Seoul High Court-2015-Nu62349 (O7. 2019)

The officer's defined contribution plan shall be included in deductible expenses for the business year to which the payment date belongs.

A defined contribution plan for an officer shall be included in deductible expenses in the business year in which the date of payment falls, even if the payment is not legitimate, and the amount of retirement pension paid by the officer during the business year to which the date of payment belongs shall not be included in excess of the limit for the actual retirement business year, and it is difficult to conclude that the amount of

Article 44-2 (Non-Inclusion of Retirement Insurance Premium in Expenses)

2016du48256 revocation of disposition of imposing corporate tax, etc.

-Appellee

AA system

-Appellant

K Director of the Korean Tax Office

Seoul High Court Decision 2015Nu62349 Decided July 7, 2016

October 18, 2019

All appeals are dismissed.

The costs of appeal are assessed against the Defendants.

The grounds of appeal are examined.

1. Article 26 subparag. 1 of the former Corporate Tax Act (amended by Act No. 10423, Dec. 30, 2010; hereinafter the same) provides that an amount deemed excessive or unreasonable among personnel expenses as prescribed by Presidential Decree shall not be included in deductible expenses when calculating the amount of income of a domestic corporation for each business year. According to delegation, Article 44-2(2) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 22577, Dec. 30, 2010; hereinafter the same shall apply) provides that "in calculating the amount of retirement pension paid by a domestic corporation for an officer or employee as the ground for payment of pension and the amount of pension paid by a domestic corporation as an officer or employee shall be included in deductible expenses in calculating the amount of income for the relevant business year." The amount in excess of the amount of retirement pension paid by the domestic corporation for each business year shall be included in deductible expenses, but the amount in excess of the amount of retirement pension paid by the corporation for each business year shall be included in deductible expenses.

Meanwhile, Article 44(4) of the former Enforcement Decree of the Corporate Tax Act provides that "the amount exceeding any of the following amounts out of the retirement benefits paid to an executive of a corporation shall not be included in deductible expenses." Subparagraph 1 provides that "the amount stipulated in the articles of incorporation if the amount to be paid as retirement benefits (including retirement benefits, etc.) is determined by the articles of incorporation, and the amount calculated by multiplying the amount equivalent to 1/10 of the total amount of retirement benefits paid to the relevant executive for one year retroactively from the date of retirement by the number of years of continuous service calculated by the method prescribed by Ordinance of the Ministry of Strategy and Finance," and Article 44(5) provides that "the amount shall be determined by the articles of incorporation, if there is a separate provision on payment of retirement benefits delegated by the articles of incorporation, it shall be governed by the corresponding provision."

2. Based on the instant provision, the lower court determined that the part concerning the amount of each of the Defendants’ respective dispositions was unlawful on the grounds that the Plaintiff’s payment of the instant charges was not included in deductible expenses for the business year 2010, including the payment date, and it is difficult to regard the Plaintiff’s payment of the instant charges as a wrongful calculation, on the grounds that: (a) the amount exceeding the interim settlement amount of retirement allowances calculated in accordance with the standards for the Guarantee of Workers’ Retirement Benefits (hereinafter “instant charges”) from among the 1,00,000,000 won paid by the retirement pension trustee as retirement pension trustee on December 30, 2010; (b)***,492,267 won (hereinafter “instant amount”).

Examining the record in accordance with the aforementioned provisions and relevant legal principles, the lower court did not err in its judgment by misapprehending the legal doctrine regarding the interpretation of the instant provision and the denial of unfair act under the Corporate Tax Act, contrary to what is alleged in the grounds of appeal.

3. Therefore, all appeals are dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.