[1] Whether the "request" under Article 168 subparagraph 1 of the Civil Act as the ground for interrupting extinctive prescription can be a ground for interrupting extinctive prescription of the right to collect national taxes (affirmative with qualification)

[2] In an exceptional case where there exists a benefit of lawsuit for interruption of extinctive prescription of a tax claim

[3] The legal nature of a lawsuit filed by a taxation entity, such as the State, for the interruption of extinctive prescription for the pertinent finalized taxation claim against the taxpayer (=party suit in public law)

[1] Article 27(2) of the former Framework Act on National Taxes (amended by Act No. 11604, Jan. 1, 2013; hereinafter the same) provides that extinctive prescription of the right to collect a national tax shall be in accordance with the Civil Act, except as otherwise provided by the Framework Act on National Taxes or other tax-related Acts. Article 28(1) of the same Act provides that a duty payment notice (Article 1), urging or demand notice of payment (Article 28(1) (Article 28(1)), demand for delivery (Article 3), and seizure (Article 4) as the grounds for

The above duty payment notice, demand notice, demand notice, delivery request, and seizure are special procedures under the National Tax Collection Act for the purpose of collecting the national tax, and there exist special grounds for suspending extinctive prescription under the Framework Act on National Taxes. However, the former Framework Act on National Taxes does not provide for the exclusion of the application of the grounds for interrupting extinctive prescription under the Civil Act. However, in light of the comparison with civil claims, where the grounds for interrupting extinctive prescription under the Civil Act can be applied in light of the nature of the taxation claim, there is no reason to exclude the application mutatis mutandis. Therefore, the grounds for interrupting extinctive prescription under each subparagraph of Article 28(1) of the former Framework Act on National Taxes can not be deemed as the grounds for suspending extinctive prescription under Article 28(1) of the former Framework Act on National Taxes by deeming that the grounds for interrupting extinctive prescription under each subparagraph of Article 27(2) of the former Framework Act on National Taxes may not be deemed as the grounds for suspending extinctive prescription of the national tax collection right. In light of the structure and text of the relevant provisions.

[2] Taxes are the basis of finance, which is the basis of national existence, and the tax law guarantees public interest and public nature by granting considerable authority to the tax authority, which is the subject of the exercise of public authority, to pay and collect the amount of tax, such as imposition rights, preferential rights, and self-performance rights. Therefore, it is difficult to recognize benefits to file a lawsuit against a taxpayer, barring any special circumstance, as a tax payer is able to realize a tax claim based on the imposition rights granted by the

However, under the provisions of Article 28(1) of the former Framework Act on National Taxes (amended by Act No. 11604, Jan. 1, 2013), where there exist special circumstances, such as the interruption of extinctive prescription of a taxation claim is impossible, and the expiration of the extinctive prescription period is imminent due to the insolvency or unknown whereabouts of a taxpayer, etc., it is reasonable to view that a judicial claim for the interruption of extinctive prescription has benefit of lawsuit on an exceptional basis.

[3] A lawsuit seeking confirmation of existence of a taxation claim filed by a taxation entity, such as the State, etc. against a taxpayer for the interruption of extinctive prescription of the relevant taxation claim constitutes a party suit under public law.

[1] Articles 27(2) and 28(1) of the former Framework Act on National Taxes (Amended by Act No. 11604, Jan. 1, 2013); Article 168 subparag. 1 of the Civil Act / [2] Articles 27(2) and 28(1) of the former Framework Act on National Taxes (Amended by Act No. 11604, Jan. 1, 2013); Article 12 of the Civil Act; Article 12 of the Administrative Litigation Act / [3] Articles 27(2) and 28(1) of the former Framework Act on National Taxes (Amended by Act No. 11604, Jan. 1, 2013); Article 168 subparag. 1 of the Civil Act; Article 3 subparag. 2 of the Administrative Litigation Act

Republic of Korea (Law Firm LLC, Attorneys Choi Young-han et al., Counsel for the defendant-appellant)

Co., Ltd. (Law Firm LLC, Attorneys Kang Han-hun et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2016Nu72596 decided March 28, 2017

The appeal is dismissed. The costs of appeal are assessed against the defendant.

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

1. Article 27(2) of the former Framework Act on National Taxes (amended by Act No. 11604, Jan. 1, 2013; hereinafter the same) provides that extinctive prescription of the right to collect national taxes shall be in accordance with the Civil Act, except as otherwise expressly provided for in the Framework Act on National Taxes or other tax-related Acts. Article 28(1) of the same Act provides that a duty payment notice (Article 1) and a demand notice or demand notice of payment (Article 28(1) (Article 28(2)), a request for delivery (Article 3), and a seizure (Article 4

The above notice of tax payment, demand or demand notice of payment, demand for delivery, and seizure are special procedures under the National Tax Collection Act for the collection of national taxes, and there exist special grounds for suspending extinctive prescription under the Framework Act on National Taxes. However, the former Framework Act on National Taxes does not stipulate that the interruption of extinctive prescription under the Civil Act shall not apply mutatis mutandis to the taxation claims, and where the grounds for interrupting extinctive prescription under the Civil Act can be applied in light of the nature of the taxation claims compared with the civil claims, there is no reason to exclude the application thereof. Therefore, the grounds for suspending extinctive prescription under each subparagraph of Article 28(1) of the former Framework Act cannot be deemed as the grounds for suspending extinctive prescription under Article 28(1) of the former Framework Act on National Taxes by deeming that the grounds for suspending extinctive prescription under each subparagraph of Article 27(2) of the former Framework Act on National Taxes are limited and rhe/she cannot be deemed the grounds for suspending extinctive prescription of the national tax collection right. In light of the structure and text of the relevant provisions.

On the other hand, taxation is the basis of national existence of finance, and the tax law provides considerable authority to pay and collect the amount of tax, such as the imposition right, priority right, and self-performance right, to the tax authority which is the subject of the exercise of public authority, and guarantees its public interest and public nature. Therefore, it is difficult to recognize the benefits of filing a lawsuit against the taxpayer, barring any special circumstances, as the taxation right holder can realize the tax claim based on the imposition right granted by the tax law

However, in special circumstances, such as where the interruption of extinctive prescription of a taxation claim is impossible due to the insolvency or unknown whereabouts of a taxpayer, and where there exist special circumstances, such as where the lapse of the extinctive prescription period is imminent without realizing a taxation claim, it is reasonable to view that a judicial claim for the interruption of extinctive prescription has benefit of lawsuit exceptionally.

In addition, a lawsuit for the confirmation of existence of a taxation claim filed against a taxpayer for the suspension of extinctive prescription of the relevant taxation claim by the State, etc. is a party suit under public law.

2. The court below found the following facts based on the evidence duly admitted.

A. On March 2, 2011, the Director of the Portal Tax Office designated and imposed corporate tax of KRW 22,338,248,920 ( KRW 13,643,072,950 for year 2006 + KRW 8,695,175,970 for year 2007) on and against the Defendant as March 31, 201.

B. However, the defendant did not hold any property in Korea as a foreign corporation whose principal office is Japan's Republic of Korea.

C. On April 8, 2011, the Commissioner of the Statistics-gu Tax Office sent a demand notice to the Defendant regarding the above corporate tax and additional dues (hereinafter “instant tax claims”) and sent the demand notice to the Defendant on April 11, 2011.

D. In accordance with Article 30 of the Adjustment of International Taxes Act and Article 11 of the Multilateral Tax Cooperation Convention, the director of the Central Regional Tax Office of China requested Japan to entrust the collection of the instant taxation claims through the Commissioner of the National Tax Service, but did not proceed with the collection procedure because no mutual agreement was reached with Japan on taxes imposed in the taxable period prior to the entry into force of the said Convention.

E. After that, on December 24, 2014, a national tax investigator belonging to a Jungbu Regional Tax Office visited the Defendant’s business establishment located in Japan to deliver a peremptory notice of payment to the Defendant as of December 31, 2014, but the Defendant refused to receive the peremptory notice, and the director of the Central District Tax Office sent the said peremptory notice to the Defendant by international registration mail on December 24, 2014.

F. On May 26, 2015, the Plaintiff filed the instant lawsuit seeking confirmation of the existence of the instant taxation claim.

3. Examining these facts in light of the legal principles as seen earlier, the tax authority imposed and notified corporate tax on the Defendant, a foreign corporation, liable to report and pay corporate tax on domestic source income pursuant to Articles 97(1) and 60(1) of the former Corporate Tax Act (amended by Act No. 8831 of Dec. 31, 2007) on the Defendant, who had no domestic place of business, and the tax authority imposed and notified the corporate tax on the Defendant, who was obligated to report and pay corporate tax on domestic source income. The Defendant’s property was located in a foreign country, but did not take measures such as seizure, etc. because it did not collect corporate tax and additional dues and did not complete extinctive prescription, and thus, it is reasonable to deem

Although the reasoning of the lower court partially inappropriate, the lower court’s conclusion that recognized the benefit of confirming the instant lawsuit is justifiable. In so doing, it did not err by misapprehending the legal doctrine on the interruption of extinctive prescription of national tax collection right, contrary to what is alleged in

4. Therefore, the appeal is 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.

Justices Lee Dong-won (Presiding Justice)