Whether the secondary liability for tax payment is borne to the extent of the exercise of substantial rights

It is not against the principle of tax equality even if the person liable for secondary tax payment bears the tax liability without asking whether or not he exercises the substantial right to the national tax imposed on a lineal descendant living together with the person liable for secondary tax payment.

Article 39 (Secondary Liability to Pay Taxes by Investor)

1. Each of the plaintiffs' claims is dismissed.

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

On December 29, 2006, the Defendant: (a) designated the Plaintiffs as secondary taxpayers of Nonparty ○○○○○○ Co., Ltd.; (b) imposed KRW 4,801,437 out of the corporate tax delinquent amount of the same company’s corporate tax on Plaintiff Kim Jong-sung; and (c) revoked each disposition imposing KRW 4,609,380 out of the corporate tax delinquent amount of the same company’s corporate tax on Plaintiff Kim

1. Details of the disposition;

A. ○○○○○○ Co., Ltd. (hereinafter “○○○○○○”) was established on February 27, 2002 and now engaged in export and import business, etc. The Plaintiffs’ mother, the mother of the Plaintiff, has been working as ○○○○ representative director from the time of establishment to January 10, 2003.

B. During the two taxable periods of 2002, ○○○○ received the processing tax invoice for gold bullion amounting to KRW 228,564,000 from the supply price of KRW 228,564,00, and reported value-added tax and corporate tax.

C. Around November 2006, the Defendant determined that the purchase amount under the preceding paragraph was a processing transaction, and imposed upon ○○○○ on the basis of the non-deduction of the input tax amount of value-added tax and the deductible expenses of the corporate tax, respectively, the amount of value-added tax of KRW 45,495,630 for 202 and corporate tax of KRW 67,270,750 for 202 (hereinafter referred to as the “instant imposition”).

D. According to the statement on the situation of changes in the shares of ○○○○○○, as of December 31, 2002, the date on which the liability to pay the above delinquent tax was established, 2,500 shares, 50% of the outstanding shares of ○○○○○○, the mother of the Plaintiffs, 1,250 shares, 25% of the 1,250 shares, and 1,200 shares, 24% of the shares, were owned by the Plaintiff Kim○○, respectively.

E. On December 21, 2006, the Defendant determined that ○○○○○○○, a principal taxpayer, was incapable of paying the above delinquent tax due to his own property, and deemed that it falls under the oligopolistic shareholder of ○○○○○○○○○○○ as of the date when the Plaintiffs’ liability for tax payment was established pursuant to Article 39(1)2(c) of the Framework Act on National Taxes, and accordingly, the Plaintiffs were designated as the secondary taxpayer of ○○○○○○○○○○○○○○○○○, and imposed KRW 29,037,320 on the Plaintiff Kim○, according to the shares owned by the Plaintiffs, the amount of corporate tax and value-added tax in arrears

F. The Defendant revealed that the sales and purchase amount of ○○ ○○○○ was processed, but that there was a benefit from the transaction by credit card alteration. On April 13, 2007, the Defendant revoked all the value-added tax of 45,495,630 won on the said ○○ ○○ ○○ ○○ ○○ ○○ ○○ ○ ○○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ 6,646,360 won and corrected the corporate tax amount to 18,640 won. On May 29, 2008, the Defendant notified the Plaintiff ○ ○ ○ ○ ○ ○ ○

G. The Plaintiffs filed a request for a national tax trial on March 16, 2007 upon each of the instant dispositions, but was dismissed on August 21, 2007.

Facts without dispute (applicable to recognition), entry of evidence Nos. 3, 5 through 12, 15, 16, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiffs' assertion

(1) The Defendant’s imposition of each of the instant dispositions is null and void due to the failure to attach a tax notice in violation of Article 12 of the National Tax Collection Act, which is a mandatory provision.

(2) The Plaintiffs were not aware of the fact that they were listed as shareholders, and they were merely listed in the name of the next person, such as there was no fact that they paid stock price, and thus cannot be deemed to constitute an oligopolistic shareholder who bears the secondary tax liability.

(3) According to the proviso of Article 39(1) of the Framework Act on National Taxes, in the case of over-point shareholders falling under subparagraph 2(a) and subparagraph 2(b), the tax amount to be borne by the over-point shareholders out of the insufficient tax amount is to be borne within the limit of the stocks exercising a substantial right, and in the case of shareholders falling under subparagraph 3(c), it is against the principle of tax equality, regardless of whether or not the shareholder exercises a substantial right. Accordingly, the instant disposition based thereon is null and void.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) As to the First Claim

In Article 12 of the National Tax Collection Act, when the director of the tax office intends to collect the national tax, additional dues or disposition fee for arrears from the secondary taxpayer, he/she shall notify the taxpayer of the tax year, tax item, amount of national tax, additional dues or disposition fee for arrears to be collected to the secondary taxpayer, the basis for calculation, payment period, place of payment, the amount to be collected from the secondary taxpayer, and the basis for calculation and other necessary matters. In such cases, he/she shall notify the taxpayer thereof. In such cases, pursuant to Article 9 of the Enforcement Rule of the National Tax Collection Act, the notice of payment to the secondary taxpayer shall be based on the notice of payment in attached Form 12,

According to the evidence Nos. 1, 2, and 2-1, 2-1, 2-2, and 1-1, 2-2, 23-1, 23-2, and 3 of the evidence Nos. 1, 12-1, 2, and 3 of the National Tax Collection Act, it can be recognized that the defendant notified the plaintiffs according to the notice of payment under Article 12 of the National Tax Collection Act and Article 9 of the Enforcement Rule of the same Act

(2) On the second argument

(A) Comprehensively taking account of the overall purport of the arguments in Gap's evidence 13, 14, and 17-2 through 4, and Eul's evidence 13 through 16, the following facts were revealed: (a) The plaintiff Kim Jong-soo worked for the ○○ Grand Foreign Research Institute from June 1, 200 to December 31, 2003; (b) he received monthly salary of 1,300,000 won from his bank account (○○○-○-○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ on March 5, 198; (c) the plaintiffs were enrolled at the above school until December 31, 2002 at the ○○○○○○○○○○○’s 20-dong 202.

(B) Determination of whether a person constitutes an oligopolistic shareholder under Article 39(1)2 of the Framework Act on National Taxes (amended by Act No. 8139, Dec. 30, 2006; hereinafter the same applies) shall be made based on whether the person is a member of a group of stocks owned by the majority. Specifically, even if there is no fact involved in the management of the company, it cannot be deemed an oligopolistic shareholder merely because it is not an oligopolistic shareholder. The fact of ownership of stocks should be proved by data such as a list of stockholders, a detailed statement of stock movement or a certified transcript of corporate register, etc. by the tax authority. However, even if a shareholder appears to be a single shareholder in light of the above data, if there are circumstances, such as where the name of the shareholder was stolen or registered in a name other than the de facto ownership, the actual shareholder cannot be deemed to be a shareholder, but it should be proved by the nominal shareholder who is not a shareholder (see, e.g., Supreme Court Decision 2003Du1

(C) According to the above, among the 0,000 shares issued by ○○○○○ as of the date of establishment of the tax liability, Plaintiff Kim Jong-dong shares 25%, Plaintiff Kim Jong-dong shares 24%, Plaintiff Kim Jong-dong shares 1,200 shares, and Defendant Kim Jong-dong shares 24%, and 4,950 shares equivalent to 99% of the total number of 00 shares issued by 00 shares, if the Plaintiff’s shares and his mother share of Kim Jong-dong shares were jointly owned by 1,200 shares, and Plaintiff Kim Jong-dong was a university student as of December 31, 2002, and Plaintiff Kim Jong-dong was working as an English instructor of 00,000, but it is difficult for the Plaintiffs to prove that there was a lack of evidence to prove that the Plaintiffs’ shares were owned by 1,200 shares, or that there was no reason to prove that there was a lack of evidence to prove that the Plaintiffs’ shares were actually owned by 150 shares.

(3) On the third argument

① The second tax liability is intended to realize the principle of substantial taxation under the Act on the Imposition of National Taxes and the Application of Tax-Related Acts. The second tax liability belongs to a third party. However, even if the third party has the same responsibility as that of the second tax obligor, thereby denying the formal attribution of rights to such third party’s property, thereby ensuring rationality and feasibility in its contents or equity. The second tax liability system’s legislative purpose is to achieve the public interest such as securing tax collection. (2) It is also a small-scale closed company in which the Republic of Korea’s non-listed corporation actually controls the company’s management as its shareholders and its losses are attributed to itself and thus, it is likely that the third party’s corporate entity will abuse its legal personality and thus be subject to tax evasion. (3) It is also reasonable to view that the second tax liability system’s oligopolistic shareholder’s shares and/or its spouse’s share ownership may be excluded from the scope of its own stocks owned by the third party’s shareholder.

4. Conclusion

Therefore, all of the plaintiffs' claims are dismissed, and it is so decided as per Disposition.

public official law, order of law,

Article 39 (Secondary Tax Liability of Investors)

(1) Where the property of a corporation (excluding a corporation which has listed stocks on the securities market under Article 2 (1) of the Korea Securities and Futures Exchange Act) is insufficient to cover the national tax, additional dues, and disposition fee for arrears imposed on or to be paid by such corporation, any of the following persons as of the date on which the liability to pay national taxes is established shall assume secondary tax liability for such shortage: Provided, That in the case of oligopolistic stockholders under subparagraph 2, the limit of the amount calculated by multiplying the amount obtained by dividing the shortage by the total number of stocks issued (excluding non-voting stocks; hereafter the same shall apply in this Article) or total amount of investment of such corporation by the number of oligopolistic stockholders owned (excluding non-voting stocks; hereafter the same shall apply in this Article) or investment amount (in the case

1. General partners;

2. An oligopolistic stockholder who falls under any of the following items:

(a) A person who exercises a substantial right over the stocks or investment shares in excess of 50/100 of the total issued stocks or total investments of the relevant corporation;

(b) An honorary chairperson, chairperson, president, vice president, senior managing director, managing director, director, or any other person who actually controls the management of the corporation, notwithstanding the title thereof;

(c) The spouse (including the person in de facto marital relationship) of the persons under items (a) and (b) and the lineal ascendants and descendants sharing their living

(2) For the purpose of paragraph (1) 2, the term “excess stockholder” means a person who is a relative or has other special relations with a stockholder or partner with limited liability as prescribed by the Presidential Decree, and the total sum of his stocks or investment is 51/100 or more of the total number of stocks issued or total amount of investment made by the juristic person concerned (hereinafter referred to as “excess stockholder

Article 12 (Payment Notice to Secondary Taxpayer)

If the head of a tax office intends to collect national taxes, additional dues or disposition fees for arrears of a taxpayer from a secondary taxpayer (including a tax guarantor; hereinafter the same shall apply), he/she shall notify the taxpayer of the tax year, tax item, amount of national taxes, additional dues or disposition fees for arrears which he/she intends to collect, and the basis for calculation, payment period, place of payment, amount to be collected from the secondary taxpayer, calculation basis and other necessary matters. In such cases, he/she shall

Article 9 (Payment Notice to Secondary Taxpayer)

A notice of payment under Article 12 of the Act shall be in accordance with attached Form 12.

July 22, 2008