Whether the representative is a real representative

The instant disposition against the representative under a name is unlawful in violation of the principle of substantial taxation.

Article 14 of the Framework Act on National Taxes

1. The Defendant’s disposition of imposition of global income tax of KRW 92,678,680 against the Plaintiff on January 10, 2005 shall be revoked.

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

The same shall apply to the order.

1. Details of the disposition;

A. The non-party corporation's ○○ Construction Co., Ltd. (the "non-party corporation") was established on August 25, 2001 as a corporation mainly engaged in the construction business, and the plaintiff was registered as the representative director on July 23, 2002 to February 27, 2003.

B. The head of the ○○ Tax Office having jurisdiction over the illegally located location confirmed that the non-party company omitted the sales of KRW 36,100,000 and KRW 200,000 for the non-party company's business year 200,000,000 for the non-party company's 36,100,000 and the non-party company's 259,710,000 (236,100,000 + 23,610,000 + 23,610,000) including the value-added tax on the value of supply, and then disposed of the income by being recognized as the representative director on the corporate register of the ○○to, and notified the defendant, the head of the tax office having jurisdiction

C. Accordingly, on January 10, 2005, the Defendant issued the instant disposition that corrected and notified the Plaintiff of KRW 92,678,680 as global income tax for the year 2002.

Grounds for Recognition: Facts without dispute, Gap evidence No. 1, Gap evidence No. 2-1, 2, Eul evidence No. 1 through 5

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff completed the registration of the appointment of the representative director in advance for the acquisition of the non-party company. Around October 2002, the plaintiff finally renounced the registration of the appointment of the representative director and demanded the change of the name of the representative director, and there was no actual operation of the above company. There was no fact or no knowledge at all about the transaction which became the basis of the tax invoice at issue in this case. The disposition against the plaintiff who was not the representative in the name of the non-party company was unlawful since it violated the principle of substantial taxation.

(b) Related statutes;

【National Tax Basic Act

Article 14 (Real Taxation)

(1) If the ownership of income, profit, property, act or transaction subject to taxation is merely nominal and a person to whom such ownership belongs exists, the tax-related Acts shall apply to such person to whom such person actually belongs as a taxpayer.

m. Corporate Tax Act

Article 67 (Disposition of Income)

In filing a report on the corporate tax base on the income for each business year under the provisions of Article 60 or in determining or revising the corporate tax base under the provisions of Article 66 or 69, the amount included in the calculation of earnings shall be disposed of as bonus, dividend, other outflow from the company, internal reserve, etc. according to the person to whom it reverts

(1) Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 17826, Dec. 30, 2002)

Article 106 (Disposition of Income)

(1) The amount included in the calculation of earnings under the provisions of Article 67 of the Act shall be disposed of pursuant to the provisions of the following subparagraphs. The same shall also apply to non-profit domestic corporations

1. Where the amount included in the calculation of earnings has clearly leaked out of the company, the dividends, bonuses from the disposition of profits, other income, and other outflow from the company under each of the following items according to the person to whom they accrue: Provided, That where the accrual is unclear, it shall be deemed as accrual to the representative (where the total number of stocks issued by the relevant corporation or the total number of stocks invested by an officer who is not a minority shareholder under the provisions of Article 87 (2) and persons in a special relationship under the provisions of paragraph (4) of the same Article holds not less than 30/100 of the total number of stocks issued by the relevant corporation or the total amount of investment in the relevant corporation and the officer actually controls the operation of the corporation, he shall be deemed the representative, and where a corporation which is a stockholder is exempted from withholding taxes under the provisions of Article 46 (12) of the Restriction of Special Taxation Act reports that there is another person representing the relevant corporation

(1) Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Ministry of Finance and Economy, March 26, 2003)

Article 54 (Representative bonus Disposal Method)

In the application of the proviso to Article 106 (1) 1 of the Decree, where the representative is changed during a business year, where it is clear that the amount reverted to each representative is divided into representatives and disposed of to each representative, and where the attribution is unclear, it shall be calculated by dividing it according to the number of months in service, and disposed

C. Determination

(1) The purpose of the corporate tax law is not to establish the basis of the fact that such income has accrued to the representative, but to consider certain facts that can be recognized as such in order to prevent unfair conduct under the tax law by a corporation as a bonus to a unconditional representative regardless of their substance. In light of the legislative intent and the contents of the regulations in the Enforcement Decree, the representative shall be the representative operating company. Although the representative of the company was registered in the corporate registry, it shall not be deemed that such recognized income is attributed to the representative unless the company had been actually operated (see Supreme Court Decision 88Nu3802, Apr. 11, 1989).

(2) Therefore, in full view of the purport of the whole pleadings as to whether the Plaintiff was merely a nominal representative director who did not participate in the actual operation of the ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○, the Plaintiff, upon request of the former representative director for the acquisition of the non-party company, decided to waive the registration of the appointment of the representative director on July 23, 2002. The Plaintiff was registered on February 27, 2003 at the time of the request for change of the name of the representative director, but the Plaintiff was not suspected of having been registered as the former representative director on August 23, 200, at the time of entry of the Plaintiff’s representative director, for the reason that the Plaintiff did not actually been registered as the former representative director at the time of entry in the ○○○○○○○○○○○○○○○○○○○○○○○○’s sales account was stated as the former representative director at issue.

(3) Therefore, the disposition of income made against the plaintiff, not the actual representative of the non-party company, is erroneous, and the disposition of this case based on it is illegal as it violates the substance over form principle.

3. Conclusion

Therefore, the plaintiff's claim of this case seeking the revocation of the disposition of this case is reasonable, and it is so decided as per Disposition with the assent of all participating Justices.