Seoul High Court 2010Nu18309 ( November 11, 2010)

Early High Court Decision 2009Du2421 ( August 28, 2009)

Where an honorarium has been paid upon delegation of the disposition right concerning payment, it shall not be deemed delegated to the duty to collect withholding taxes and the duty to submit payment records.

Even if the Plaintiff received delegation of the authority to pay the instant income amount from the props, there must be circumstances to deem that the Plaintiff received delegation of withholding business, etc. implicitly, such as explicitly delegated withholding business, or entering into a payment agreement on behalf of the props.

Article 164 of the Income Tax Act shall be submitted to the current report.

Supreme Court Decision 2010Nu27479 (No. 24, 2014)

KoreaA

Head of Namyang District Tax Office

Seoul High Court 2010Nu18309 ( November 11, 2010)

November 1, 2011

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Article 127 (1) of the former Income Tax Act (amended by Act No. 7528 of May 31, 2005, hereinafter referred to as the "Act") provides that "any person who pays income falling under any of the following subparagraphs to a resident or a nonresident in the Republic of Korea shall withhold income tax from such resident or nonresident," and subparagraph 5 of Article 127 provides that "other income amount" is "the act of a person who acts on behalf of, or is delegated to, a person liable to withhold income under paragraph (1) shall be deemed to be the act of the principal or the delegating within the scope of the delegation."

In addition, Article 164 (1) of the Act provides that "A person who pays an individual liable for income tax in the Republic of Korea the following income amount shall submit a written payment record to the head of a tax office having jurisdiction over withholding taxes by the end of February of the year following the year in which the date of payment falls, as prescribed by the Presidential Decree," and subparagraph 5 of Article 164 provides that "other income amount" shall be referred to as "the act of a person who represents or is delegated to a payer pursuant to the provision of paragraph (1) shall be deemed the act of the principal or the delegating within

In full view of the language, purport, etc. of the above provisions, it is reasonable to deem that “a person who is a person who acts for or has been entrusted to a withholding agent or a payer, and is liable to submit a withholding tax or payment record within the scope of the delegation or delegation” as “a person who is liable to pay a withholding tax” under Articles 127(1) and 164(1) of the Act refers to a person who has the right or delegation (hereinafter referred to as “Delegation”) of the payment of the income amount to a source taxpayer as well as the payment of the income amount to the source taxpayer and the payment of the income tax withheld through withholding at the competent tax office after submitting a payment record for withholding the income tax and paying the income tax withheld at the source (hereinafter referred to as “collection business, etc.”). In addition, in light of the nature, effect, etc. of withholding tax, it is reasonable to deem that there is an explicit delegation of authority to the extent that it can be the same as the case where an implied delegation exists in order to ensure that there is an implied delegation of the intent to withhold the income.

2. The court below, citing the reasoning of the judgment of the court of first instance, accepted the claim for compensation for the land incorporated into the river from the props through the GangwonB, and the plaintiff received the full amount of compensation from the defendant in the above case on the basis of the plaintiff's account. 27% of the compensation amount from the plaintiff in the above case, and 10.5% of the compensation amount shall be paid to the plaintiff, and the remaining 62.5% of the compensation amount shall be remitted to the plaintiff.

Based on the aforementioned factual basis, the lower court determined that the instant disposition was lawful, on the ground that the Plaintiff was obligated to withhold the income tax on the instant income amount corresponding to the other income of GangwonB and submit the payment record, on the ground that the Plaintiff was delegated the authority to pay the instant income amount from the props and paid it to the GangwonB.

3. However, we cannot accept such a determination by the court below.

According to the aforementioned legal principles, even if the Plaintiff was delegated by the props with the authority to withhold income tax on the instant income amount, in order to ensure that the Plaintiff has the obligation to withhold income tax on the said income amount and the obligation to submit a written statement of payment, there should be circumstances to deem that the Plaintiff was delegation of the authority to withhold income tax on behalf of the props, such as explicitly delegated the payment of the said income amount and entering into a vertical and non-payment agreement on behalf of the props that constitutes the cause of the instant income

Nevertheless, the lower court, without examining these circumstances further, concluded that the Plaintiff had the obligation to withhold income tax and the obligation to submit a payment record on the instant income amount solely based on its stated reasoning. In so doing, the lower court erred by misapprehending the legal doctrine on the obligation to withhold income tax and the obligation to submit a payment record by proxy or delegation, thereby failing to exhaust all necessary deliberations, thereby affecting the conclusion

4. Therefore, without examining the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.