S.P.D.

O Head of tax office

2. The plaintiff's appeal is dismissed.

3. All costs of the lawsuit shall be borne by the Plaintiff.

The Defendant’s disposition of imposition of corporate tax of KRW 5,841,505,810 for the business year of 2003 against the Plaintiff on March 9, 2007 is revoked.

2. Purport of appeal

A. The plaintiff shall revoke the part of the judgment of the court of first instance against the plaintiff. The defendant's disposition of KRW 898,693,200 among the disposition of imposition of KRW 5.841.810 on March 9, 2007 against the plaintiff shall be revoked. The defendant's disposition of KRW 898,693,200 shall be revoked.

(b) Defendant: as set forth in paragraph (1) above;

The court's reasoning concerning this case is as stated in the part of the judgment of the first instance except for the second instance court's first instance court's first instance court's first instance court's first instance court's first instance court's first instance court's first instance court's first instance court's second instance court's second instance judgment's second instance judgment's second instance court's second

2. Parts in height:

[4] As to the applicable rate of duty

A) Article 12(1) of the Korea-U.S. Tax Treaty provides that “The dividends received from sources within one of the Contracting States may be taxed by both Contracting States.” Article 12(2) provides that the tax rate imposed by a resident of the other Contracting State on dividends received from sources within one of the Contracting States shall not exceed 15% of the total amount of dividends or 10% of the total amount of dividends, or (b) the recipient of dividends is a corporation (c). In the case of dividends received from a resident of the other Contracting State, either (a) 15% of the total amount of dividends, or (b) 10% of the voting stocks issued by the paying corporation during the taxable year prior to the date of dividends payment, whichever is less than 25% of the total amount of the voting stocks issued by the paying corporation during the immediately preceding taxable year, shall not exceed 10% of the total amount of dividends or dividends (excluding the interest paid from a subsidiary, which is 50% or more of the voting stocks issued at the time of receiving the dividends or interests).

또한 한・미 조세조약 제2조(일반적 정의) 제1항 (d)는 「"인(person) 이라 함은 개인(individual), 파트너쉽(partnership), 법인(corporation), 유산재단estate), 신탁재단 (trust) 또는 기타인의 단체 (any body of persons)를 포함한다」고 규정 하고 있고, 같은 항 (e)의 (ⅱ)는 「"미국법인(United States corporation) 또는 "미국의 법인 (corporation of the United States) 이라 함은 미국 또는 미국의 제 주 또는 콜럼비아특별구의 법에 따라 설립되거나 조직되는 법인(corporation), 또는 미국의 조세목적상 미국법인으로 취급되는 법인격 없는 단체(any unincorporated entity treated as a United States corporation for United States tax purposes)를 의미한다」고 규정하고 있다.

On the other hand, Article 10(2) of the OECD Model Convention explicitly provides for a lower rate of 5% (5%) for dividends paid by a subsidiary company to a parent company if the actual owner of the dividends is a resident of another Contracting State. It is reasonable to impose taxes imposed when the actual owner of the dividends is a company (other than partnership) which directly owns at least 25% of the total dividends in the case of a company that directly owns at least 5% of the total dividends in the case of a company that is paid by the actual owner. In the case of a State’s holding at least 25% of the shares in another State, it seems reasonable to impose taxes on a foreign subsidiary to avoid repeated income and taxes and to facilitate international investments. The realization of this objective seems to be " how to deal with the dividends in the country of the parent company’s resident state", and the "limited partnership" is to be treated as a corporation in accordance with its domestic law. In particular, the term "limited partnership" to the extent that a partnership is treated as a corporation under the provisions of the OECD Model Convention 2.

B) structural forms of ○○○ and ○VI and handling them under the domestic tax law

(1) Article 1 subparag. 3 of the Corporate Tax Act defines “foreign corporation” only as a corporation with its head office or principal office in a foreign country, and does not define the meaning of a legal entity separately. However, since the United States’ limited partnership established under the law of the United States does not exist under the domestic law and there is no same concept as our legal entity under the law of the United States, it is not immediately derived whether a limited partnership is a foreign corporation under the Corporate Tax Act or the law of the United States of America.

On the other hand, the method of determining whether a foreign organization constitutes a foreign corporation under the Corporate Tax Act and the method of determining the judicial nature of a foreign organization based on the tax laws in that foreign organization. In the taxation of a foreign organization, tax treaties are applied at the stage of the application of the allocation of tax authority and the limited tax rate, but the establishment of specific tax liability is determined by individual domestic tax laws in that country, it is difficult for a foreign organization to request the tax authority to confirm daily handling of the tax laws in that country, and it cannot be viewed that the uniform organization should be treated differently in the application of the domestic tax laws on the ground that there is a difference in the tax laws in the foreign country. Therefore, it is reasonable to apply the domestic tax laws by examining the judicial nature of that organization in order to determine which kind of organization is most close to a foreign corporation under the domestic law.

○○○○ LLC and ○○VI, a limited partnership, are composed of general partners with expertise in fund management, performing the daily affairs of the fund, and unlimited partners with unlimited liability who are responsible only within the investment limit, as a passive investor who is not actively involved in fund management, and are for profit-making organizations with property separate from its members and conduct its own business activities with its own investment purpose. It is not a human combination where the personal nature of its members is sufficiently revealed, but a group of partners has the nature of independent existence that can be the subject of rights and obligations separate from its personal nature. Thus, our Civil Code has a different legal nature in essence from our Civil Code, where all partners are liable for the ownership of limited partners. Although there is a little difference in relation to the transfer of shares of limited partners, the basic structure of which is similar to the limited partnership company under our Commercial Act (On the other hand, the United States can be easily taxed as a corporation, but it cannot be treated differently under our tax law.

Therefore, it is reasonable to view that ○○○EP and ○VI, which are the most similar to the limited partnership company under our law, are subject to corporate tax as a foreign corporation under our corporate tax law.

C) Application of limited tax rates under the Korea-U.S. Tax Treaty

On the other hand, as seen earlier, the Korea-U.S. Tax Treaty clearly separates partnership and corporation from the U.S. legal entity established or organized under the U.S. law, and does not stipulate partnership. The tax rate imposed by a resident of the other Contracting State on dividends received from the source of one Contracting State shall, in principle, not exceed 15% of the total amount of dividends. However, only the case where the receiver of dividends is a legal entity that satisfies certain requirements, the total amount of dividends shall not be exceeded 10%, and it does not coincide with the law of no taxation without law, and even if it is interpreted as a legal entity or an analogical interpretation, it cannot be seen that the concept of corporation and a partnership under the Korea-U.S. Tax Treaty is a legal entity and thus, it is unreasonable to interpret it as a legal entity under the Korea-U.S. Tax Treaty.

Therefore, even if ○○○○P and ○○VI are subject to corporate tax taxation under the Korean Corporate Tax Act, it cannot be deemed a corporation under the Korea-U.S. Tax Treaty. Therefore, the tax rate applicable to the dividend received by ○○P and ○VI is reasonable to apply 15%, not to the case where the recipient of the dividend is a corporation. Thus, the Plaintiff’s above assertion is without merit.

5) Sub-decisions

Therefore, the instant disposition to which the tax rate of 15% is applied is legitimate, where the Defendant deemed the non-party company as the Doctrine company and the ○○○ and ○VI as the subject of actual attribution of the instant dividend (beneficial owner) and applied the Korea-U.S. Tax Treaty by deeming ○○ and ○VI as not a corporation under the Korea-U.S. Tax Treaty.

3. Conclusion

Therefore, the plaintiff's claim shall be dismissed as without merit, and the defendant's appeal shall be accepted and the part against the defendant among the judgment of the court of first instance shall be revoked, and the plaintiff's appeal shall be dismissed as it is without merit. It is so decided as per Disposition.