Whether the Plaintiff is an actual business operator of the key workplace

Pursuant to the principle of substantial taxation, a person who substantially controls and manages the relevant taxable object shall be a taxpayer. Determination should be made by comprehensively taking into account various circumstances such as the details of the name use, the content of the agreement between the parties, the degree and scope of the nominal owner's involvement, the relationship between internal responsibility and calculation, and the location

2018Guhap60763 Other Global Income and Revocation of Disposition

KimA

BB Director of the Tax Office

2018.07.04

2018.08.08

1. The imposition of global income tax of KRW 242,057,930, which the Defendant rendered to the Plaintiff on December 1, 2016, shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. On June 1, 2015, the Plaintiff completed business registration with its trade name as ○○○○○ (hereinafter referred to as '○○○○○○○’), '○○○○ 676-9', and 'simarket' as '○○○ ○○ Do 676-9', and 'simarket'. The Plaintiff reported the closure of business of this case on June 1, 2015.

B. When the Plaintiff filed a comprehensive income tax for the year 2012, the Plaintiff reported that the total amount of income for the instant workplace was KRW 2,750,409,306; necessary expenses was KRW 2,697,158,512; and income amount was KRW 53,250,794. However, the Defendant denied KRW 461,00,000, which is not verified by the fact of actual purchase among the necessary expenses of the instant workplace, from the necessary expenses; adding the amount of KRW 13,750,000,000, and added the amount of KRW 242,057,930, which is global income tax for the year 2012 (hereinafter “instant disposition”).

C. The Plaintiff filed an appeal with the Tax Tribunal on the instant disposition, but the Tax Tribunal dismissed the Plaintiff’s appeal on November 10, 2017.

2. Summary of the plaintiff's assertion

The Plaintiff, at the request of KimCC, was registered as a business operator in the form of the instant workplace by lending the business operator’s name to KimCC, which is a pilot, and was never involved in the operation of the instant workplace. Since KimCC actually operated the instant workplace, the instant disposition was unlawful in violation of the principle of substantial taxation.

3. Determination on the legality of the disposition

(a) Relevant legal principles;

Article 14(1) of the Framework Act on National Taxes declares the principle of substantial taxation by stipulating that “if the ownership of income, profit, property, act, or transaction subject to taxation is merely nominal and there is another person to whom such income, profit, property, act, or transaction belongs, the person to whom such income, profit, or transaction belongs shall be liable for tax payment.” Therefore, if there is another person who substantially controls and manages such income, profit, property, act, transaction, etc. different from the nominal ownership, the nominal owner shall not be the person to whom such income, profit, or appearance belongs, but the person who substantially controls and manages the relevant taxable object shall be the person to whom such income, pursuant to the principle of substantial taxation. Furthermore, whether such income, etc. falls under such case shall be determined by comprehensively taking into account the following: (i) details of the agreement between the parties to the transaction; (ii) degree and scope of the nominal owner’s involvement; (iii) internal responsibility and calculation relationship; and (iv) whereabouts of independent management and disposal authority over the taxable object, in principle, the tax authority bears the burden of proof that the actual owner bears the burden of taxation.

B. Determination

In full view of the following facts and circumstances that can be recognized by the evidence Nos. 1 through 5, 9 through 11, Eul’s evidence No. 3, part of Eul’s evidence No. 8, witness KimCC’s testimony and the overall purport of pleadings, it is sufficient to deem that the present place of business is a person who actually runs the present place of business, and the plaintiff has lent his/her name to KimCC, a pilot KimCC. The evidence submitted by the defendant and the circumstances asserted by the defendant are insufficient to recognize that the plaintiff actually operated the present place of business, and there is no other evidence to support this.

① The KimCC operated Scam Market in the name of the Plaintiff prior to the completion of the business registration in the name of the Plaintiff with respect to the instant business establishment. However, since the Korea Credit Guarantee Fund received approximately KRW 300 million loans from the Korea Credit Guarantee Fund while operating the said business, it was impossible to obtain additional loans in the name of KimCC. However, KimCC attempted to raise funds necessary to operate the instant business establishment through the loan of financial institutions, and accordingly, KimCC needed to complete the business registration in the name of another person with respect to the instant business establishment.

② The KimCC borrowed a part of the lease deposit with respect to the instant business establishment from its model KimE, and in order to secure the repayment obligation of the loan, the name of the lessee was changed according to the lease contract.

③ On January 29, 2015, KimCC entered into a contract with the EF to transfer the right to operate the instant workplace. After that, the EF filed a complaint with the KimCC on the charge of fraud and the uttering of an investigation document on the grounds that the Plaintiff was not a legitimate lessee of the instant workplace. In the investigation process regarding the instant complaint case, KimCC stated to the effect that the Plaintiff is the actual operator of the instant workplace, and the Plaintiff was merely a person who lent his business name. The credibility of the above statement made by the investigative agency was recognized and thus, KimCC was not prosecuted.

④ In the case of Suwon District Court 2016Kadan215713 claim, where the FF serves as the representative director, the Suwon District Court 2016Gadan215713 claim, the Mat○○○, a stock company, argued that the KimCC was not the actual owner of the instant business establishment, but the Mat○○, a real owner of the instant business establishment; however, the said court stated that the ○○○○○, Et○, and ○○, which engaged in a transaction with the instant business establishment, are the actual operator of the instant business establishment; and the FF entered into a contract on the transfer of the operating right of the instant business establishment with the KimCC, and operated the instant business establishment without any particular problem, on the ground that it is difficult to deem that there was a deceptive act of Mat○○○, a stock company, was not accepting the said claim.

⑤ As the Plaintiff’s global income tax was corrected due to the instant disposition, the Plaintiff was additionally imposed and notified of KRW 24,205,790 for personal local income tax in 2012, and KimCC paid KRW 25,803,340 for the sum of the additional charges in KRW 24,205,790, as the global income tax was additionally imposed and notified.

6) Although KimCC directly performs the sales of the instant workplace, the purchase of goods, the management of employees, etc., and the accounting or accounting affairs at the instant workplace, no wage was paid at the instant workplace, and the tax return on the instant workplace was also delegated by KimCC to the certified tax accountant. In the event that the purchase price of goods was paid in cash, the KimCC withdrawn and paid the purchase price from the deposit account directly opened in its name.

C. Sub-committee

Therefore, it is difficult to view that the subject of the transaction, etc. with respect to the instant workplace is the Plaintiff, and thus, the instant disposition taken on the premise that the Plaintiff, the title holder of the business registration, actually runs the instant workplace, is in violation of the principle of substantial taxation, and thus ought to be revoked

4. Conclusion

Therefore, the plaintiff's claim of this case is reasonable, and it is decided as per Disposition by admitting it.