Fact-finding as to whether a representative director is a corporation

In light of the fact that the plaintiff was admitted to and withdrawn from the non-party company while the plaintiff was registered as the representative director of the non-party company, the plaintiff is judged as the actual representative director in the corporate register when comprehensively considering the fact that the plaintiff was involved in the business of the non-party

Article 66 of the Corporate Tax Act: Decision and Correction

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The defendant shall revert to the plaintiff on May 10, 2004 as a whole in the year 200.

The imposition of income tax of 32,709,280 won shall be revoked.

1. Details of taxation; and

A. During the period from January 1, 200 to June 22, 200, ○○○ Company received a false tax invoice of KRW 102,947,900 from ○○○ Company without a real transaction, and included the amount in its deductible expenses at the time of filing a corporate tax base return. The Defendant: (a) deemed that the above processed purchase amount (hereinafter referred to as the "instant purchase amount') was excluded from deductible expenses and the corporate profits equivalent thereto were leaked out outside the company; (b) disposed of the amount of the instant issue by recognizing the Plaintiff registered as the representative director on the corporate register of the non-party company from April 15, 199 to December 22, 200; and (c) notified the Plaintiff of the change in the amount of income on October 31, 2003; and (d) notified the Plaintiff of the change in the amount of income amount, thereby including the Plaintiff's income amount that the Plaintiff did not pay for the revised tax disposition to the Plaintiff in global income tax year 2004.

B. Accordingly, the Plaintiff filed a request for examination with the Commissioner of the National Tax Service on July 9, 2004, but the said request was dismissed on December 23, 2004.

Facts without any dispute over recognition, Gap evidence 1, Eul evidence 1, Eul evidence 1, Eul evidence 2, Eul evidence 3-1, 2, 3, Eul evidence 4, 5, and the purport of the whole pleadings.

2. Whether the taxation disposition is legitimate

A. The plaintiff's assertion

The plaintiff was registered as the representative director and the shareholder of the non-party company, but only lent only the name of the representative director upon the request of the ○○○○○○, which was the punishment, and did not have been involved in the operation of the non-party company, nor received dividends as a formal shareholder. Since ○○○ actually managed all the business of the non-party company as the representative, the defendant's taxation in this case is unlawful as against the principle of substantial taxation

(b) Related statutes;

○ Framework Act on National Taxes

Article 14 (Real Taxation)

(1) If the ownership of the income, profit, property, act or transaction subject to taxation is merely nominal, and there is another person to whom such ownership belongs, the person to whom such ownership belongs shall be a taxpayer.

Tax-related Acts shall apply.

(2) The provisions concerning the calculation of tax base in tax-related Acts shall apply according to the substance, notwithstanding the name or form of income, profit, property, act or transaction.

○ Corporate Tax Act

In filing a report on the tax base of corporate tax on income for each business year pursuant to the provisions of Article 60 or in determining or revising the tax base of corporate tax pursuant to the provisions of Article 66 or 69, the amount included in gross income shall be disposed of as bonus, dividend, other outflow from the company, internal reservation, etc. according to the person to whom it belongs as prescribed by Presidential Decree

○ Enforcement Decree of Corporate Tax Act

Article 106 (Disposition of Income)

(1) The amount included in the calculation of earnings under the provisions of Article 67 of the Act shall be disposed of pursuant to the provisions of the following subparagraphs. The same shall also apply to non-profit domestic corporations

1. Where the amount included in the calculation of earnings has clearly leaked out of the company, the dividends, bonuses from the disposition of profits, other income, and other outflow from the company under each of the following items according to the person to whom they accrue: Provided, That where the accrual is unclear, it shall be deemed as accrual to the representative (where the total number of stocks held by an officer who is not a minority shareholder under the provisions of Article 87 (2) and persons in a special relationship under the provisions of paragraph (4) of the same Article is 30% or more of the total number of stocks issued or total investment amount of the relevant corporation and the officer actually controls the operation of the corporation, he shall be deemed the representative, and where a corporation which has been exempted from withholding taxes under the provisions of Article 46 (12) of the Restriction of Special Taxation Act reports that there is a separate representative among the officers who are stockholders, etc., the reported person shall be the representative, and where there are 2 or

(a) Where the person to whom benefits accrue is a stockholder, etc. (excluding a stockholder who is an executive officer or employee), the dividends to the person to whom benefits accrue;

(b) If the person to whom it belongs is an officer or employee, the bonus to the person to whom it reverts;

(c) Where the person to whom the income accrues is a corporation or an individual operating the business, other outflow from the company: Provided, That it shall be limited to cases where the distributed profit constitutes the income of a domestic corporation or a domestic business place of a foreign corporation under Article 94 of the Act for each business year, or the business income of a resident or a nonresident

(d) Other income of the person to whom the income belongs, in cases where the person to whom the income accrue falls.

(c) Fact of recognition;

(1) The non-party company is a corporation established on November 27, 1997 with aggregate extraction business as its business purpose. The certified transcript of corporate register is registered respectively as a director from the time of incorporation of the non-party company to July 22, 1998, as an auditor from July 22, 1998 to April 15, 199, and as a director and a representative director from April 15, 199 to December 22, 190.

(2) From January 1, 200 to December 31, 2000, the Plaintiff reported to hold 12,000 of the total outstanding shares of Nonparty Company (40% of the equity ratio) in the business year from January 1, 200 to December 31, 200. The Plaintiff deposited KRW 25,000,000 in the corporate account of Nonparty Company, and deposited KRW 15,00,000,000 in the corporate account of Nonparty Company, respectively, and deposited KRW 8,00,000 on June 28, 200 from the above account.

(3) Although ○○○, the Plaintiff’s punishment, was registered as the director and the representative director of the non-party company at the time of the incorporation of the non-party company, the representative director of the non-party company on January 5, 1998, and the director on July 22, 1998, the non-party company was not registered as the director and the representative director of the non-party company on December 22, 200. In other words, ○○ was registered as the non-party company’s director and the representative director on December 22, 200. At the end of the business year 200, ○○ did not hold the shares of the non-party company. From around 1997, ○○ did not pay taxes of KRW 52,6

Facts without any dispute over recognition, Gap evidence 1 and 2, Eul evidence 6-1 to 24, Eul evidence 1-2, Eul evidence 7 and 8, Eul evidence 11-1 to 5, Eul evidence 13, and the purport of the whole pleadings.

D. Determination

(1) As long as the revenue of a corporation that is not entered in the account book and it is not clear that it belongs to it, the tax authority is bound to dispose of it as bonus for the representative pursuant to Article 67 of the Corporate Tax Act and the proviso of Article 106(1)1 of the Enforcement Decree of the Corporate Tax Act. In such a case, the burden of proving that it is clear that it belongs to it is certain (see, e.g., Supreme Court Decision 92Nu6747, Aug. 14, 1992). In addition, the recognition and recognition system for the representative under Article 106(1) of the Enforcement Decree of the Corporate Tax Act is not based on the fact that it has accrued to the representative, but it is intended to regard a certain fact that can be recognized as such act as a bonus for the representative, regardless of its substance, and in such a case, the representative of the corporation subject to the bonus disposition shall be interpreted strictly in accordance with the relevant sentence (see, e.g., Supreme Court Decision 92Nu231320, Jul. 14, 1992).

(2) As to the instant case, the Plaintiff was merely a nominal representative director of the non-party company.

As evidence consistent with the plaintiff's assertion that ○○○○ was actually operating the non-party company, there was evidence Nos. 3-1 through 9, 7, and 8, and testimony of the non-party company Gap, but all of them is a document or testimony of the person concerned, stating the statement by ○○○, the non-party company, its customers, and the bank-related parties after the taxation of this case was made, and as seen above, if the plaintiff takes office as the representative director of the non-party company only under the name of ○○○ upon the request of the non-party company's incorporation, it is hard to find that the plaintiff held 40% of the total number of shares issued by the non-party company as of the end of the business year 200 and it is hard to find that the non-party company was registered as the representative director of the non-party company No. 1 and No. 2 as at the time of the incorporation of the non-party company, and the plaintiff did not have any other evidence to prove that the non-party company was registered as the non-party company's company's representative director of this case.

(3) Therefore, we cannot accept the Plaintiff’s assertion that the instant tax disposition imposed by the Plaintiff as the representative of a legal entity is legitimate, and that ○○ ought to be deemed as the representative of a legal entity.

3. Conclusion

Therefore, the plaintiff's claim seeking the revocation of the tax disposition of this case, on the premise that the plaintiff is merely the nominal representative director of the non-party company, shall be dismissed as it is without merit. The judgment of the court of first instance is just in this conclusion, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.