Korea Cmat Bank (Law Firm LLC, Attorneys Kang Han-hun et al., Counsel for the plaintiff-appellant)

The Head of Nam-gu Tax Office (Law Firm Namsan, Attorneys Lee Chang-soo et al., Counsel for the plaintiff-appellant

November 22, 2016

1. The portion exceeding 17,206,217,145 won among the disposition of collecting corporate tax withheld for the business year 2008 to the Plaintiff on March 11, 2013 (including additional tax); the portion exceeding 1,84,746,90 won among the disposition of collecting corporate tax withheld for the business year 2008; the portion exceeding 11,746,823,400 won (including additional tax); the portion exceeding 11,746,823,400 won among the disposition of collecting corporate tax withheld for the business year 2008; the portion exceeding 7,526,567,3333 won; the portion exceeding 2,303,748,729,747; the portion exceeding the amount exceeding 1,75,79,757,297,729,729,747; the portion exceeding 281,75,297,2947,7105,297,297

2. The plaintiff's remaining claims are dismissed.

3. Of the costs of lawsuit, 2/3 shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

On March 11, 2013, each corporate tax withholding disposition (including additional tax) listed in attached Table 1 that the defendant made against the plaintiff on March 11, 2013 shall be revoked.

1. Details of the disposition;

(a) LF-KE2 Holdings (SF-KB) is a corporation incorporated under the Belgium Act (hereinafter “Belgium”).

B. On January 1, 2008, the Plaintiff entered into a storage service contract with LSF-KEB (hereinafter referred to as “instant storage contract”), and kept 329,042,672 shares of the Korea Exchange Bank (hereinafter referred to as “foreign Exchange Bank”) owned by LSF-KEB (hereinafter referred to as “foreign Exchange Bank”). The foreign Exchange Bank, from April 11, 2008 to July 20, 201, paid dividends to LSF-KEB (hereinafter referred to as “instant dividend income”), and the Plaintiff, as the custodian (cususd) of the instant case, paid the remainder of LSB income tax and the tax for the prevention of Fiscal Evasion with respect to the income of the Republic of Korea and Belgium (hereinafter referred to as “the instant stock”). The Plaintiff, as the custodian, made a withholding tax return and payment with respect to the instant dividends by 90% (hereinafter referred to as “the instant dividend income”).

A person shall be appointed.

C. On November 26, 2012, the director of the Seoul Regional Tax Office: (a) deemed that the instant withholding tax was not subject to the limited tax rate under the Korea-Belgium Tax Treaty; and (b) notified the Plaintiff of the result of tax investigation that the amount equivalent to 20% of dividend income was corrected as the corporate tax for the dividend income for the year 2008 pursuant to Article 98(1)3 of the former Corporate Tax Act (Amended by Act No. 9267, Dec. 26, 2008); and (c) for the dividend income for the year 2009 through 2011 pursuant to Article 98(1)3 of the former Corporate Tax Act (Amended by Act No. 11128, Dec. 31, 2011).

D. On December 24, 2012, the Plaintiff requested the Commissioner of the National Tax Service to review the legality of the taxation before taxation, but received a non-adopted decision from the Commissioner of the National Tax Service on March 5, 2013.

E. Accordingly, on March 11, 2013, the Defendant: (a) deemed that LSF-KEB was a conduit company for the purpose of tax avoidance and does not correspond to the beneficial owner of the instant dividend income; (b) denied the application of the limited tax rate under the Korea-Belgium Tax Treaty with respect to the instant dividend income; and (c) notified the correction and notification of the total of KRW 103,187,781,960 (including additional tax) of the corporate tax withheld for the business year from 2008 to 2011 by applying the withholding tax rate 25% or 20% under the Corporate Tax Act (hereinafter “instant disposition”).

F. On June 5, 2013, the Plaintiff filed a request for a trial with the Tax Tribunal, but was dismissed on October 14, 2014.

[Ground of recognition] Facts without dispute, Gap evidence 1 to 3, 34, 46 evidence, Eul evidence 1 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) lsF-KEB is a Belgium resident and is a beneficial owner of the instant dividend income, and the instant dividend income belongs to lsF-KEB, so the limited tax rate under the Korea-Belgium Tax Treaty shall apply to the instant withholding tax.

2) If the limited tax rate under the Korea-Belgium Tax Treaty is not applicable, the limited tax rate under the tax treaty concluded between the superior investors and the resident state of the final investors, and thus, the instant disposition is unlawful.

3) If LSF-KEB is not the actual owner of the instant dividend income, the instant withholding is made for a person who is not the original taxpayer and thus null and void.

4) The imposition of penalty tax for failure to pay withholding tax on the Plaintiff who trusted lsF-KEB as the beneficial owner of the instant dividend income and fulfilled the duty of withholding tax is unlawful, as there is a justifiable ground for nonperformance of the duty on the Plaintiff.

B. Relevant statutes

Attached Form 2 shall be as listed in attached Table 2.

(c) Fact of recognition;

The investment structure of the shares in this case shall be as listed in attached Form 3, and investment shares, structure, etc. shall be as follows.

1) An overview of investment in LSF-KEB

A) Lone Star Fund U.S. (L.S.), L.S. L. L.P. (hereinafter “S.”) is a limited partnership established under the laws of the United States Deteawa (Deawa) and the U.S. investors invest as limited partners (hereinafter “GP”), with unlimited liability, and limited partners are organizations under the U.S. legal system that assume limited liability only within the scope of equity interest. In general, GP has expertise in managing a fund and executes the fund’s daily business affairs, and bears unlimited liability for partnership activities, while LP bears unlimited liability for investment risks arising from passive investment activities, which are passive investors not actively involved in its operation, within the scope of equity interest).

Hudco Partners Korea Ltd. (Hudco Partners IV, Korea, Ltd, hereinafter “Hudco Partnership”) is a community corporation established under the laws of the State of Bada to provide Lone Star Fund’s subsidiaries and employees in the Republic of Korea with investment opportunities.

Lone Star Funds, Funds, L.P.), Lone Star Funds, Lone Star Funds, L.P., L. L.), Lone Star Funds, Lone Star Funds, L.P., K. V. L.P., Kerves, L.P. L.), K V. V. V. V. V. V. L. L. L.P., K, V. V. V. V. L. V. L. L. L. L. L.P. (K. Ⅱ, L.P.), K is a limited partnership established by the laws of the Republic of Korea to invest in the issued stocks of foreign exchange banks (hereinafter ① U.S., ② V. V. V., L.V., L. L. L.V.,

The GP of upper-tier investors is Lone Star Partners (Lone Star Partners IV (Beruda) L.P. hereinafter “lsP IV”). The equity ratio of the U.S. LP is 1.00%, and the GP of LSⅣ holds 100% of the 100% of the 100% of the 100 equity shares (English name omitted) Lone Star Holdings Co., Ltd. (Loneone Star Ltd. (Bmd. (Bmuda); hereinafter “LSC”) and 25 of the corporations, etc. are owned by Nonparty 1, Nonparty 2, Nonparty 3, and Nonparty 5 as one shareholder.

B) The upper-tier investors established KEB Holdings L.P. (hereinafter “KHL”) in the Republic of Korea by contributing funds for the purpose of investing in the issued stocks of the foreign exchange bank. On August 21, 2003, Belgium established LF-KSB in accordance with the laws of the Belgium.

C) The U.S.L., Hudco Partners, Lone Star Fund Holdings Korea Ltd., Inc., in succession, acquired the shares of Lone Star Global Holdings (Loneone Lone Star Global Holdings, Ltd.) and KHL, which are corporations in the Republic of Korea. The remaining top investors, in order, acquired the shares of Lone Star Global Holdings Lone Star L. L.C. L. L. L. L.P. and L.C. Investment (L.P.) established by Luxembourg law, which are corporations established by Luxembourg law, from among the shares of LSF-KB, 9.9% L.C. and 0.1% of the remainder of L.C. L. L. L.S. L. and L.C. Investment, each of the legal directors of L.C. (hereinafter “L.C. Investment”) and each of the corporations, the legal directors of L.C. Investment, each of which is a statutory directors of L.C. M. 3rd Capital.

1) The ratio of shares of higher investors to lsF-KEB is as follows:

In the number of top investors in the main text, the ratio of shares (%) owned by top investors (%) Nos. 46.187 and 46.187 of the U.S. EEB Investment Fund (Beruda) 8.21 ② Hudco Partnership 1.55 6 ② Hudco Partnership 2, L.P. (Beruda) 3.863 Lone Star Fund IV II, II, II, II, L.P.(Bmuda) 11.65 7, L.P. 3.78 4.784 Lone Star Fund IV, II, Korea, L.P. 82 8.32 82 8.444)

② The U.S.P. invested 38 investors, including the LP Medical Foundation, California Retirement Teachers’ Pension, etc. with a higher-tier investor. In addition to the instant shares, it invested indirectly in other Korean invested assets, such as Kudong Construction Co., Ltd., and in Japan, Tadong Construction Co., Ltd., Germany, France, and the United States. Meanwhile, Hudco Partnership was established according to a joint investment program for performance compensation among the executives and employees of Lone Star Co., Ltd. in three countries of the United States, Ireland, and Korea.

The current status of U.S. ELP investors (excluding GPP IV) between 2008 and 2011 are as follows:

본문내 포함된 표 유에스엘피 투자자(거주지국 : 미국) 1 Howard Hughes Medical Institute 20 Fresno County Employees’ Retirement Association 2 Washington State Investment Board 21 Trustees of Columbia University in the City of New York 3 Board of Trustees of the Leland Stanford Junior University 22 Dallas Police ＆ Fire Pension System 4 State of Oregon Public Employees' Retirement Fund 23 Houston Municipal Employees Pension System 5 New York State Teachers' Retirement System 24 Kresge Foundation (philanthropic foundation) 6 William ＆ Flora Hewlett Foundation 25 University of Louisville Foundation, Inc. 7 California State Teachers’ Retirement System 26 Surdna Foundation, Inc. (foundation fostering U.S. sustainable communities) 8 Bullshead Limited Liability Company (affiliateofIBMPensionFund) 27 PNC Investment Corp. (affiliate of PNC Bank)(주3) 9 State of Wisconsin Investment Board: Real Estate Division 28 Scripps College 10 State of Wisconsin Investment Board: Opportunity Fund 29 BMO Private Equity (U.S.), Inc. (affiliate of Bank of Montreal) 11 Massachusetts Institute of Technology; MIT 30 Northern Trust Company (GuideStone Financial Resources of the Southern BaptistConvention) 12 Massachusetts Institute of Technology; Basic Retirement Plan 31 WFC Holdings Corporation (affiliate of Wells Fargo Bank) 13 University of Notre Dame du Lac 32 Mr. John Oudt 14 Mandel Family Investors: Manbro R.E. I, L.P. 33 Henry E. Huntington Library and Art Gallery 15 Mandel Family Investors: MAF Investments, Ltd. 34 Walter ＆ Elise Haas Fund (philanthropic foundation) 16 Mandel Family Investors: Foundation Investments of Ohio, Ltd. 35 Vaucluse LLC (investment by U.S. individuals) 17 Weyerhaeuser Company Master Retirement Trust 36 Louisville Presbyterian Theological Seminary 18 Houston Firefighters' Relief and Retirement Fund 37 Lucile Packard Foundation for Children’s Health 19 JDPT Partners Group Ⅰ, L.P.(John Deere Pension Trust)(주4) 38 Claude Worthington Benedum Foundation (philanthropicfoundation)

Note 3) Banak

Note 4) Terust

③ The current status of investors of six higher-tier investors except U.S. ELP and Hudco Partners is as follows. Six higher-tier investors are composed of final investors who hold passive equities and general partners who assume the responsibility for management (lsP IV), and partners who can open and maintain overseas bank accounts without restriction under the Foreign Exchange Regulation Act with authorization from Ba community countries.

LF IV II Korea II, L.P.C. II, L.P.C. 19.0% of 19.0% of 19.0% of lF IV, L.P.C. 19.1% of 199.9% of 199.1% of L.P.C. 199.9% of L.P.C. 199.9% of 0.01% of 0.01% of 0.01% of 0.01% of 0.01% of 199.01% of 0.01% of 2, L.P.M. 199.M. 199.9% of 0.09% of 0.01% of 0.9% of 0.9% of 0% of 0.9% of 0.09% of 9.0% of 19.0% of 9.0% of 19.0% of 19.0% of 19.0

Sheet investors within the territory of the Republic of Korea I, L.SF IV. 1, L.P. 10 Republic Vt. III Piragle Management Pound (Braztile flapi) International Monet International Malve Robling Bafra Fluor, Trush Ba Hascis Rove Rove Rove Rove Rove Rove Rovera Robre Ro. 3rder's Rove Rove Rove Rove Rove Rove Ro. 13rder's Rove Rove Rove Rove 297.C. 297.3rder's Rove Rove Rove Royer's L. 3rder's Rove Rove Rove Royer's Republic of Korea

E) lsF-KEB did not have employees belonging to lsF-KEB, and did not pay wages, rent, fixtures, etc. which are essential for business activities. 9% of the total assets were composed of stocks of the foreign exchange bank, and the remainder is composed of the credit purchase amount and cash in relation to the investment company. Meanwhile, the domicile of lsF-KEB is the same as the location of KC Holdings SCA and lsCM, a company related to Lone Star Fund’s other Belgium.

F) lsM was established in the Belgium on March 5, 2003, and managed lsF-KEB as legal directors and shareholders. lsM managed global investment holding companies, including Japan, in addition to lsF-KEB. After that, Loneone Star Investment Management SPR (hereinafter “lsM”) was established in the Belgium around 2009, and succeeded to all officers, employees, and businesses of lsM.

2) Investment mode IV of Loneone Star Faunder IV

A) Lone Star Fund is a partnership fund in the form of private equity fund that mainly raises funds by means of private placement and primarily creates profits from financial institutions or general companies whose asset value was low, acquisition by and merger with non-performing loans, purchase of non-performing loans, and investment in real estate. On the completion of each investment, Lone Star Fund was established by Non-Party 1 in the mid 1990s. On the completion of each investment, Lone Star Fund was established from Lone Star Fund first to Lone Star Fund IV in the form of constituting a new fund (hereinafter “Lone Star Fund”).

B) Lone Star Fund IV consists of LP IV, LPP, LP, UP, U.S. LP, and other high-tier investors. GP determines whether to make an investment upon delegation of the right of operation from LP, the timing of sale of assets, methods of management, etc., and LP only receives dividends depending on the performance of the LP’s operation, and does not control or participate in the operation of the LP. LP IV consists of 25 LPC and LP. The LP IV consists of ls and 25 LP. The corporations consisting of Nonparty 1, Nonparty 2, Nonparty 3, and Nonparty 5 are included in the LP.

C) Lone Star Fund has Lone Star Global Squiis (hereinafter “SGA”) established by Lone Star global quid for the purpose of discovering and assessing investment targets as a related company. Nonparty 1 owns all equity shares. In addition, for the purpose of managing the assets invested in each country, Hudson LAL established by the U.S. Telecommunications Corporation Act (hereinafter “HAL”). Nonparty 1 owns 9.9% of its equity shares, and the remainder 0.1% of its equity shares are owned by Nonparty 1, a corporation with all equity shares (Ad Round Round Robal Acquiis, Inc.). Lone Star Fund establishes a contract with Lone Star and HAL to discover and manage its assets and services, and owns the Lone Star Fund’s respective fees for the purpose of entrusting the management of its assets and services.

3) The domestic structure of Lone Star Fund IV-related corporations

A) The domestic subsidiary of LSG is Lone Star Round Korea established on February 10, 199, and Lone Star Round Korea (hereinafter “Lone Star Round Korea”). The subsidiary was in charge of assisting investment in the Republic of Korea of Lone Star Fund. LSAK was composed of experts in each field, such as investment financing experts, certified public accountants, and financial institutions, and was in charge of assisting investment in the Republic of Korea. LSAK was in physical coloring assets such as non-performing loans, and upon the decision of the head office’s investment, received the intent of investment by participating in the bidding, and entered into a contract for acquisition of assets.

The domestic subsidiary of HAL is Hudson Korea(Hudson Advis Korea) established on the same day, and Ludson Fund is an asset management company that manages the assets invested in Korea by Lud Star Fund. It consists of certified public accountants, appraisers and real estate development experts as asset management companies established under the Asset Securitization Act.

lsAK and HAK concluded an entrustment contract with LSG, HAL on December 12, 2001 with respect to the discovery of domestic investment objects and management of assets, and received the prescribed fees in return.

B) The acquisition of non-performing loans was discovered by the non-party 3, etc. of LSAK’s assets to be invested, was reported through the non-party 2 to the head office located in the U.S. Tech, and the investment was finally decided by the Investment Committee located in the head office. However, the sale of non-performing loans was conducted by the intention of the HAK Asset Management Team.

C) The domestic manager of Lone Star Fund IV is Nonparty 2. Nonparty 2, in fact, has overall control over the affairs of HAK and LSAK, participated in the meetings of the advisory committee at the head office as a regional manager, and held office as the representative director of LSAK until July 22, 2003.

D) Nonparty 3 worked as the former office of HAK from October 200 to December 2 of the same year, and became the representative director from January 2001 to December of the same year, and was actually engaged in the duties of HAK from July 23, 2003 to June 30, 2009 while serving as the representative director of LSAK. Meanwhile, Nonparty 3 established LSF-KB to take charge of the acquisition team duties in the process of acquiring Korea Exchange Bank, and was appointed as a registration director of Korea Exchange Bank immediately after acquiring the said Bank.

E) Nonparty 5 entered HAK around August 199 and served as the former director in charge of finance, and became the representative director around March 2002.

4) Acquisition and sale of Lone Star Fund IV’s shares in foreign exchange banks

A) The acquisition of Lone Star Fund IV’s shares in Lone Star Fund IV was made on Nonparty 2’s proposal. Nonparty 2 strongly recommended LSGA and LSP IV to purchase a domestic bank as a representative of LSAK, and around October 2002, Nonparty 3 visited Nonparty 7, a president of Lone Star Fund, at the time of foreign exchange, and officially expressed the intent of Lone Star Fund’s investment. Thereafter, Nonparty 3, as the representative of LSAK on February 10, 2003, started work of the foreign exchange bank acquisition, including submitting a preliminary proposal for the acquisition of the foreign exchange bank to the president of the foreign exchange bank. Nonparty 2, along with Nonparty 2, was engaged in negotiations for the acquisition of the foreign exchange bank as a representative of LSK.

B) On April 3, 2003, Nonparty 2, as the representative director of LSAK, consulted with the foreign exchange bank about the acquisition of new shares worth KRW 600 billion. In addition, Nonparty 2 attended the meeting held on June 8, 2004 and explained the conditions, possibility, and condition of the investment in the foreign exchange bank to the participants, such as Nonparty 1, Nonparty 8, and other U.S. LP.

C) On August 27, 2003, Nonparty 3 participated in an underwriting agreement conference of the foreign exchange bank on behalf of LSAK and took charge of the acquisition team of the foreign exchange bank.

D) The sale of shares of a foreign exchange bank was conducted through a credit sphifs under the direction of Nonparty 1.

E) Nonparty 3, Nonparty 1, Nonparty 8, Nonparty 4, and Nonparty 2 were outside directors of the foreign exchange bank after the acquisition of stocks of the foreign exchange bank.

5) Action seeking revocation against a higher investor’s taxation of permanent establishment;

A) On August 22, 2007, through May 23, 2008, the director of the Seoul Regional Tax Office conducted a tax investigation with respect to the superior investors, and then notified the Defendant that “the beneficial owner of the stock transfer income is not the Belgium-KEB but its superior investors, and they have acquired the stock transfer income by carrying out business activities with the permanent establishment in Korea.” Thus, he notified the Defendant that “the beneficial owner of the stock transfer income was subject to taxation on the stock transfer income.”

B) Accordingly, the Defendant: (a) on July 7, 2008, on the premise that the beneficial owner of the stock transfer income is the upper investors; and (b) on the premise that the upper investors have a permanent establishment in the Republic of Korea, imposed corporate tax and income tax on the upper-tier investors in proportion to the upper-tier investors; and (c) on the remaining upper-tier investors, respectively. After that, the Defendant rendered a decision on January 27, 2012 that “foreign limited partnership constitutes a foreign corporation under the Corporate Tax Act, and thus, imposed corporate tax after ex officio cancelling the imposition of income tax on the other upper-tier investors (hereinafter “permanent taxation”).

C) Accordingly, the upper-tier investors filed a revocation suit regarding the taxation of permanent establishment [the Seoul Administrative Court 2010Guhap36824, 2012Guhap13672 (merged)], and on February 8, 2013, on the ground that “1 lsF-KEB is merely a subsidiary company established for the purpose of tax avoidance and cannot be deemed to control and manage the capital gains. Therefore, this part of the allegation is without merit, but it is difficult for the upper-tier investors to view that they have a permanent establishment in Korea.”

D) Thereafter, the instant case was rendered by the Seoul High Court (2013Nu8792) on January 10, 2014 (2013Nu8792) and was pending in the Supreme Court (2014Du3044).

6) Litigation seeking revocation of taxation of stock transfer income such as LSF-KEB

A) On February 9, 2012, LSF-KEB transferred the instant shares to one Financial Branch Co., Ltd. (hereinafter “IB”) KRW 3,915,607,796,800 in total.

B) On January 8, 2012, the director of the Seoul Regional Tax Office notified one finance company that he/she is liable to withhold the above capital gains. On March 5, 2012, one finance company withheld and paid KRW 391,560,779,680, equivalent to 10% of the above capital gains, and paid the remainder to lsF-KEB.

C) On May 9, 2012, LSF-KEB filed a request for correction seeking the full refund of the withheld tax amount on the grounds that it cannot be taxed on the capital gains from the transfer of stocks pursuant to Articles 4 and 13 of the Korea-Belgium Tax Treaty with the Defendant, but the Defendant was deemed to have rejected the request for correction (hereinafter referred to as the “transfer income-related corrective rejection disposition regarding the remaining withholding tax amount of KRW 387,645,171,890 remaining after refund of KRW 3,915,60.

D) On December 20, 2012, the Defendant voluntarily cancelled and refunded the portion of KRW 3,915,60 (excluding refund excluding refund ) equivalent to 10% of advance payment, on the ground that “The sales contract of the instant shares was concluded on November 29, 2010 and paid KRW 39,156,07,968 as advance payment around that time, the Defendant paid the amount of KRW 39,156,07,968 as advance payment.” On the ground that “The obligation to withhold advance payment was established in the business year 2010,” the Defendant issued a tax withholding disposition of corporate tax of KRW 4,307,168,570 (including additional tax) for one financing on February 1, 2013 (hereinafter referred to as “transfer income-related disposition”), and the Defendant issued a tax withholding disposition related to transfer income (hereinafter referred to as “transfer income-related disposition”).

E) Accordingly, LSF-KB, one finance company, filing a lawsuit for cancellation of each disposition related to capital gains [2012Gu 3944, 2013Gu 9076,] On November 21, 2014, “1 LSF-KB is merely a conduit established for the purpose of tax avoidance and thus cannot be deemed to have controlled and managed the capital gains of this case. 2nd-class investors are foreign corporations under the Corporate Tax Act. 3rd-class investors are treated as foreign corporations under the Corporate Tax Act, so it is difficult to apply the tax treaty based on the place of residence of the final investors. 4rd-class investors except for SSEL are all residents of the Republic of Korea, and the remaining high-class investors are not subject to the tax treaty 5% of the capital gains of this case’s stocks are subject to the taxation of 9% of the capital gains of the United States, and the tax treaty between the Republic of Korea and the Republic of Korea. 5% of the capital gains of this case’s stocks is not subject to the tax treaty (IV 1).

F) After that, the instant case was rendered by the Seoul High Court (2014Nu74178) on September 23, 2015, and the appeal was pending in the Supreme Court (2015du55134).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 4 through 33, 35 through 45, Eul evidence Nos. 2, 6 through 13 (including each number), and the purport of the whole pleadings

D. Determination

1) Whether the instant dividend income belongs to lsF-KEB

A) The taxation treaty is established for the purpose of the Avoidance of Double Taxation and the prevention of Fiscal Evasion by coordinating the issue of taxation between the Contracting States, and thus, rather than establishing the taxation right, and functions to allocate or restrict the already established taxation right under the tax laws of one Contracting State. Therefore, in order to apply the tax treaty, the person to whom the income belongs should be identified as a resident of the Contracting State of the tax treaty on the premise that the determination of the person to whom the income accrues ought to be made

The principle of substantial taxation under Article 14(1) of the Framework Act on National Taxes, in cases where there is a separate person to whom such income, profit, property, transaction, etc. belongs, unlike the person to whom such income, profit, etc., belongs, is to be the person to whom such income, profit, property, or transaction, etc., belongs, rather than the person to whom such income, belongs in form or appearance. Therefore, the nominal owner of the property does not have the ability to control and manage the property, and there is another person who substantially controls and manages the property through the control, etc. over the nominal owner, and where such disparity between name and substance arises from the purpose of tax evasion, income on the property shall be deemed to be reverted to the person who actually controls and manages the property and shall be the person to whom such income belongs (see Supreme Court en banc Decision 2008Nu8499, Jan. 19, 2012). This principle applies in interpreting and applying a tax treaty having the same effect as law, unless there is any special provision excluding this (see Supreme Court Decision 2011Du

B) In light of the following circumstances, it is reasonable to view that lsF-KEB is merely a Doing company established to obtain a resident qualification in the Belgium in order to avoid taxation on the dividend income of this case. Therefore, the dividend income of this case does not belong to lsF-KEB, and thus, the Korea-Belgium Tax Treaty cannot be applied to this case’s withholding.

① At the time of the acquisition of a foreign exchange bank, Belgium was used by a multilateral-national investment institution as a means of tax reduction in accordance with the Korea-Belgium Tax Treaty, and was classified as a single-state group in which the OECD would comply with international tax standards.

② From the time of creation, Lone Star Fund IV studies and reviews the tax systems, investment benefits, tax treaties, etc. of the Republic of Korea and other countries including the Republic of Korea as a means of tax avoidance in order to seek maximized profit from assets investment in Korea in the future. In order to design the optimal investment structure to benefit from tax exemption under the Korea-Belgium Tax Treaty, the laws and systems of the investment hub countries, such as Korea and Belgium, were analyzed.

③ Lone Star Fund IV established LSF-KEB on August 21, 2003, prior to the conclusion of the Korea Exchange Bank Stock Subscription Agreement, for the purpose of applying the tax benefits of the tax authorities of the Republic of Korea on stock transfer income, dividend income, etc. in accordance with the Korea-Belgium Tax Treaty, and acquired the instant shares on August 27, 2003.

④ Although a foreign exchange bank’s purchase and sale contract is concluded in the name of lsF-KB, the said contract was concluded based on the investment structure and governance structure as seen earlier, and the foreign exchange bank’s shares were purchased with funds from top investors invested in Korea. Moreover, Nonparty 2, Nonparty 3, etc., a domestic asset management company lsK, HAK’s officers, who were under the control and management of Lone Star Fund IV, led to the entire process up to the transfer of shares, etc., and the sale of shares of the foreign exchange bank was conducted under the initiative of Nonparty 4, the representative of lsFC, and Nonparty 1, etc.

⑤ lsF-KEB was used by top-tier investors for the optimal investment structure, and there is no circumstance that Lone Star Fund IV was engaged in other business or activities within its resident state in addition to its formal role as a holding company for investment in Lone Star Fund IV.

6) In managing funds, the necessity of an investment holding company, such as LF-KEB, cannot be denied for efficient management and operation of investment funds and investment assets. The actual person in charge of actual source of substantial funds, investment and asset management activities in investment through an investment holding company, and the ultimate person in charge of the investment proceeds, may not be reconcept into the transactional relationship without permission by referring to issues. However, establishing LF-KEB in the Belgium that is irrelevant to the actual resident state of the investors in Korea or Lone Star Fund IV, the investment partner of the Republic of Korea or Lone Star Fund IV, and constituting the investment structure through a multiple-level holding company seems to be an act to consider benefits under the tax treaty.

7) The verification of a resident is required to verify the actual business performance in addition to the establishment of a main office in a foreign country (see Supreme Court Decision 93Nu13162, Apr. 15, 1994; 93Nu13162, Apr. 15, 199), and according to each of the lF-KB evidence Nos. 13 through 28 (including each serial number), lsF-KB is registered as a corporation in the Belgium, and only the details of lsCM’s activities can be recognized. lsCM is a company controlled through LSP, Dodco partner, Lone Star Fund Lone Star Korea Ltd. through Lone Star Global Holdings. Thus, this alone is insufficient to acknowledge the actual business performance of LSF-KEB, and there is no other evidence to prove otherwise.

8) The Plaintiff asserts that lsF-KEB had human and material factors, as lsF-KEB operated lsF-KEB. However, considering that lsF-KEB and lsIMF own only 1% of lsF-KEB’s issued stocks, and they manage lsF-KEB as well as lsF-KEB, in light of the fact that lsCM and lsIMF’s activities are merely a company that manages LlsF-KEB’s global investment, and their human and material factors are not deemed lsF-KEB’s investment.

9) The Plaintiff asserts that lsF-KEB used lsF-KSB preferentially for bank loans and senior bonds, payment of corporate tax, etc., and exercised its rights as the beneficial owner with respect to the instant dividend income, such as distributing dividends to superior investors or filing a tax report via a resolution of the general meeting of shareholders. However, lsF-KEB is operated by lsM and lsIM, and it does not perform only the intermediate role in the process of distributing the instant dividend income to superior investors, such as the investment structure of the instant stocks. Therefore, it is not a beneficial owner of the instant

(10) From among top-tier investors, it is difficult to deem that there was no tax avoidance purpose under the tax treaty among some top-tier investors on the ground of the benefit of the tax treaty, taking into account the following: (a) there is a person entitled to benefit under the tax treaty; (b) there is a person who does not receive benefit under the tax treaty; and (c) establishing a top-tier investor in the Belgium after checking the benefit under the tax treaty on the capital gains of the instant stocks; and (d) the instant dividend income, etc.

2) Whether the instant dividend income belongs to a superior investor

A) Whether a higher investor is a foreign corporation under the Corporate Tax Act

Where a foreign unincorporated association, foundation, or other organization is a profit-making organization that obtains domestic source income provided for in the Income Tax Act or the Corporate Tax Act and distributes such income to individuals as a partner, such organization shall be liable for tax payment if it can be deemed a foreign corporation under the Corporate Tax Act. If it cannot be deemed a foreign corporation under the Corporate Tax Act, income tax shall be imposed on the income amount that is distributed to each of its members as a taxpayer in the same manner as in the case of a resident. In this context, whether such organization can be deemed a foreign corporation under the Corporate Tax Act shall be determined depending on whether it can be deemed as a separate subject of rights and obligations independent of its members under the Korean judicial law, in light of the content of the law of the country established by the organization, and the substance of the organization, unless otherwise provided for in the Corporate Tax Act (see Supreme Court Decisions 2010Du5950, Jan. 27, 2012; 2010Du25466, Oct. 25, 2012; 2013Du161613

However, considering the following circumstances which are acknowledged by comprehensively considering the evidence and the overall purport of each of the above facts of recognition, i.e., ① the corporations established by high-ranking investors other than the eight higher-ranking investors located in the following as stated in the investment structure of the instant shares as well as the human and material facilities. ii) the high-ranking investors were operated in accordance with lsP IV (which is a general partner). 6 higher-ranking investors were established for the purpose of opening and operating foreign bank accounts without restriction on foreign exchange regulations, and were established for the same purpose as that of high-level investors, i.e., the number of investors in the instant case, such as the United States, which is established through the lower-class corporations, and i.e., the number of investors in the instant case, which are established for the purpose of distributing profits through joint ventures, and i.e., the number of investors in the instant case and the number of investors in the instant case, i.e., the number of investors in the instant case, which are established for the purpose of distributing profits through joint ventures, 10% or 10% partners.

B) Whether the instant withholding tax was null and void since it was conducted for a person who is not a source taxpayer

Article 21(2)1 of the Framework Act on National Taxes and Article 22(2)3 of the same Act are the taxes automatically determined at the time when the tax liability is established at the time when the income amount or income amount is paid (Article 21(2)1 and Article 22(2)3 of the same Act). The taxation authority’s collection disposition against the withholding agent is merely a claim for the performance of the tax liability that has already been determined by payment of the income amount or income amount, and thus does not affect the existence or scope of the original tax liability that the recipient of the income or income amount bears. Article 9(1) of the former National Tax Collection Act (amended by Act No. 10527, Apr. 4, 2011) provides that “the basis for calculation of the tax amount” shall be stipulated in the tax payment notice for the collection of national tax, but it is difficult to view that the recipient of the income amount or income amount is included in the “income amount or income amount basis for calculation”, it is reasonable to view that the person who

Therefore, even if the tax authority claims the change of the recipient of the income or revenue amount in a lawsuit seeking the cancellation of the collection disposition of corporate tax withheld at source, if it does not change the basic facts for the payment of the income or revenue amount, it is allowed as a change of the reason for disposition within the scope of maintaining the identity of the disposition (see Supreme Court Decision 2011Du7311, Jul. 11, 2013). Therefore, the withholding agent can determine the effective owner

Therefore, it is difficult to deem that the above withholding tax was illegal on the ground that the person to whom the dividend income of this case belongs should be deemed as the superior investor with respect to the withholding of this case where the person to whom the dividend income of this case belongs is deemed as lsF-KSB. Accordingly, the Plaintiff’s assertion

C) the application and scope of tax treaties to higher investors;

(1) Whether the tax treaty of the country of residence of the final investor should be applied

With respect to partnershipship, whether it can be seen as the subject of separate rights and obligations independent from the members of the private law organization in Korea, that is, whether it constitutes a profit-making organization that can be seen as a foreign corporation or a foreign corporation that is an independent taxpayer under the Corporate Tax Act, and if so, investors who are members of the partnership can not be deemed as taxpayers (see Supreme Court Decision 2011Du4411, Jul. 11, 2013). As seen earlier, insofar as higher investors are deemed foreign corporations under the Corporate Tax Act, as long as higher investors are deemed to be foreign corporations under the Corporate Tax Act, tax treaties cannot be applied based on the place of residence of the final investors by treating them as taxable object. Accordingly, even if the instant dividend income belongs to the higher investors, the Plaintiff’s assertion that the limited tax rate under the Tax Treaty ought to be applied based on the resident country of

(2) In the case of other senior investors than U.S. ELP:

The place of residence of the other top-tier investors except the U.S. ELP is all the community countries, and the tax treaty is not concluded between the community countries and the Republic of Korea. Therefore, withholding tax on the dividend income of this case cannot be exempted, and 25% or 20%, which is the tax rate under the Corporate Tax Act, shall be applied.

(3) In the case of U.S. EL

The place of residence of the U.S. ELP is the United States, and there has been a Korea-U.S. Tax Treaty between the United States and the Republic of Korea. As such, the limited tax rate under the Korea-U.S. Tax Treaty shall apply to the dividend income in this case. Article 12(1) of the Korea-U.S. Tax Treaty provides that "any dividend that a resident of the other Contracting State receives from sources in the other Contracting State may be taxed by both Contracting States." In accordance with paragraph (2) of the same Article, the tax rate imposed by either Contracting State on the dividend that the resident of the other Contracting State imposes on the dividend that is received from sources in the other Contracting State shall be 15 percent (a) or 15 percent (b) of the total dividend amount, if the receiver is a juristic person, at least 10 percent of the voting shares of the paying juristic person issued during the taxable year of the previous taxable year and the total period of the immediately preceding taxable year, and (ii) the interest or dividend of the paying juristic person shall not be more than 25 percent of the total dividend amount paid by the subsidiary.

Meanwhile, Article 3(1)(b) of the Korea-U.S. Tax Treaty provides that “a resident of the U.S. shall be deemed to be a resident of the Republic of Korea.” (i) the term “U.S. corporation” (excluding a corporation or an entity treated as a corporation under the laws of the U.S.) and (ii) the term “in the case of a person acting as a partner or trustee of the U.S., only to the extent that the income derived from such person must be subject to U.S. tax as the income of the resident.” Article 2(1)(e)(ii) of the Korea-U.S. Tax Treaty provides that “a resident of the U.S. corporation or an unincorporated entity established or organized under the laws of the U.S. or under the laws of the U.S., or an entity treated as a resident of the U.S., for the purposes of taxation purposes of the Korea-U. Tax Treaty shall be deemed to be a resident of the Republic of Korea-U.S. Tax Treaty and thus, an entity deemed to be a partner of the Korea-U. Tax Treaty.

In addition, the U.S.PP and 38 final investors are composed of lsP, which are GP (1% of shares), and the 38 final investors are U.S. residents (the Defendant asserted that materials submitted by the Plaintiff alone are insufficient to recognize the final investors as U.S. residents, but it is sufficient to recognize that the final investors are U.S. residents, taking into account the respective descriptions of Gap evidence Nos. 4, 36, 37, 43, 44, and 44 (including the number number)). Of the instant dividend income, the U.S. ELP portion out of the instant dividend income is likely to be distributed according to the above final investors' investment shares [the Defendant appears to have failed to prove the details of the instant dividend income distributed to the final investors, but it is reasonable to consider the fact that the final investors are liable to pay the investment shares listed in the partnership agreement (Evidence No. 4) in the U.S., if they are not returned to the U.S. residents by the final investors.

On the other hand, LSP IV, the GPP of the U.S. LSP, consists of lsMC (LP corporation, 0.1% equity interest) and 25 LP (9.9% equity interest). Since LSP is a corporation in the Republic of Korea, it is difficult to conclude that the U.S. is liable to pay tax in the United States. According to each of Gap evidence 11, No. 44-2 and No. 9, the fact that some of the members of LSP IV is a resident of the United States or the Ireland is recognized, but lsP IV is not a resident of the United States or the Ireland, and it is difficult to conclude that LSP IV is liable to pay tax in the United States only because some of the members of LSP is a resident of the United States or the Ireland. In light of the above, it is difficult to conclude that LP IV is liable to pay tax in the United States.

Therefore, among the dividend income in this case, only the part belonging to the LP of the U.S. LP (excluding 9% of the shares of LP IV, which is the GP), shall be subject to the Korea-U.S. Tax Treaty (Article 4 Section 8.6 of the OECD Model Convention refers to whether a final investor is liable to pay a comprehensive tax on global income on the basis of his residence under the laws of the Contracting State, and most countries are sufficient to bear abstract tax liability under the internal tax law of the Contracting State, and it shall be interpreted as liable to pay a tax even if the country bears abstract tax liability under the internal tax law of the Contracting State, and the tax is not actually paid by non-taxation or reduction. In light of the fact that the international authority for the proper interpretation of the tax treaty between OECD members is recognized as the standard for recognizing the international authority for the proper interpretation of the tax treaty between OECD members, and can be a reference material for the interpretation of the treaty between OECD members.)

In addition, given that the U.S. tax law does not correspond to “corporation”, the 15% limited tax rate under Article 12(2)(a) of the Korea-U.S. Tax Treaty should be applied to the dividend income earned in the Republic of Korea where the U.S. EL is the source country.

3) Whether the part of the penalty tax for failure to pay withholding taxes in the instant disposition is illegal

The substance over form principle applies to withholding tax on domestic source income under Article 98(1) of the former Corporate Tax Act. Thus, barring any special circumstance, a person who pays domestic source income is obligated to withhold corporate tax on such income based on the actual person to whom the income actually accrues, after investigating whether there is another person to whom the income actually accrues, different from the name of the person to whom the income actually accrues: Provided, That the person who pays domestic source income is liable to withhold corporate tax upon a request made by the tax authority for public interest, such as securing the early tax revenue and promoting tax collection efficiency, while the person who does not have any investigation authority granted to the tax authority, such as the right of questioning and inspection, does not constitute a person who pays domestic source income, even if the person who faithfully investigated and secured the income in the course of transaction or paying the income amount, cannot be deemed liable to withhold corporate tax on such income based on the actual person to whom the income actually accrues (see Supreme Court Decision 2011Du3159

(4) In light of the above facts and the overall purport of each of the above facts, it seems that the Plaintiff, at the time of entering into the storage contract with LSF-KEB, signed on its own behalf, Nonparty 4, not the Plaintiff’s director, but the statutory director of LSF-KB. The Plaintiff appears to have been able to doubt that the beneficial owner of the dividend income of this case was not LSF-KB under the above contract. ② The Plaintiff did not visit LSF-KB at the time of entering into the storage contract, and the Plaintiff did not appear to have been able to reasonably have the authority to request the Plaintiff to keep the dividend income of the Plaintiff at the place of the FS-KB, and the Plaintiff did not appear to have been able to have been able to ask the Plaintiff to submit the relevant documents or other relevant evidentiary documents at the location of the Plaintiff’s beneficial owner (LS-KB) or to reasonably have the authority to request the Plaintiff to keep the dividend income of this case.

(iv) a reasonable tax amount;

In a lawsuit seeking revocation of taxation, the subject matter of adjudication is whether the tax base and tax amount notified by the tax authority exist objectively. In a case where the tax base and tax amount recognized by the disposition are excessive compared to the legitimate tax base and tax amount, the disposition of imposition is unlawful within the scope exceeding the reasonable tax base and tax amount (see Supreme Court Decision 88Nu6504, Mar. 28, 1989).

As seen earlier, with respect to the U.S. residents of the United States, among the instant dispositions, the 15% limited tax rate under Article 12(2)(a) of the Korea-U.S. Tax Treaty for the U.S. residents, and with respect to the remaining high-tier investors except the GP and U.S. ELP of the U.S. P.P., the reasonable tax amount calculated by reflecting 25% or 20% under the Corporate Tax Act

On April 11, 208 208 208 28,791, 2308, 2307, 346, 746, 746, 367, 368, 2074, 2078, 307, 468, 207, 407, 407, 407, 207, 407, 147, 207, 208, 207, 207, 207, 208, 304, 207, 207, 147, 207, 207, 346, 346, 207, 407, 206, 374, 205, 206, 206, 206, 257, 207, 2010

Therefore, the part exceeding the above legitimate tax amount among the disposition of this case should be revoked as unlawful.

4. Conclusion

Therefore, the plaintiff's claim is justified within the above scope of recognition, and each of the remaining claims is dismissed as it is without merit. It is so decided as per Disposition.

[Attachment Omission]

Judges Yoon Gyeong-do (Presiding Judge)

1) Of the claims, 28.791, 233,801 won, 2,303,298,712 won, 3,109,453,252 won, 19,578,038,986 won, 34,779,810,432 won, among the claims, shall be corrected ex officio.

2) According to Article 2(1)(b) of the Korea-Belgium Tax Treaty, since the limited tax rate of 15% on the dividend income of this case includes corporate tax and resident tax, the Plaintiff applied the withholding tax rate of corporate tax on the dividend income of this case to 13.64%.

Note 3) The investors from 2008 to 2009 are Redd Fabund Ⅰ and LLC.

Note 4) From 2008 to 2009, investors from 2008 are Baon Safe Depoit Doru Commonpa Doru ruste de Jhn Poste de Pensemem.