The meaning of oligopolistic stockholders liable for secondary tax liability

In order to have a shareholder of a corporation bear the secondary tax liability pursuant to subparagraph 2 of Article 39 of the Framework Act on National Taxes, it is necessary to have an oligopolistic shareholder be in a position to substantially control the operation of the corporation, and only the reasons registered as a shareholder in the register of stockholders of the corporation in the form of a shareholder cannot be said to be an oligopolistic shareholder.

Article 39 of the Framework Act on National Taxes

Supreme Court Decision 85Nu63 Decided June 11, 1985

Plaintiff 1 and 2 others, Counsel for the defendant-appellant

The director of the tax office.

Seoul High Court Decision 84Gu1072 delivered on December 19, 1985

The appeal is dismissed.

The costs of appeal shall be borne by the defendant.

The grounds of appeal are examined.

In order to impose the secondary tax liability on the shareholders of a corporation pursuant to Article 39 subparagraph 2 of the Framework Act on National Taxes, it requires that the oligopolistic shareholders be in a position to substantially control the operation of the corporation, and only the reasons registered as shareholders in the register of shareholders of the corporation in the form of a shareholder cannot be said to be the oligopolistic shareholders (see Supreme Court Decision 85Nu63, Jun. 11, 1985).

According to the judgment below, the court below held that the disposition of this case, based on the premise that the plaintiffs were oligopolistic shareholders of the above company, was unlawful, since the plaintiffs were registered as shareholders in the register of shareholders at the time of original adjudication, which was imposed on the non-party Youngdong Development Promotion Corporation upon the non-party Youngdong Development Promotion Corporation due to macro evidence, but the plaintiffs did not exercise the rights as shareholders, such as payment of shares or participation in the management of the company. Thus, the plaintiffs did not have a position to substantially control the management of the above corporation. In light of the records, the court below's above fact-finding and the judgment of the court below are just and there were no errors

Therefore, the appeal is dismissed, and the costs of the appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating judges.

Justices Park Jong-dong (Presiding Justice)