As a withholding agent has the right to claim a refund, the plaintiff as the original taxpayer has no right to claim a refund and there is no right to claim a return of unjust enrichment.

Since the right to claim a refund has a withholding agent, the plaintiff as the original taxpayer does not have the right to claim a refund and the plaintiff's claim for a return of unjust enrichment is without merit.

Seoul Central District Court 2016 Gohap530692 Undue gains

Until the service date of a copy of the complaint, 5% per annum and 15% per annum from the next day to the day of complete payment shall be paid.

Notes

Korea

November 9, 2016

January 18, 2017

1. The plaintiff's primary claim and the conjunctive claim are all dismissed.

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

The defendant shall pay to the plaintiff 952,43,417 won with 15% interest per annum from the day following the delivery of a copy of the complaint of this case to the day of complete payment.

Preliminary claim: The Defendant’s KRW 77,598,916 and its claim from March 13, 2012 to the Plaintiff

1. Basic facts

A. On April 14, 2005, the Plaintiff sold to 44,300,000,000 the sales price for each of the instant lands located within the land transaction permission zone in Yangju-si Welfare-2 and 56 lots (hereinafter “each of the instant lands”) located within the land transaction permission zone.

B. On October 13, 206, 106, 201, 200, 200, 1, 200, 200, 200, 200, 200, 200,000 won for 1,000 won for 20,000 won for 20,000 won for 20,000 won for 20,000 won for 20,000 won for 20,000 won for 30,000 won for 1,000,000 won for 20,000,000 won for 20,000 won for 20,000 won for 20,000 won for 20,000 won for 1,000,000 won for 20,000 won for 20,000 won for 3,000,000 won for 1,00.

2. Summary of the plaintiff's assertion

(a) The primary cause of the claim;

Although the Plaintiff is a resident prescribed by the Income Tax Act who is not a source taxpayer of the capital gains tax, Yannam Development withheld 44,300,000,000 won from the Plaintiff as well as 443,873,000,000 won of the capital gains tax and resident tax, and paid 4,873,000,000 won to the Plaintiff respectively. As such, if the withholding agent collected the tax amount on income not subject to withholding from the source taxpayer in excess of the tax amount to be collected, paid, or to be collected from the source taxpayer, the Defendant received the said tax from the withholding agent, and the Defendant is obliged to refund the amount equivalent to additional refund from the payment date to the time when the obligation for payment of capital gains tax on each of the land of this case was incurred.

Thus, on January 31, 2008 and May 31, 201, the defendant, at the time of receiving transfer income tax on each of the land of this case from the plaintiff, did not deduct not only the aforementioned erroneously paid withholding tax amount, but also the additional refund on refund accrued therefrom.

Therefore, the Defendant is liable to pay the Plaintiff the refund amount, 952,433,417 won, which was deducted from the amount equivalent to the additional refund amount, in accordance with the legal principles of appropriation for performance, and the delay damages.

(b) Preliminary cause of claim.

Even if the Plaintiff could not directly claim the amount equivalent to the refund amount of capital gains tax paid to the Defendant, the Plaintiff acquired the right to claim the refund of national tax against the Defendant from the New South Development.

Therefore, the Defendant is obligated to pay the Plaintiff the acquisition amount of KRW 777,598,916 and the delay damages therefor.

3. Determination

A. Judgment on the primary cause of the claim

1) Relevant legal principles and regulations

A) If a withholding agent collects and pays a tax amount on any income that is not subject to withholding from a source taxpayer in excess of the tax amount to be collected or has to be collected from a source taxpayer, the State shall be unjust enrichment held by the withholding agent without any legal ground (see Supreme Court Decision 2001Du8780, Nov. 8, 2002). (B) Article 1(1)2 of the former Income Tax Act (amended by Act No. 9897, Dec. 31, 2009; hereinafter the same) provides that “any individual who is not a resident (hereinafter “non-resident”) is liable to pay tax under the former Income Tax Act.” Articles 119 subparag. 9 (a) and 94(1)1 of the same Act provide that any income generated from the transfer of land among the domestic source income of a non-resident subject to income tax, but Article 156(1)3-2 of the same Act provides that a withholding agent shall impose a withholding tax on a non-resident who pays such income to the non-resident.

A) If a withholding agent, in the withholding tax system, collects and pays a tax amount on any income that is not subject to withholding from a source taxpayer in excess of the amount of tax to be collected and paid, the claim for refund arising therefrom shall be attributed to the withholding agent, not the source taxpayer, to the withholding agent (see Supreme Court Decision 2002Da68294, Mar. 14, 2003). In this case, the withholding agent, has the right to claim the refund of the refund, and the Plaintiff, the source taxpayer, cannot seek the return of the additional refund or claim the deduction of the amount equivalent to the additional refund amount.

B) Meanwhile, the Plaintiff asserts to the effect that the Plaintiff’s primary claim is not the Plaintiff’s primary claim but the amount of tax withheld from the Plaintiff and paid by the Plaintiff, and that the Defendant received unjust enrichment equivalent to the amount of tax, and thus, the Plaintiff is obligated to pay additional dues on this amount separate from the amount of tax. Therefore, even though the amount should have been deducted from the amount of capital gains tax on each of the land of this case, the Plaintiff’s unjust enrichment obtained by the Defendant is a right separate from the amount of refund or additional dues. However, even if the Plaintiff’s primary claim is different from the theoretical composition, the Plaintiff’s primary claim is based on the premise that it has the right to claim a refund, not the remaining development. As seen earlier, the Plaintiff’s claim based on this premise is without merit.

3) Sub-decisions

In the end, the plaintiff's primary claim on the premise that the plaintiff's right to claim restitution of unjust enrichment exists is without merit.

B. Determination as to the conjunctive cause of claim

1) According to the statement in Gap evidence No. 1, the fact that the plaintiff and Ynam Development submitted to the director of the tax office of the Do government on March 13, 2012 a request for transfer of national tax refund to the plaintiff and the transferee as the plaintiff can be acknowledged.

2) The Defendant asserts that the above claim for refund was extinguished by the statute of limitations. The statute of limitations on the taxpayer’s national tax refund and the right to the national tax refund and the additional dues is five years pursuant to Article 54(1) of the Framework Act on National Taxes. In a case where there is no tax disposition or the deferred invalidity, the amount paid or collected by the taxpayer under this taxation constitutes unjust enrichment acquired by the State without any legal ground. Since the taxpayer’s right to claim the return of unjust enrichment on the erroneous payment was paid or collected without any legal ground from the beginning, it shall be determined at the time of payment or collection (see, e.g., Supreme Court en banc Decision 91Da32053, Mar. 31, 192). The period for the claim that the Plaintiff acquired by transfer shall begin to run from October 13, 2006 when the remaining development was paid to the Defendant the withholding tax amount. It is evident that the lawsuit in this case was instituted on May 27, 2016.

As to this, the Plaintiff asserts to the effect that the tax authority could not file a claim for the return of the above refund because there was a de facto disability that the Plaintiff could not file a claim for the return of the refund on the premise that the Plaintiff is a nonresident as prescribed by the Income Tax Act. However, it is difficult to deem that there was a de facto disability that the Plaintiff could not exercise his/her right objectively until such disability terminates. Moreover, it is difficult to find out the circumstances that the Plaintiff did not proceed with the extinctive prescription, and it is difficult to find out that the Plaintiff’s assertion is without merit (it is difficult to find out the circumstances that the Defendant’s

3) If so, even if the development of drynam has a claim for the refund of the tax amount paid to the defendant as alleged by the plaintiff, it should have expired by prescription. Thus, the plaintiff's conjunctive claim is without merit.

4. Conclusion

Therefore, all of the plaintiff's main and ancillary claims are dismissed as they are without merit. It is so decided as per Disposition by the assent of all participating Justices.