Whether the amount received as a result of early retirement in the process of restructuring is earned income.

Retirement bonus and other salaries of a similar nature, which are not uniformly paid to many and unspecified retirees, are paid for special meritorious services, and thus constitute earned income.

Article 20 of the Income Tax Act

Article 22 of the Income Tax Act

1. The plaintiff's claim is dismissed.

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

The imposition of global income tax of KRW 230,621,97 on July 22, 2005 by the defendant against the plaintiff on July 22, 2005 shall be revoked.

1. Details of the disposition;

The following facts are not disputed between the parties, or acknowledged by Gap evidence 1, 2-1 to 3, 6-1, 2, 9, 12, 12, and 1 in each entry of evidence No. 1.

A. On August 18, 2004, when the Plaintiff retired from ○○○○○○○ Investment Securities Co., Ltd. (hereinafter “○○○ Investment Securities Co., Ltd. at the time of its establishment”) in order to have its trade name changed to ○○○○○○○ Investment Securities Co., Ltd. (hereinafter “○○○○ Investment Securities Co., Ltd.”) and worked as vice president, and then worked as the current Plaintiff. ○○○○○○○ was offered voluntary retirement for restructuring, the Plaintiff received an additional payment of KRW 674,36,322 (hereinafter “the instant money”). The Plaintiff filed a global income tax return on May 31, 2005, and paid the Plaintiff’s income tax by filing a comprehensive report on the instant money as earned income.

C. On June 13, 2005, the Plaintiff filed a claim for correction with the Defendant for the reduction of KRW 230,621,997, out of the tax amount paid that the Plaintiff received early retirement in the process of restructuring ○○○○○○○○, thereby constituting retirement income other than wage and salary income.

D. On July 22, 2005, the Defendant rendered the instant disposition rejecting the Plaintiff’s claim for correction on the ground that the instant money constitutes earned income as it constitutes an earned income that the Plaintiff received specially as a contribution during the period of service.

E. The plaintiff appealed to the National Tax Tribunal on October 5, 2005, but the National Tax Tribunal dismissed the request on April 20, 2006.

2. Whether the disposition is lawful;

A. The plaintiff's assertion

According to the provisions of Article 42-2 (1) 4 of the Enforcement Decree of the Income Tax Act, retirement allowances, retirement allowances, retirement allowances, and other similar benefits paid under the rules of payment of retirement allowances, rules of employment, or labor-management agreements, which apply to many unspecified retirement workers, shall be deemed retirement income. The amount of this case is paid 30% by adding 30% to retirement allowances under the officer retirement allowance group pursuant to Article 4 (1) 1 of the Regulations on Retirement Allowances for Officers when the plaintiff retired ○○○ as part of restructuring and received ○○○ as part of restructuring

In light of the nature of the instant money, such as the fact that the instant money was accounting for the restructuring cost of the company, not for the disposal of profits, it is clear that it was one parent or retirement income, and thus, the instant disposition reported differently shall be revoked in an unlawful manner.

(b) Related statutes;

It is as shown in the attached Form.

(c) Fact of recognition;

The following facts are not disputed between the parties, or can be acknowledged by comprehensively considering the following facts: Gap evidence Nos. 1, 3-1, 3-2, 4, 5, and 6-1, 2, 9, and 10, and the whole purport of the arguments as a result of the inquiry into ○○○○ in this court.

(1) As a result of a restructuring for the rationalization of management, ○○○ performed the voluntary retirement of officers, etc. around June 2004 and the voluntary retirement of employees around July 2004.

(2) On August 18, 2004, the ○○○○ held a temporary general meeting of shareholders to realize the level of compensation for executive officers who contributed to the development of the company, and in accordance with the compensation corresponding to the performance, the company realized a business culture, thereby amending Article 4(1)1 of the Regulations on Retirement Allowances for Executive Officers as follows (after that, the above provision has not been amended thereafter).

Current

Amendments

Article 4 (Special Cases concerning Payment of Retirement Allowances)

(1) An executive or a job-related division who has rendered a special contribution.

Executives and public officials who retired from office due to injury or disease;

such officer as prescribed in Article 2.

The amount payable shall be any of the following:

may be paid in addition to the rate.

1. Officers who have made special contributions: Not more than 50 percent;

Additional Rate

Article 4 (Special Cases concerning Payment of Retirement Allowances)

(1) Coordinating units.

1. Officers who have rendered special meritorious services: The rate calculated by adding not more than 150/100 to the aforesaid rate;

(3) From 1997 to February 2004, ○○○○ contributed to enhancing the status of ○○○○○ by creating a new work in the course of performing the duties of the representative director, etc., as well as to contribute to the successful conversion of ○○○○○ into a successful company through a successful inducement of foreign capital, while additionally paying the instant monetary amount, which is 34-month benefits calculated pursuant to Article 4(1)1 of the Regulations on the Retirement Allowances for Officers, in addition to the amount of statutory retirement allowances, in addition to the amount of 26 months of retirement allowances.

(4) At the time, among the executives of ○○○○○○○, the retirement of an executive officer due to the restructuring of human resources was between June 30, 2004 and August 18, 2004 (the Plaintiff). There is no person other than the Plaintiff, who received the money pursuant to Article 4(1)1 of the Regulations on Retirement Allowances for Officers, and the remaining executive officers except the Plaintiff received retirement allowances only under Article 2 of the Regulations on Retirement Allowances for Officers (after that year, there is no person who received the money under Article 4(1)1 of the Regulations on Retirement Allowances for Officers even among the executive officers including outside directors retired from ○○○○○○ by 2006).

Retirement Allowance Regulations for Officers

Article 2 (Payment)

(1) Retirement allowances shall be the amount calculated by multiplying the monthly average remuneration at the time of retirement by the payment rate for continuous service.

(2) The monthly average remuneration under paragraph (1) means 1/12 of the standard annual salary.

(3) The rate of payment for one year of continuous service shall be 1: Provided, That if the fractional period of continuous service is six months, 1/2 of the payment rate for one year shall apply.

D. Determination

(1) Article 38(1)13 of the Enforcement Decree of the Income Tax Act provides that retirement allowances, retirement allowance, retirement bonus, and other similar salaries, which are received due to retirement, which do not belong to retirement income, are wage and salary. Article 42-2(1)4 of the Enforcement Decree of the Income Tax Act provides that retirement allowances, retirement allowance, retirement allowance, and other similar salaries which are paid under the rules on payment of retirement benefits, rules of employment, or labor-management agreement, which apply to an unspecified number of retirement workers, are retirement income. Thus, in a case where a company to which a retirement belongs receives wages from a company to which he/she belongs, whether it is retirement income or wage and salary, rather than whether it is forced payment, or whether it is wages by disposition of profits

(2) However, according to the above facts, although ○○○○’s retirement allowance provision, which is a general provision, was paid based on the contents of the provision itself, it is not paid uniformly to all retired executives, but paid only to a certain retired officer. In substance, ○○○○○’s contribution was recognized to convert ○○○○ into a successful company by enhancing ○○○○○’s status while working as the representative director, etc., and implementing the successful inducement of foreign capital, and the compensation was realized, and thereafter, the above money was paid only to the Plaintiff on the same day as the Plaintiff’s retirement allowance provision was revised on the same day as the date of the Plaintiff’s retirement, and thereafter, there was no case where the above money was paid. Accordingly, in light of the circumstance of payment of the money in this case’s wage and salary income, it cannot be viewed as retirement allowances, consolation benefits, and other similar benefits to the Plaintiff’s retirement allowances, which are applied to many unspecified retirement workers under Article 42-2(1)4 of the Enforcement Decree of the Income Tax Act.

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

Article 20 (Earned Income)

(1) Earned income shall be the following incomes generated during the relevant year:

1. Class A:

(a) Salary, salary, remuneration, remuneration, annual allowance, wage, bonus, allowance, and other benefits of a similar nature, which are received due to the provision of labor;

(b) Income received as a bonus by a general meeting of stockholders, general meeting of members or a resolution equivalent thereto of a corporation;

(c) Amount treated as a bonus under the Corporate Tax Act;

(d) Income received owing to a retirement, which is not included in the retirement income; and

Article 22 (Retirement Income)

(1) Retirement income shall be the following incomes generated in the current year:

1. Class A:

(a) Lump sum one time payments for retirement received by a person having Class A employment income;

(b) Voluntary retirement allowances paid to various public officials;

(c) Lump sum one time payments for retirement as prescribed by the Presidential Decree that are received by a person having Class A employment income; and

(d) Lump sum return payment or lump sum death payment under the National Pension Act;

(e) Lump-sum payments received under the Public Officials Pension Act, the Military Pension Act, the Private School Teachers Pension Act, or the Special Post Offices

(f) Other lump sum payments as prescribed by the Presidential Decree among incomes similar to those under items (a) through (e).

2. Class B:

Income received by a person having any employment income of Class B, for his retirement.

(4) Retirement income under paragraph (1) (excluding income under subparagraph 1 (d)) shall be limited to retirement income received by a resident, non-resident, or an employee of a corporation who actually retires.

Income Tax Act

Article 38 (Scope of Earned Incomes)

(1) The scope of employment income under Article 20 of the Act shall include the following incomes:

13. Retirement consolation benefits, retirement bonus and other salaries similar to them which are paid upon retirement, but which do not belong to the retirement incomes;

Article 42-2 (Scope of Retirement Incomes)

(1) Retirement income prescribed in Article 22 (1) of the Act shall include any of the following amounts:

4. The retirement allowance, retirement allowance, and other benefits of a similar nature which are paid under the provisions on payment of retirement benefits, employment rules, or labor-management agreement, which apply to a number of unspecified retirees.

[Seoul High Court Decision 2007Nu8920 ( November 06, 2007)]

1. The plaintiff's appeal is dismissed.

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

The decision of the court of first instance shall be revoked. The disposition of imposition of KRW 230,621,97 on July 22, 2005 by the defendant against the plaintiff on July 22, 2005 shall be revoked.

The reasoning of the court's explanation concerning this case is the same as that of the judgment of the court of first instance, and thus, it is acceptable to accept this case in accordance with Article 8 (2) of the Administrative Litigation Act and Article 420 of the Civil Procedure

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