Early High Court Decision 2009Du4264 (No. 11, 2010)

Since the shareholder was in a position to exercise shareholder's rights as an oligopolistic shareholder, the second taxpayer was designated and imposed as the second taxpayer is legitimate.

It can be recognized that a company owns 100% of shares issued by it, barring special circumstances, it is deemed that it was in a position to exercise shareholders' rights as an oligopolistic shareholder, and thus a disposition designated and imposed by an investor as a secondary taxpayer is legitimate.

2010Guhap3171 Value-Added Tax Second Taxpayer Designation, etc.

PostalAA

○ Head of tax office

April 19, 2011

June 14, 2011

1. The plaintiff's claim is dismissed.

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

The Defendant’s designation of secondary taxpayer on September 30, 2009 and the disposition of imposition of KRW 8,345,830, which the Plaintiff rendered on September 30, 2009, is revoked.

1. Details of the disposition;

A. On November 4, 2005, a corporation AA’s village ○○○○○○ (hereinafter “instant company”) was established with 301 head office within the ○○○○○○○-si ○○○○○○○○○-si ○○○○○○○○○○○○○○○, a main office for the purpose of restaurant business, refined meat, livestock product sales business, and food sales business.

B. The instant company did not report value-added tax between the second and second years in 2006, while running a restaurant business at the address of the said principal office, and the Defendant imposed value-added tax on the said company totaling KRW 14,638,270.

C. The company of this case did not pay the above value-added tax, and the defendant, on September 30, 2009, designated the plaintiff who owned 100% of the shares of the company of this case as the secondary taxpayer of the above value-added tax, and notified the plaintiff to pay the above value-added tax.

D. On December 2, 2009, the Plaintiff filed an objection and filed an appeal with the Tax Tribunal on December 2, 2009, and the Tax Tribunal rendered a decision to revoke the value-added tax of KRW 6,292,440 for the first and second period of the imposition of value-added tax in 2008 (the foregoing decision was referred to as the "disposition of this case") (the second taxpayer designated on September 30, 2009 as the second taxpayer and the disposition of imposition of value-added tax of KRW 8,345,830 for the second period of 206 or 207 as the remainder after being changed according to the above decision).

[Ground of recognition] Facts without dispute, Gap 4, 8 evidence, Eul 1 through 3 (including each number, if any) and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

On March 2006, the Plaintiff transferred all of the representative status and shares of the instant company to KimA, and delivered all relevant documents, and did not pay value-added tax while operating the instant company without transferring the name of KimA. Accordingly, the Plaintiff was not involved in the operation of the instant company after March 2006, and was no longer an oligopolistic shareholder, and thus, the instant disposition was unlawful.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

Article 39(1)2 (a) of the Framework Act on National Taxes means that all oligopolistic shareholders who exercise rights over 51/100 or more of the total number of issued and outstanding shares among oligopolistic shareholders shall bear secondary tax liability: Provided, That the scope of liability is limited to those within the scope of their own shares. It does not require that one shareholder who falls under an oligopolistic shareholder actually exercise rights over 51/10 or more of the total number of issued and outstanding shares (see, e.g., Supreme Court Decisions 2006Du19105, Jan. 10, 2008; 2006Du19105, Jan. 10, 2008); rather, the exercise of rights over shares by 51/10 or more as mentioned in the above item (a) must not be necessarily required to have actual exercise shareholders’ rights; however, if a shareholder is in a position to exercise shareholders’ rights on the shares held as of the date on which the tax liability is established, it shall not be deemed sufficient if the shareholder appears to have been registered in the shareholder’s name or shareholders’ list.

According to the statement of 1 to 4-1 to 3-4, the plaintiff can be recognized as holding 100% of the shares issued by the company of this case from around 2006 to 2009. Thus, the plaintiff is in a position to exercise shareholder's rights as an oligopolistic shareholder of the company of this case for the above period, barring special circumstances. Thus, the disposition of this case based on this premise is legitimate unless there are special circumstances.

The plaintiff asserts that he transferred all of the representative status and shares of the company of this case to KimA on March 2006, and delivered all related documents, and exceeded the status as an oligopolistic shareholder of the company of this case. However, each statement of Gap 1 through 3, 5, 6, 7, and 9 is insufficient to recognize it, and there is no other evidence to recognize it (it can be acknowledged that the plaintiff was appointed as a liquidator of the company of this case on October 21, 2010 and is implementing liquidation procedures for the company of this case). Accordingly, the plaintiff's above assertion is without merit.

3. Conclusion

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