Cho Jae-chul201 Jeon 2447 (Law No. 14, 2011)

It is legitimate to impose secondary tax liability on oligopolistic shareholders because there is no reason to obstruct the exercise of shareholder's rights.

The phrase "written confirmation of fact" that waives all rights and obligations with respect to shares, or the phrase "comprehensive agreement for corporate sale" that agrees to the time, condition, price, etc. of the sale of the company cannot be deemed to have renounced the shareholder's status. Thus, the disposition that the oligopolistic shareholder was designated and imposed as the secondary taxpayer as of the date of establishment of tax liability is legitimate.

Article 39 (Secondary Tax Liability of Investors)

2011 disposition of revocation of imposition of value-added tax, etc.

Maximum XX

Head of the tax office

December 8, 2011

December 29, 2011

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The Defendant’s imposition of value-added tax of KRW 377,825,540 on February 16, 2010 against the Plaintiff on February 16, 2011 is revoked.

1. Details of the disposition;

A. The Plaintiff holds 144,000 shares (from the next 'the second 'the second 'the second 'the second '') of 240,000 shares issued in total in XX metal (the second 'the second 'the second '').

B. On February 16, 2011, the Defendant: (a) did not pay the value-added tax for the first quarter of 2010; (b) designated the Plaintiff as the secondary taxpayer of the non-party company; and (c) imposed value-added tax for the first quarter of 2010 on the Plaintiff in proportion to the shares owned by the non-party company; and (d) imposed value-added tax for the first quarter of 2010 on the Plaintiff in proportion to the shares owned by the non-party company (

C. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Director of the Tax Tribunal on July 11, 201, but the said appeal was dismissed on September 14, 201.

[Ground of recognition] Facts without dispute, Gap evidence 1 to Gap evidence 3, Eul evidence 1 to Eul evidence 4, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

On January 21, 2010, when the non-party company was in bankruptcy, the non-party company’s representative director of the non-party company renounced the shares of this case and delegated all rights and duties to the non-party company, and thereafter, in the process of conducting the comprehensive sale of the non-party company’s company, the non-party company prepared a written consent to delegate all rights and duties to shareholders of the non-party company to the new bank, which is the principal creditor bank of the non-party company, and thus there was no possibility for the plaintiff to exercise rights to the shares of this case as of June 30, 2010. Accordingly, the disposition of this case that

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

1) The meaning of Article 39(1)2(a) of the Framework Act on National Taxes is to be that all the persons falling under oligopolistic shareholders who actually exercise rights over 51/100 or more of the total number of issued and outstanding stocks shall bear the secondary tax liability, but it is reasonable to view that the scope of liability is limited within the scope of shares in good faith. It does not require that one shareholder falling under an oligopolistic shareholder actually exercise his/her rights over shares of at least 51/100 (see, e.g., Supreme Court Decision 2006Du19105, Jan. 10, 2008) and that the exercise of rights over shares of at least 51/100 as referred to in the above item (a) is not necessarily required to have actual exercise of shareholders’ rights, but is sufficient if the shareholder is in a position to exercise shareholders’ rights over the shares held as of the date on which the tax liability is established (see, e.g., Supreme Court Decision 2008Du983, Sept. 11, 2008).

2) In light of the aforementioned legal principles, evidence as seen earlier, evidence No. 4, and evidence No. 5 were revealed by comprehensively taking account of the overall purport of pleadings, namely, the following circumstances: ① the Plaintiff was holding 60% of the total issued shares of the non-party company as of June 30, 2010, which was the date of establishing tax liability; ② the non-party company’s failure to pay for the non-party company around January 21, 2010, the Plaintiff’s refusal to pay for the non-party company’s representative director and delegated all rights and duties to the non-party company, which was the non-party company’s representative director; ③ the Plaintiff’s disposal of the non-party company’s shares is legitimate upon considering the following facts, other than the confirmation (Evidence No. 4) that the Plaintiff renounced the shares of this case and delegated all rights and duties to the non-party company to the non-party company; ③ the Plaintiff’s comprehensive sale of the shares at the time the new bank, which was the principal creditor bank, did not exercise the shareholder’s rights to the non-party company.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.