Disposition Revocation of Collection of Withholding Corporate Tax

Since the amount exceeding the advance payment constitutes the money to be compensated in excess of the damages to the payment itself under the original contract, it constitutes a penalty, which constitutes other domestic source income.

Article 98 of the Corporate Tax Act

Disposition of revocation of disposition of collection, such as Seoul Administrative Court-2015-Gu Partnership-5758 Corporate Tax;

○ Bank Co., Ltd.

The director of the tax office

July 20, 2017

September 7, 2017

1. The Defendant’s imposition disposition of KRW 000 (including additional tax of KRW 000) of the withholding tax for the business year 2010 that the Defendant imposed on the Plaintiff on July 9, 2010 (attached Form 1 List 4), and the Defendant’s imposition disposition of KRW 000 (including additional tax of KRW 00) of the withholding tax for the business year 2010 that the Defendant imposed on the Plaintiff on December 9, 2010 (attached Table 1 List 3) shall revoke each disposition exceeding KRW 00 (including additional tax of KRW 00).

2. The plaintiff's remaining claims are dismissed.

3. Of the costs of lawsuit, 4/5 shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

Cheong-gu Office

The imposition of a total of KRW 000,000,000, which the Defendant imposed on the Plaintiff shall be revoked.

1. Details of the disposition;

(a) Conclusion of a shipbuilding contract;

1) As indicated in the table 1, Karina Co., Ltd., Bright ○○, ○○ Doz., Co., Ltd., Ltd., Ltd., ○○ Doz., Ltd., hereinafter referred to as “stock company” in each name omitted, and hereinafter collectively referred to as “domestic ship owners”) received a contract for construction of vessels from Karina, Inc., and eight foreign corporations (hereinafter referred to as “foreign ship owners”) as indicated below.

2) According to each shipbuilding contract of this case, foreign vessel owners shall first pay part of the vessel price to domestic shipbuilding officers prior to the completion of shipbuilding, and where each shipbuilding contract of this case is terminated due to reasons such as termination or termination of shipbuilding, domestic shipbuilding officers shall refund the vessel price already received by foreign vessel owners (hereinafter referred to as "advance payment") and additional dues (hereinafter referred to as "additional dues on refund") calculated by applying a specified interest rate until the date of refund of the aforementioned advance payment. Foreign vessel owners paid advance payment (hereinafter referred to as "advance payment") to domestic shipbuilding officers in accordance with each shipbuilding contract of this case.

B. Issuance of an advance refund guarantee certificate by the Plaintiff

The Plaintiff, a corporation engaged in banking business, issued to foreign vessel owners a letter of advance refund guarantee (Refunduante, as described in Table 2) to pay advance payment received by domestic shipbuilding owners and the amount equivalent to additional dues on such advance payment if he/she violates each shipbuilding contract of this case due to the failure of domestic shipbuilding manufacturers to deliver the vessel on the fixed date (hereinafter referred to as “the refund guarantee contract of this case”).

C. Cancellation of each shipbuilding contract of this case and the plaintiff's implementation of the refund guarantee contract of this case

From 2000 to 200, domestic shipbuilding companies have difficulties in implementing each shipbuilding contract of this case due to the business crisis of domestic shipbuilding companies due to the increase in raw materials prices, the decrease in the quantity of orders, and the urbanization in Korea and abroad, etc., and foreign vessel owners have cancelled each shipbuilding contract of this case in such a manner as to exercise the right of rescission under each shipbuilding contract of this case or to agree with domestic shipbuilding companies. Based on the refund guarantee contract of this case, based on the refund guarantee contract of this case, the Plaintiff filed a claim with the Plaintiff for the payment of the amount equivalent to the advance payment of this case and the amount equivalent to the additional refund payment of this case (hereinafter referred to as the "additional refund of this case"). Accordingly, the Plaintiff paid the amount equivalent to the advance payment of this case and the amount equivalent to the additional refund of this case

D. Each disposition of this case and the procedure of the previous trial

1) As shown below, the Defendant: (a) as stated in the following Table 4, the additional dues for the Plaintiff are the same as the actual contents of both parties; (b) Article 93 subparag. 11 (b) of the former Corporate Tax Act (amended by Act No. 9898, Dec. 31, 2009); (c) Article 132 subparag. 10 (10) of the former Enforcement Decree of Corporate Tax Act (amended by Presidential Decree No. 22577, Dec. 30, 201); (d) Article 93 subparag. 10 (b) of the former Corporate Tax Act (amended by Act No. 11128, Dec. 31, 2011); and (e) Article 132 subparag. 10 (hereinafter referred to as the "former Corporate Tax Act and the Enforcement Decree of Corporate Tax Act") of the Enforcement Decree of the Corporate Tax Act, the Plaintiff calculated the additional taxes for the Plaintiff’s domestic source income of a foreign corporation; and (e) each of the Plaintiff did not pay taxes for additional taxes for the following 0000.

(e) the addition of the reasons for the disposition;

During the instant lawsuit pending, the Defendant added a preliminary disposition to the effect that the instant additional payment on refund constitutes “other income under Article 93 subparag. 10 (a) or (j) of the former Corporate Tax Act or “interest income under Article 93 subparag. 1 (a) of the former Corporate Tax Act” and constitutes a foreign corporation’s domestic source income.

[Ground of recognition] Facts without dispute, Gap evidence 1 through 10, Eul evidence 1 and 3 (including each number), the purport of the whole pleadings

2. The plaintiff's assertion

Each disposition of this case shall be revoked on the grounds that it is unlawful for the following reasons.

A. The instant refund does not constitute domestic source income.

1) The refund of this case is the return of unjust enrichment that is paid for restitution following the cancellation of each shipbuilding contract of this case. Accordingly, the refund of this case is the compensation for damages paid due to the breach or termination of a contract on property rights, which is other income stipulated in Article 93 subparag. 10 (b) of the former Corporate Tax Act and Article 132(10) of the Enforcement Decree of the Corporate Tax Act, and does not constitute “money paid in excess of compensation per se for payment under the original terms

Even if the refund of this case falls under the damages, the refund of this case is the damages paid to the foreign vessel owners in order to compensate for the actual damages, and thus does not fall under the "money paid in excess of the damages to the payment itself under the original contract."

2) Since foreign vessel owners do not operate a business in the Republic of Korea without providing human services in the Republic of Korea and do not hold assets in the Republic of Korea, the instant additional refund cannot be deemed to constitute other income under Article 93 subparag. 10 (a) or (j) of the former Corporate Tax Act.

3) Since foreign vessel owners did not lend the instant advance payment to domestic vessel owners or receive interest thereon, the instant additional refund does not constitute interest income as stipulated in Article 93 subparagraph 1 (a) of the former Corporate Tax Act. If the instant additional refund falls under interest income, the agreement between the Netherlands and the 15% interest rate, which is the interest income rate under the relevant tax treaty, and the agreement between the sequence 7 through 9, which is entered in the title 3 through 6, exceeds 5%, which is the interest income rate under the relevant tax treaty with Pakistan.

B. The Plaintiff is merely a guarantor that guarantees the payment of the instant advance payment and the obligation to refund additional dues on refund of the instant case by domestic shipbuilding companies under each shipbuilding contract of this case, not a “person who pays income that is liable for withholding.”

C. The part concerning contracts 1, 2, 10 through 12, among the additional charges of this case, is prohibited from taxation on other income pursuant to the tax treaty between the Republic of Korea and its Lease. Since the contract Nos. 7 through 9, which is a domestic corporation, is not subject to withholding, the Plaintiff is not subject to withholding tax on the additional charges of this case as to the above contract. In other words, the foreign vessel owners in each contract other than the contracts listed in Nos. 3 through 6, is merely a company using convenience, and merely a company using convenience in shipbuilding, and thus, the foreign vessel owners are not parties to the shipbuilding contract, or the domestic corporation is not subject to withholding tax treaty based on the domestic corporation’s independent business entity’s own business entity and its actual business entity’s own business entity, not the domestic corporation’s actual business entity, under the principle of substantial taxation, but the domestic corporation’s actual business entity’s actual business entity and its actual business entity.

D. Even if the Plaintiff is liable for withholding taxes on the refund of this case, the amount of withholding taxes shall be calculated as an amount equivalent to 20/100 of the additional dues on refund of this case. The Defendant calculated withholding taxes by multiplying the amount equivalent to 128% (1/78) of the additional dues on refund of this case by 20/100. However, there was no agreement that the Plaintiff shall pay the amount of withholding taxes by the amount of withholding taxes on the refund of this case’s contract between 1,2,10,11 and 12 contract between 3 and 9 and 12 contract between the Plaintiff and the refund guarantee contract on the refund of this case’s refund of this case’s refund of this case’s refund of this case’s refund of this case’s refund of this case’s refund of this case’s refund of this case’s refund of this case’s refund of this portion’s refund of this case’s refund of this case’s refund of this case’s refund of this case’s refund of this case’s refund of this case’s refund of this case’s tax amount.

3. Related statutes;

Attached Form 3 shall be as listed in attached Table 3.

4. Determination

(a) Whether it constitutes domestic source income;

1) Domestic source income and withholding obligation of a foreign corporation

Article 98 (1) 3, Article 93 (1) 1 (a), (b), and (j) of the Corporate Tax Act, and Article 132 (10) of the Enforcement Decree of the Corporate Tax Act, the amount of penalty or compensation paid in Korea to a foreign corporation, which is ① The amount of compensation for losses paid in Korea, namely, the amount of money or other goods paid to the foreign corporation due to a breach or termination of a contract on property rights, which is the value of the payments in excess of the original contract itself, notwithstanding its title, which is the compensation for the payment itself, (2) the amount of insurance money, compensation or damages received in connection with the real estate and other assets in Korea or the business operated in Korea, ③ the income generated from the personal services provided in Korea or assets located in Korea, or other similar ones that are prescribed by the Presidential Decree, ④ The amount of income paid from a domestic corporation and paid from the domestic corporation before the date of partial amendment by Act No. 12852, Dec. 23, 2014) of the former Income Tax Act (hereinafter the same shall apply).

The instant disposition is premised on the assumption that the Plaintiff, a foreign vessel owner, who has no domestic place of business, is liable to withhold part of the amount paid, as a person who pays domestic source income under the Corporate Tax Act to a foreign vessel owner, who is a foreign corporation with no domestic place of business. On the other hand, first of all, whether the instant additional refund constitutes a domestic source income

(ii) the facts of recognition

(A) Balterina Prone Ltd, Sailing Investment Co., Ltd.

The main contents of shipbuilding contracts (referred to in 1, 2) are as follows:

(1) The application to appoint an administrator, a trustee, or a liquidator, for designation of the administrator, or any such appointment.

It is one of the reasons for the failure to perform the fiduciary duty in BalB good.

2. Termination, etc. of this Agreement by the Karina Accounting Inc., upon cancellation, etc. of this Agreement

If this contract is terminated in accordance with the terms and conditions of the contract which is authorized to be made available to the public, the Balb

from the date of receipt to the date of refund, the interest calculated at the rate of 5% per annum shall be refunded.

(2) if such cause has been caused by force majeure, domestic shipbuilding control, or any other cause.

2.5% per annum shall be reduced.

(3) The payment of additional dues on refund is not a method of compensation, but by means of an estimate of compensation for damage caused by the rescission of a shipbuilding contract, and the payment of advance payment and additional dues on refund to Bright ships shall be exempted from all obligations, duties, and legal responsibilities of both parties to the contract.

④ On the contrary, if the above foreign vessel owners fail to perform the obligation to pay, the delivery deadline of the vessel automatically is automatically extended for that period, and 5% interest per annum shall be paid to the conciliation division on the date of actual payment of the price, and if the failure to perform the obligation continues for 28 days or longer, the Baltish Shipbuilding has the right to cancel this contract and to hold the amount already received.

(5) English law shall govern the governing law of the contract.

B) The main contents of the shipbuilding agreement between Balbry ○○ and that of the Stold-Niel ginseng Telecommunications Group B.V. are as follows.

(1) If the delay in delivery of a ship continues to exist for 210 days after the expiration date of delivery, the ship's shipbuilding contract may be rescinded at the end of Stold-Nelsen Group B.V.

(2) If a vessel is notified of the cancellation of the shipbuilding contract from the Service-Nelsen B.V., the vessel of B.V. to be B. of the B. of the B. of the B. of the B. of the B. of the B. of the B. of the B. of the B. of the B. of the Service, the vessel shall immediately pay the sum of all the amounts paid to the vessel account of the B. of the B. of the B. of the B. of the Service and the amount calculated at the rate of 7% per annum: Provided, That the same shall not apply where the B. of the B. B. of the Agreement has filed an arbitration pursuant to Article 12 of the Agreement, or

③ In the event that the Stold-Nelsens B.V cancels this contract, there is no right to claim compensation for damages or any other claims for refund from the BYTU, except for the obligation to refund the advance payment and additional dues.

④ On the contrary, in the event that a person fails to perform his obligation to pay the price, the period of delivery shall be extended as much as the period of default, and the amount calculated by the rate of 7% per annum from the date of payment to the ○○ Balt of Balt of Korea shall be paid together to the Balt of Korea. If the nonperformance continues for 20 days or more, the Balt of Balt of Korea shall have the right to cancel this contract and hold the amount already received.

(5) English law shall govern the governing law of the contract.

On the other hand, B.V. rescinded the agreement on the shipbuilding contract as listed in No. 3 through No. 6 of the Table 1 on August 30, 2010, B.V. decided that “An existing shipbuilding contract shall continue to exist until the return of advance payment and the receipt of interest corresponding thereto.” If a foreign vessel owner receives the aforementioned amount, the shipbuilding contract shall be rescinded, and all of the obligations arising in relation to the said contract shall be extinguished and exempted from mutual liability.”

C) The actual substance of the ○○ Doz. and Crystal H.A., Crystal H.B.A., JY NANVS No. 1 Sipold S.A., respectively, are as follows.

1. If the ○○○ Shipbuilding delays the performance of its duties for more than 180 days from the date of delivery provided for in this contract, the foreign vessel owners may rescind this contract, provided that the delay permitted in accordance with Article 8 of this Agreement shall be considered.

(2) If a foreign vessel owner has terminated a shipbuilding contract in accordance with the provisions of the contract which allows the foreign vessel owner to terminate, such as the cancellation of the shipbuilding contract, the actual actual tax amount, ○○ shall be refunded from the payment date to the refund date of the advance and interest calculated at the rate of 7% per annum.

(3) The payment of additional dues on refund is not a method of compensation, but a method of determination of compensation for damage caused by the rescission of a shipbuilding contract, and the actual provisions of the actual provisions of the refund of advance payment and additional dues on refund shall be exempted from all obligations, duties, and legal responsibilities of both parties to the contract.

④ On the other hand, when foreign vessel owners fail to perform their duty of payment, the actual tax is automatically extended for a period of time, and the actual tax is paid at the rate of 7% per annum during the default period, and the actual tax is paid to foreign vessel owners at the same time, and the actual tax is paid to foreign vessel owners at the same time after seven days have passed from the notification of the default to foreign vessel owners.

(5) English law shall govern the governing law of the contract.

D) The main contents of ○○ Doz. and Fyglia Marine INC, Zefxis Maritim Corp, and Lousios S.A. are as follows.

(1) When the ○ Operational Aid Division suspends its business, an administrator, a trustee, or a liquidator shall file an application for appointment, or consent thereto, shall be deemed non-performance if the administrator files an application for designation of an administrator or is judged insolvent, and each foreign vessel owner may immediately request the payment of advance payment and additional dues on refund through written notice.

(2) Where each foreign vessel owner permits the termination, cancellation, or termination of a shipbuilding contract in accordance with the provisions of the contract which allows the termination, etc. of the shipbuilding contract, the actual cost of the shipbuilding contract shall be paid in advance and in lieu thereof, the refund calculated at the rate of 6% (the No. 10, 11) per annum (the No. 12) or 7% per annum from the date of payment until the date of refund.

(3) The payment of additional dues on refund is not a method of compensation, but a method arising from an estimate of compensation for damage caused by the rescission of a shipbuilding contract, and the refund of advance payment and additional dues on refund on refund shall be exempted from all obligations, duties, and legal responsibilities of both parties to the contract.

④ On the other hand, if the above foreign vessel owners fail to perform their obligation to pay the price, the foreign vessel owners shall pay the amount calculated by the rate of 6% per annum (No. 10,11) or 7% per annum (no. 12) until the date on which they actually pay the price to the vessel. The ○○ Doz. may cancel this contract and hold the amount already paid if the failure has continued for 28 days after the notification to the foreign vessel owners.

(5) English law shall govern the governing law of the contract.

[Ground of recognition] Facts without dispute, Gap evidence 3 through 6, 8 through 10, Eul evidence 9 (including each number), the purport of the whole pleadings

3) The legal nature of the instant additional dues on refund

In light of the following circumstances that can be seen by adding the purport of the entire pleadings, additional dues on the instant case paid by the Plaintiff following the rescission of agreement not only the exercise of the right of rescission by foreign vessel owners, but also the additional dues on the instant case paid by the Plaintiff following the cancellation of agreement shall be deemed to constitute damages paid

① The governing law on the payment of the advance payment and the refund of advance payment due to the cancellation of each shipbuilding contract of this case is the English law. Under each shipbuilding contract of this case, the additional refund amount is not the method of compensation for the use of money but the scheduled amount of compensation for damage due to the cancellation of the contract, and is used separately. ② Under each shipbuilding contract of this case, the domestic shipbuilding company is exempt from all obligations and obligations of both parties related to the shipbuilding contract of this case when the foreign shipbuilding owner cancels advance payment and the refund of advance payment are not the method of compensation for the use of money. In addition, under the English law, the additional amount of the additional refund amount of the refund amount of this case constitutes the scheduled amount of compensation for damage due to the cancellation of the contract of this case.

③ Each shipbuilding contract of this case provides for payment of additional dues at the time of termination of the contract due to a cause attributable to domestic shipbuilding companies. The cancellation of each shipbuilding contract of this case is caused by a cause attributable to domestic shipbuilding companies. The contents of each shipbuilding contract of this case are not only to confirm that the contractual relationship is terminated when a domestic shipbuilding company equally performs the obligation to refund advance payments and pay additional dues. On the other hand, if there is a cause attributable to foreign vessel owners, domestic shipbuilding companies are not obligated to pay additional dues, and instead foreign vessel owners are obliged to pay the corresponding amount to domestic shipbuilding companies, and in case of cancellation of the contract due to a cause attributable to domestic shipbuilding companies, the exemption or mitigation clause of additional dues is also provided. Accordingly, the additional dues of this case cannot be viewed as return of unjust enrichment arising from restitution regardless of the cause attributable to domestic shipbuilding companies.

④ Interpretation of a juristic act is clearly confirming the objective meaning that the parties gave to the act of indicating the juristic act. In a case where the interpretation of the parties’ intent expressed in a contract document is at issue, it shall be reasonably interpreted in accordance with logical and empirical rules by comprehensively taking into account the contents of the language and text, motive and developments leading up to the agreement, the objective to be achieved by the agreement, the parties’ genuine intent, etc. (see, e.g., Supreme Court en banc Decision 2014Da225809, Jun. 22, 2017). In addition, due to the nature of the shipbuilding contract where the shipbuilding period requires a long period and the shipbuilding company and the owner should pay high-amount expenses, and it is necessary to specify the amount of damages in order to secure predictability in disputes that may arise in the future and to resolve difficult proof in concluding the shipbuilding contract.

4) Whether the payment constitutes money paid in excess of damages on the payment itself under the original terms and conditions of the contract

A) In a property right contract, if a penalty or compensation received due to a breach or termination of a contract on a property right is merely a compensation for damages equivalent to the original payment or actual property damages, it cannot be deemed that it constitutes a new income or income. However, if a penalty or compensation has been paid in excess of this, it shall be subject to income tax (see Supreme Court Decision 2002Du3942, Apr. 9, 2004). Such legal principle likewise applies to the interpretation of Article 21(1)10 (b) of the former Income Tax Act and Article 132(10) of the Enforcement Decree of the Corporate Tax Act and Article 132(10) of the Enforcement Decree of the Corporate Tax Act. Therefore, “damage exceeding the payment itself, which constitutes the contents of the first contract” as stipulated in Article 132(10) of the Enforcement Decree of the Corporate Tax Act, means 200 (see Supreme Court Decision 2002Du3942, Apr. 9, 2004).

B) A foreign vessel owner, upon the rescission of each shipbuilding contract of this case, suffered active losses in the instant advance payment itself, which was not returned to the domestic shipbuilding owner, and ② passive losses in the amount equivalent to interest accrued due to the failure to use the instant advance payment in other locations. The foreign vessel owner was paid the amount equivalent to the instant advance payment, which was not returned to the domestic shipbuilding owner, out of the damages incurred by the cancellation of each shipbuilding contract of this case. Accordingly, the additional payment on refund of this case can be deemed to have been paid to the foreign vessel owner in order to compensate for the damages equivalent to the interest accrued due to the failure of the foreign vessel owner to use the instant advance payment paid to the domestic shipbuilding owner in other locations. Accordingly, the additional payment on refund of this case constitutes money paid in excess of the compensation for the payment itself, which constitutes the substance of the original contract under Article 132(10) of the former Enforcement Decree of the Corporate Tax Act or Article 132(10) of the Enforcement Decree of the Corporate Tax Act.

C) The Plaintiff asserts that a foreign vessel owner bears financial expenses by borrowing the amount of the instant advance payment from a financial institution, etc. to pay the instant advance payment to the domestic vessel owner, etc., and that in the process of concluding each shipbuilding contract and implementing each shipbuilding contract, all expenses other than the above financial expenses have been disbursed, and that the interest rate for the instant additional refund is within reasonable scope, so the instant additional refund payment should be deemed as the damages paid to the foreign vessel owner in order to compensate for damages actually suffered by the foreign vessel owner. However, even if the foreign vessel owner paid the financial expenses, such financial expenses cannot be deemed as including damages for the payment itself, which forms the contents of each shipbuilding contract. The Plaintiff’s above assertion is without merit.

5) Sub-committee

Therefore, the refund of this case constitutes other income stipulated in Article 93 subparag. 11 (b) of the former Corporate Tax Act or Article 93 subparag. 10 (b) of the Corporate Tax Act, which constitutes a foreign corporation’s domestic source income, and the remainder of this issue is without merit.

B. Whether the Plaintiff, a guarantor, bears withholding obligations

In full view of the fact that Article 98(1) of the former Corporate Tax Act provides that a withholding obligation for domestic source income shall be borne by a foreign corporation at the time of payment by the person who pays the income to the foreign corporation, the essence of the withholding tax system to ensure convenience in taxation and securing tax revenue by withholding at the time of payment from the source of income source, and the content and structure of other provisions related to withholding tax on domestic source income, it is reasonable to deem that a “person who pays income under Article 98(1) of the same Act who is liable for withholding tax on domestic source income paid to the foreign corporation” refers to a person who actually pays the income amount as his/her performance under a contract, etc. (see Supreme Court Decision 2006Du7904, Mar. 12, 200

The Plaintiff paid the instant additional dues to perform its obligations, not other than the other party’s obligations under the instant refund guarantee contract. As such, if the instant additional dues were paid to a foreign corporation, the Plaintiff is liable to withhold taxes, and the Plaintiff cannot be deemed to be the withholding agent solely on the ground that the cause of the instant additional dues was based on the guarantee contract. The Plaintiff’s assertion on this part is without merit.

C. Whether the beneficial owner of the refund of this case and the duty to withhold accordingly exists

As seen earlier, pursuant to the main sentence of Article 98(1)3 of the former Corporate Tax Act, a person who pays a foreign corporation the amount of income which is not substantially related to the domestic place of business or is not attributed to the domestic place of business is liable to withhold and pay 20/100 of the amount of income paid as corporate tax on the income for each business year of the relevant corporation. In addition, Article 22 of the Tax Treaty between the Republic of Korea and the relevant lease provides that the Republic of Korea shall not be subject to taxation on other income that is not provided

Therefore, it is a matter of whether a foreign vessel owner could deny the legal personality of the foreign vessel owner, and whether the Plaintiff is liable to withhold corporate tax pursuant to the above taxation requirements and the above tax treaty based on the substance over form principle or the actual management place. As to the contract mentioned in the Nos. 7 through 9 of the table 1, whether the actual vessel owner does not have the obligation to withhold tax pursuant to the above provision as a domestic corporation, and as to the contract mentioned in the No. 1, No. 2, 10, 11, and 12 of the table 1, it is a matter of whether the actual vessel owner is not liable

1) A special purpose company is generally established without human and physical capital by meeting only the minimum requirements for capital investment to achieve a temporary purpose as set forth in Nos. 1, 2, 7, or 12 of the Table 1. Therefore, the mere fact that a special purpose company owns a minimum amount of property invested within the scope required by the law of the place of incorporation in order to achieve the purpose of its establishment, or that employees of a company which has established a special purpose company concurrently operate or controls a special purpose company by holding an officer or employee of the special purpose company as an executive officer or employee of the special purpose company is not in violation of the principle of trust and good faith to recognize the independent corporate personality of the special purpose company is an abuse of corporate entity and thus is extremely contrary to justice and equity. To recognize the abuse of corporate personality, it should be said that at least a subjective intent or purpose is recognized, such as evading debts, avoiding contractual obligations, and evading evasion of law, etc. (see Supreme Court Decision 2007Da85980, Feb. 25, 2010).

The plaintiff asserts that foreign vessel owners of each of the above shipbuilding contracts should be denied their legal personality because they are merely nominal companies established for convenience. However, in light of the above legal principles, it cannot be viewed that foreign vessel owners have denied their legal personality merely because they were established for convenience, and there is no evidence to support that foreign vessel owners have abused their legal system as a means to avoid the application of laws against their hinterlands. The plaintiff's assertion on this part is without merit.

2) Whether a de facto preemptive measure relating to the Nos. 1, 7 through 9 is a domestic corporation

A) In accordance with the substance over form principle under which Article 14(1) of the Framework Act on National Taxes declares, where there is a separate person who substantially controls and manages the subject of taxation, unlike the nominal owner, such as income, profit, property, act or transaction, the nominal owner on account of form and appearance, not the nominal owner, but the person who actually controls and manages the subject of taxation should be the person liable for tax payment. Furthermore, whether such a case exists should be determined by comprehensively taking into account various circumstances, such as the details and content of the nominal use, the degree and scope of the nominal owner’s involvement, the relationship between internal responsibility and calculation, and the location of independent management and disposition authority on the subject of taxation (see, e.g., Supreme Court Decision 2011Du9935, May 16,

In principle, the tax authority bears the burden of proving the existence and the tax base of the facts requiring taxation. This is, even in cases where the tax authority contests that the nominal owner of the transaction, etc. and the actual owner of the transaction, etc. are different, barring special circumstances, such as a separate legal provision converting the burden of proof. However, as long as the tax authority imposed tax on the nominal owner, it is necessary for the nominal owner to assert and prove that the nominal owner of the transaction, etc. is different from the nominal owner of the transaction, etc. so long as the tax was imposed on the nominal owner. In such a case, the need for proof is sufficient to the extent that the judge satisfies the taxation requirement, whereas the need for proof is sufficient to make the judge raise a considerable doubt. As a result, it is unclear whether the substance of the transaction, etc. belongs to the nominal owner, and if the judge becomes unable to have conviction, then the disadvantage therefrom is back to the tax authority that bears the ultimate burden of proof (see Supreme Court Decision 20

B) As seen earlier, in order for the Plaintiff to be liable to withhold corporate tax on domestic source income paid to a foreign corporation pursuant to the main sentence of Article 98(1)3 of the former Corporate Tax Act, it should be the case where the Plaintiff paid the “foreign corporation”. However, with respect to the contract between 7 and 9, the Plaintiff asserted that the actual subject to the refund of this case paid by the Plaintiff is a domestic corporation, △△ Shipping Co., Ltd. or ○ Maritime Co., Ltd. (hereinafter “Co.”), which is a domestic corporation, the Plaintiff’s domestic corporation, and each of the above facts acknowledged and evidence Nos. 5-3, 4, 15 through 23, 27, and 28 (including each number), and the result of the fact-finding and all of the arguments of the court with respect to △△△ Shipping Co., Ltd. in this case, the Plaintiff can be deemed to have proved the actual subject of the refund of this case’s contract No. 7 through 9.

(1) Circumstances in which the Plaintiff can regard the beneficial owner of additional dues on refund paid for the contracts Nos. 7 and 8 as the shipping company in Do-won.

① On July 7, 2007, in entering into a shipbuilding agreement with ○○○○○○○ ○○○○○, a vessel OSN11, and 1012, and around September 2007, in relation to each shipbuilding agreement, the Do governor entered into a contract to transfer the status of the parties to each shipbuilding agreement to Crystal A S.A. and Crystal B S.A. (hereinafter collectively referred to as “Crystal handy A and B”), and on September 7, 2007, the signature of the transferor and transferee column of the party status succession agreement are the same as that of the Kim branch. The Do governor signed the performance guarantee agreement issued by the Do governor Do governor on behalf of Doi Shipping on September 7, 2007 in order to guarantee the faithful performance of the contract by the Crystalhal A and B.

② Crystal handy A. A. was registered in the Republic of Pakistan on August 17, 2007, the date prior to September 7, 2007, on which the status of the parties to the contracts listed in the table 1, 7, and 8 transferred from the △△ Shipping, and the status of the parties to the contracts indicated in the table 7, and 8 was transferred, and was not owned by persons and material facilities. The three directors constituting the board of directors of the above company were all Korea, and the Kim Dogy signed a contract on behalf of the △△ Shipping as the representative director at the time of its establishment. As for the Crystal handy B.A., each of the above foreign corporations appears to have decided on its own intent or had no capacity to perform its business purpose.

③ At around September 2007, the Do governor, Do governor, and Do governor, expressed the position of the parties to the shipbuilding contract with ○○○○○○ in January and July 2009, after transferring the status of the parties to the shipbuilding contract with ○○○○○○○, and presented to the ○○○○, a statement of the position of the parties to the shipbuilding contract with OSN1-101 and 1014, and, if the difference of view is not resolved, the Do governor, Do governor, and Do governor, should cancel the shipbuilding contract with OSN101-1014 and have the right to claim the return of the advance paid.

④ Crystal handy A, B와의 선박건조계약의 해제에 따라 ●○●○조선이 지급한 선수금과 환급가산금은 예금주가 '☆★캐피탈 주식회사'인 ☆★은행 계좌에 입금되었고, ☆★캐피탈 주식회사는 이를 자신의 대출금 채권에 충당하고 나머지 금원은 ☆☆해운에게 지급하였다. ☆☆해운은 이 법원의 사실조회에 대하여 '☆☆해운은 Crystal handy A, B에 대한 아무런 지분이 없고, Crystal handy A, B가 ☆★캐피탈 주식회사로부터 선박건조대금을 대출받은 당사자로서, ☆☆해운은 Crystal handy A, B와 선박 나용선계약을 체결하였고 위 선박건조계약이 해제됨에 따라 미리 지급하였던 나용선료를 환급받은 것뿐'이라고 회신하였지만, 자본금이 미화 2달러에 불과한 외국법인인 Crystal handy A, B의 신용만을 믿고 ☆★캐피탈 주식회사가 대출을 실행하였을 것으로 보이지 아니하고, 원고가 위 선박건조계약에 대한 환급보증계약을 체결할 때 검토한 내부자료에도 실질선주사는 ☆☆해운으로 기재되어 있는 점, 위 계약에 관한 환급보증금 중 대출금을 변제하고 남은 금원은 ☆☆해운에 귀속된 점 등에 비추어 ☆☆해운의 회신은 향후 위 환급보증금의 귀속에 대하여 과세가 이루어질 가능성에 관한 우려에서 비롯된 것으로 보여 그대로 받아들이기 어렵다.

(2) Circumstances in which the Plaintiff’s actual owner of additional dues paid as to the contract No. 9 No. 1 of the table 1 can be seen as the shipping.

"① ○●해운은 2007. 7. 11. International Tanker Shipping Co. Ltd가 2007. 5. 24. ●○●○조선과 체결한 OSN1005호에 대한 선박건조계약의 선주사 지위를 승계하고,그로부터 약 1개월 반 정도 지난 2007년 8. 27. 재차 JY Navis No.1 Shipholding S.A(이하JY Navis'라 한다)에게 그 계약상 선주사 지위를 이전하였다.",② JY Navis는 ☆☆해운으로부터 <표1> 순번 9 기재 계약의 당사자 지위를 이전받은 날인 2007. 8. 27.의 얼마 전인 2007. 8. 13. 파나마공화국에 법인등록되었고, 자본금이 미화 2달러에 불과하며, 인적・물적 시설을 보유하고 있지 아니하다. JY Navis 의 이사회를 구성하는 3인의 이사는 ○●해운의 대표이사인 △△△, ○●해운의 부사장인 △■△, ○●해운의 영업팀 과장인 △▼△이므로, JY Navis는 독자적으로 의사를 결정하거나 사업목적을 수행할 능력이 없는 것으로 보인다.

③ At around 2010, JY NA notified in writing the employee affiliated with ○○ ○○ Maritime Co., Ltd that the ship should return the advance payment and additional payment for refund already paid to the bank account in the name of JY NA, upon termination of the shipbuilding contract. The actual substance of ○ ○ Co., upon the request of ○○ Co., Ltd., the KY NA’s representative in the arbitral proceedings, was a Korean lawyer, and the arbitral award was served as the Seoul Jongno-gu Seoul Jongno Building, where the head office of ○ Do Co., Ltd. was located, and thereafter, the ○ Do Co., Ltd requested that the Plaintiff pay the advance payment and additional payment for refund to the Plaintiff as the principal bank account in the name of JYa NA.

④ In 2010, the ○○ Maritime Affairs Council, on its own, entered into the 2010 financial statements as a party to the arbitration procedure on shipbuilding contract, cancellation of shipbuilding contract, advance payment, etc., and the rights under the shipbuilding contract, including advance payment, were provided as security on long-term loans of the ○ Maritime Affairs Council, and the ○ ○ Maritime Affairs Council used part of the advance return received at around 2010 for the repayment of long-term loans on its own (Article 23 subparag. 4).

C) Therefore, the Plaintiff’s portion of the additional dues in this case’s refund cannot be deemed to have been paid to foreign corporations, and thus, the Plaintiff’s obligation to withhold taxes is not recognized. Therefore, this part of the Plaintiff’s assertion is reasonable. The Defendant’s payment of withholding tax 2,304,752,290 won (including additional tax 209,522,935 won) for the business year 2010 pertaining to the contract set forth in Nos. 7 through 9 of the table 1 to the Plaintiff on July 9, 2014 should be revoked.

(iii) Whether a tax treaty between the Republic of Korea and the relevant lease applies with respect to the order Nos. 1, 2, 10, 11 and 12 in the table 1.

The substance over form principle, above, applies to the interpretation and application of a tax treaty having the same effect as the law, unless there is a special provision to exclude it (see, e.g., Supreme Court en banc Decision 2008Du8499, Jan. 19, 2012).

In order to impose corporate tax on the domestic source income of a foreign corporation, it is sufficient to prove that the foreign corporation is a corporation that does not have its head office or principal office in the Republic of Korea, and furthermore, it is not necessary to determine whether its main office is specific (see Supreme Court Decision 93Nu13162, Apr. 15, 1994). The burden of proof on the requirements for non-taxation and tax exemption lies on the taxpayer (see Supreme Court Decision 98Du16095, Jul. 7, 200).

In this case, there is a difference between the names of foreign vessel owners in relation to 1, 2, 10, 11, and 12 contracts and the subject of actual attribution. If the subject of actual attribution is based on the tax treaty between the Republic of Korea and the relevant lease, it is questionable whether the other income cannot be taxed in the Republic of Korea pursuant to the tax treaty between the Republic of Korea and the relevant lease. As such, the Plaintiff asserts that the additional refund of this case belongs to the actual vessel owners who have established the foreign vessel owners, and the actual vessel owners are corporations of their nationality, and thus, the Plaintiff bears the burden of proving that the tax treaty with the relevant lease applies.

According to the evidence Nos. 1, 2, and 10-1 to 26 (including each number) of evidence Nos. 3-1, 2, and 10-1 to 3, and 24 through 26, the following facts were stated in the shipbuilding contract: ① Notice of foreign vessel owners under Article 20 of the shipbuilding contract was made to the above lease, and Primman Management was demanded to pay the Plaintiff the advance payment and additional payment for the termination of the above contract to the Mumman's bank account. On the other hand, the plaintiff's internal data were stated as Primman Management as stated in the above contract; ② Notice of the above vessel owners established as 10, 11 of the table were stated as 300, 1000, 1000, 2000, 1000,0000,0000,0000,000,0000,000,000,000,000).

(2) With respect to shipbuilding contracts listed in the table 1 Nos. 1, 2, 10, 11, and 11, each of the foreign vessel owners' trade names is specified on the top of the documents for which the Primal Short Asset Management and Trman Management requested advance payment, etc. may be deemed to have requested advance payment, etc. in the capacity of each foreign vessel owner's representative. (3) Even if the Plaintiff decided that each of the foreign vessels owner's notification was made at the time of concluding shipbuilding contracts listed in the table 1, 2, 10, 11, and 12 as the actual vessel owner, even if the Plaintiff claimed that the vessel owner was the actual vessel owner, the notification received and related work process can be seen as the notification by the agent. (4) With respect to the agreement described in the table 12, as to the vessel owner's rights, such as the vessel owner's right to the vessel that appears to be the specialized vessel management company located in the ship management company, the vessel owner's property rights or property rights can be directly owned, the vessel owner's property rights.

Independent management and disposition of facilities and control relations, internal responsibilities and calculations relations, and independent management and disposition of taxable objects;

In full view of the existence of evidence to know the location, etc. of authority, the above-mentioned resignation

The actual owner of additional charges on the above contract shall not be entitled to pay additional charges on the basis of the Plaintiff’s assertion.

It is not sufficient to recognize that a person is a prior injection of nationality, and there is no other evidence to recognize it.

Therefore, the Plaintiff’s assertion that the Plaintiff’s withholding duty on the refund of this case, which is paid following the cancellation of shipbuilding contract as set forth in Nos. 1, 2, 10, 11, and 12 of the table 1, is exempt under a tax treaty between the Republic of Korea and the relevant lease,

(d) Whether the withholding tax amount is lawful;

(i)where there exists an agreement on the substitute payment of withholding tax;

If a withholding agent, while paying domestic source income to a foreign corporation, agrees to bear the withholding amount in itself, it is reasonable to interpret that the withholding amount is included in the amount of domestic source income of the foreign corporation as part of the payment amount (see Supreme Court Decision 89Nu522, Nov. 28, 1989).

The Plaintiff’s letter of guarantee for refund of advance payment issued by the Plaintiff regarding Nos. 1, 2, 10, 11, 12 of the table Nos. 1, 2, 12 is justifiable to regard the Plaintiff as the tax base for withholding tax, on the following grounds: “Any payment under this guarantee shall be made without tax, customs, deduction, and, if legally required, be made in addition to the amount that the actual receipt amount of the foreign advance payment would be the same as the amount that the actual receipt amount of the foreign advance payment could have been received without tax deduction or withholding.” Therefore, there is no dispute between the parties.

The Plaintiff asserts that the additional payment on the refund of this case is divided into the portion calculated as agreed interest rate and the portion borne by a foreign vessel owner on behalf of the Plaintiff, and that the portion compensated for the withholding tax amount (B) cannot be viewed as a domestic source income by compensating for the damages to the payment itself. However, it is reasonable to see that the aforementioned legal principles are inconsistent with, and that the portion of the preservation agreement on the withholding tax amount is also an agreement to compensate for the damages exceeding the active damages to the foreign vessel owner. Therefore, the Plaintiff’s above assertion is without merit.

(ii) there is no agreement on the substitute payment of withholding tax;

According to the evidence Nos. 4-1 through 16, in the case of the ship building agreement and cancellation agreement between BY 2-1 and B.5, B.V., the ship building agreement and B.V. provide that all taxes, customs duties, stamp taxes, and fees incurred in Korea in relation to the above contract should be borne by BY 1. However, it is recognized that the Plaintiff did not state such details in the advance refund guarantee certificate issued in relation to the 3 through 6 contracts in the order of the attached Table Nos. 1, and rather, it is recognized that the amount of this guarantee certificate does not exceed the sum of USD 50,700,000 (on advance payment guarantee limit) of the total sum of USD 50,700,000 (on advance payment guarantee limit) and that “The BY 200 B.V. does not include any amount exceeding the annual interest rate of 7% from the day following the day when the advance was received from GY 2.5.

According to the above facts, unless the plaintiff, at the time of the contract for an advance refund guarantee as to the No. 3 through No. 6 of the table 1, agreed that the above foreign vessel owners bear all taxes, etc. incurred in the Republic of Korea, as a withholding agent, according to the payment of the instant additional dues to the foreign vessel owners, even if the domestic vessel owners in each shipbuilding contract of this case agreed to bear all taxes, etc. incurred in the Republic of Korea, the validity of each shipbuilding contract of this case cannot be deemed to extend to the plaintiff. The amount of withholding taxes accrued in the course of the payment of the additional dues in this case is clear to the extent that it exceeds the Plaintiff’s guarantee limit

Therefore, the part of the tax base of corporate tax for which withholding tax is to be imposed is unlawful on the premise that the Plaintiff paid the withholding tax to the foreign vessel owner in lieu of the Plaintiff on the Nos. 3 through 6 of Table 1, without any special agreement to pay the withholding tax to the Plaintiff. The Plaintiff’s assertion on this part is with merit.

Accordingly, among each of the dispositions in this case, the part of the disposition in this case that exceeds 00 won (including additional tax 00 won) of the disposition of imposition of withholding tax 00 won (including additional tax 00 won) in the business year 2010, which the defendant imposed on the contract Nos. 3 through 6 No. 1 of the Table 2013 should be revoked illegally.

E. Sub-committee

Therefore, among the dispositions in this case, the Plaintiff’s assertion is reasonable to the extent of seeking revocation of the part exceeding KRW 000 of the disposition imposing corporate tax (including additional tax) for the business year 2010, July 9, 2014, which was set forth in the [Attachment 4] Nos. 7 through 9 of the Table Nos. 1, 200 as to the contract under the Nos. 3 through 6 of the Table No. 3, which was set forth in the attached Table No. 3 as to the contract under the No. 2010, Dec. 9, 2013.

5. Conclusion

Therefore, the plaintiff's claim is reasonable within the above scope of recognition, and the remaining claims are dismissed as it is without merit. It is so decided as per Disposition.