracting State with which it is habitually liable;

(c)if the individual is habitually in both Contracting States, or does not have any address in either Contracting State, that individual shall be considered as a resident of the State in which he is a national.

(d)if that individual is not a national of the Contracting State or a national of any Contracting State, the competent authorities of the Contracting State shall resolve the problem by mutual agreement.

[Seoul High Court 2007Nu6511, October 11, 2008]

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

Therefore, the judgment of the court of first instance is just, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.