Whether the remainder of the issue amount, excluding expenses for local subsidiaries, can be seen as the plaintiff's overseas earned income from among the domestic accounts.

The plaintiff, the representative of a Chinese local corporation, has leaked the export price of this case, which is the revenue of the Chinese local corporation, to one's own account and the wife's account, and it is not clear that the plaintiff used it for the business of the Chinese local corporation out of the amount of the issues remaining after the export price of this case, excluding the amount recognized as necessary expenses for the Chinese local corporation

Article 3 of the Income Tax Act (Scope of Taxable Income)

2015Guhap5914 global income and revocation of disposition

○ ○

00. Head of tax office

on 18, 2010

on October 03, 2017

1. On November 1, 2013 and November 5, 2013, the part that the Defendant imposed on the Plaintiff on the Plaintiff on November 1, 2013 and November 5, 2013, in excess of KRW 000 (including additional taxes), in the imposition disposition of global income tax for the year 2009, in excess of KRW 000 (including additional taxes) in the imposition disposition of global income tax for the year 2010, in excess of KRW 000 (including additional taxes) in the imposition disposition of global income tax for the year 2010, and in excess of KRW 000 (including additional taxes) in the imposition disposition of global income tax for the year 2012.

2. The plaintiff's remaining claims are dismissed.

3. Of the costs of lawsuit, 95% is assessed against the Plaintiff, and the remainder of 5% is assessed against the Defendant, respectively.

Cheong-gu Office

Each disposition imposing global income tax on the Plaintiff as stated in the attached disposition list issued by the Defendant shall be revoked.

1. Details of the disposition;

A. From June 1, 1998, the Plaintiff has been engaged in Libera manufacturing business in the name of ○○○-dong, Seoul, 170-11 to ○○-dong, 170-11. From January 1, 2011 to May 31, 2013, the Plaintiff was engaged in Libera manufacturing business under the trade name of ○○○-dong, Seoul, Jung-gu, 44-30 to ○○-dong, 201, which was closed ex officio from January 31, 2013. Meanwhile, the Plaintiff established the ○○○○-mora Limited Corporation (hereinafter referred to as “China-si”), which is engaged in Libera manufacturing business in China, from the Chinese Cheongdo on May 28, 2002, and currently worked as the representative of the Chinese local corporation.

B. From 2007 to 2012, a Chinese subsidiary received 000 won, which is part of the export price, from Lee*** International c.**** ○00 won, from Degrc. to the Plaintiff’s domestic trade account, which is the Plaintiff’s domestic place of business, and received 000 won, from 2000 to 2012. From 2010 to 2012, the Plaintiff transferred 00 won from the sum of the export price (hereinafter “the export price of this case”) to the Plaintiff and New ○○○○○○ account, and the Plaintiff transferred the said export price to the Plaintiff and new ○○○ account immediately from 2007 to 209. In addition, from 2008 to 200 to 209, the Plaintiff transferred the payment to the Plaintiff’s new account of the Plaintiff and the Plaintiff’s local subsidiary to the Plaintiff’s Korean subcontractor’s capital and the Plaintiff’s local subsidiary to 1, the Korea subcontractor’s subcontractor.

C. On November 1, 2013, and November 5, 2013, the Defendant respectively corrected and notified the Plaintiff of the total amount of KRW 000 (including additional tax) of each global income tax for the year 2007 from 2007 to 2012, excluding the amount used as the necessary expenses of the Chinese subsidiary (hereinafter “instant export amount”), as described in the foregoing B, as the Plaintiff received from the Chinese subsidiary from 2007 to 2012 (hereinafter “each of the instant dispositions”).

[Reasons for Recognition] Unsatisfy, Gap evidence 3, 7, 8, Eul evidence 1 to 6, 9

(2) Each entry and the purport of the whole pleading;

2. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

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

1) The Plaintiff’s overseas earned income does not exist if the amount used for the business of a Chinese subsidiary is deducted from the key issue amount (hereinafter “the first argument”).

2) The Plaintiff, jointly and severally with a Chinese local company, shall either settle or set off the claim for reimbursement or the claim for return of unjust enrichment arising from the Plaintiff’s joint and severally with a Chinese local company, and the claim for return of provisional payment equivalent to the key amount of the issue against the Plaintiff of the Chinese local company. If such settlement or set-off is conducted, the Plaintiff’s overseas earned income does not exist (hereinafter “the second claim”).

3) Even though the Chinese tax authorities did not dispose of the issue amount as a bonus for recognition of outflow from the company under the Chinese Corporate Income Tax Act, the Defendant unilaterally considered the issue amount as a bonus for recognition of the Plaintiff, who is the representative of the Chinese local corporation, pursuant to the domestic law, and accordingly, imposed the comprehensive income tax on each of the dispositions of this case, there is a procedural defect related to the sovereignty of taxation (hereinafter referred to as the "third argument").

4) Even if the Plaintiff actively withdraws the money of a Chinese subsidiary and used it without permission, and some of the issues in the process of paying the export money of this case for the Plaintiff’s local subsidiary was spent for the Plaintiff’s personal purpose, in light of the fact that the money is the money to be settled later or offseted, it cannot be readily concluded as embezzlement that does not require the recovery of the issues (hereinafter “the fourth assertion”).

B. Determination on the first and the fourth argument

1) The representative director or actual manager of a corporation who uses his/her position to discharge the corporation’s profits out of the company and then discharges them to himself/herself constitutes bonus or temporary salary, barring special circumstances (see Supreme Court Decision 9Du3324, Sept. 14, 2001).

2) According to the facts acknowledged earlier, the Plaintiff, the representative of the Chinese local subsidiary, has leaked the export price of this case, which is the revenue of the Chinese local subsidiary, to its account in the name of its own and its wife, and reverted to himself. Therefore, from the export price of this case, it is not clear that it was used for the business of the Chinese local subsidiary, out of the amount corresponding to the remaining issues other than the amount recognized as necessary expenses for the Chinese subsidiary, as seen earlier, constitutes the Plaintiff’s bonus or temporary salary, and the Plaintiff needs to prove that there was an amount used for the business of

3) The existence of an amount used as expenses for the business of a Chinese subsidiary out of the key issue amount

(A) evidence Nos. 7, 8, 13, 14, 16, 17 (including the relevant number), and Eul evidence Nos. 7;

Gap evidence Nos. 15 and 18, and evidence Nos. 15 and 18, the testimony of witnesses Kim 00 and the purport of the whole pleadings

- The following facts may be recognized:

(1) As indicated in Table 2, from around 2009 to around 2012, the Plaintiff paid a total of KRW 000 to Kim○, Lee○-○, Red, ○○, New, ○○, and Lee ○○, as indicated in Table 2.

(2) The Kim ○ is an employee of 00 U.S., a travel company, and the Plaintiff paid KRW 000 to Kim ○○, as indicated in Table 2. The Plaintiff paid KRW 000 to the airline tickets of its employees and Chinese subsidiaries and Chinese visa.

(3) A Chinese local corporation was liable for the payment of the price for half-finished goods to ○○○ Construction Co., Ltd., but around 2010, the Plaintiff transferred KRW 000 and KRW 000 to ○○○, as indicated in the table 2, upon the request of ○○, the representative of ○○○ Construction Co., Ltd., the Plaintiff, a representative of ○○○○ Construction Co., Ltd., for the performance of the above obligation.

(4) On September 29, 201, China's local subsidiary bears the obligation to pay the amount of goods and processing fees for the Cheongdo○○ Limited Corporation. However, upon the request of Kim○○, the representative of the Cheongdo○ Limited Corporation, the Plaintiff transferred KRW 000 to New○○ on July 8, 201 and KRW 000 to New○○ on September 29, 201, respectively.

(5) A Chinese local subsidiary bears the obligation to pay for the goods of finished products to ○○○ Construction Company. However, on July 18, 2012, the Plaintiff transferred KRW 10,000,000 to ○○ upon the request of Park○, a representative of ○○ Construction Company with a limited craft (hereinafter “○○”) and upon the request of ○○○, a representative of ○○○ Construction Company.

B) Further to the aforementioned facts and the overall purport of the arguments revealed as seen earlier, the following circumstances are revealed: ① A Chinese local corporation continuously received or requested gold-finished goods for ○○○○ and Red craft Limited Corporation before and after transfer to ○○○○ and Red○○ as seen earlier; the Plaintiff transferred KRW 503,000,000 to ○○○○ and its wife, the representative from March 2010 to December 2012; ② as seen earlier, the Plaintiff transferred KRW 12,50,000,000 to ○○○, the representative of the ○○○○ craft Limited Corporation and its wife; ② as seen earlier, the Plaintiff transferred KRW 12,50,000 to ○○, the representative of the ○○ craft Limited Corporation, the representative of the ○○ craft Limited Corporation, from around January 28, 201 to December 205, it is reasonable to deem that the Plaintiff used the business as indicated in the table 26,2005.

C) Therefore, the above KRW 65,072,200, out of the issues amount, should be deducted from the Plaintiff’s amount of earned income from 2009 to 2012. The Plaintiff’s assertion on this part is with merit.

4) On the other hand, the evidence Nos. 7, 8, 11, 12, 19, 20 (including the relevant numbers) and Eul evidence Nos. 7 and Eul evidence Nos. 7, the witness Park ○, and the testimony of ○○○, and the circumstances alleged by the plaintiff are insufficient to recognize that the money paid to ○○○, ○○, ○○, ○○, ○○, ○○, ○○, ○, ○○, ○, ○○, ○, ○○, Do○, Do○, ○○, Do○, ○○, Do○, ○, ○, ○, ○, and Do○, was used respectively for the business of the Chinese local subsidiary, and there is no other evidence to find otherwise. The plaintiff’s assertion in this part of this part is without merit.

C. Judgment on the second argument

1) First, the second argument is premised on the premise that the issue amount falls under the representative’s provisional payment. There is no evidence to support that China’s local corporation has appropriated the issue amount as representative’s provisional payment.

2) In addition, if the Plaintiff, from January 1, 2007, to December 31, 2012, the taxable period of each of the dispositions of this case, was exempted from the obligation of the Chinese subsidiary to pay the unpaid goods price and its interest on the Chinese subsidiary, and the Chinese subsidiary is liable for the payment of the goods price to Na and B, the payment amount constitutes the expenses used for the business of the Chinese subsidiary, and the Plaintiff’s overseas earned income from 2007 to 2012 can be excluded from the amount paid.

According to the evidence Nos. 9-1, 2, and 10-1 and 2 of the evidence Nos. 9-10 and the witness testimony of E.A., the following facts can be acknowledged: (a) the head of E.A. and E.B, the wife of E.B, from 2002 to the present Chinese subsidiary; (b) the Plaintiff and E.A., on February 6, 2013, shall pay the amount of goods unpaid to E.A. by May 1, 2013; and (c) the adjustment was established between the Plaintiff and E.B to pay the amount of goods unpaid to E.B by April 30, 2013; and (d) the Plaintiff and E.B’s payment of the amount of goods unpaid to the head of E.B by April 30, 2013; and (e) the amount of goods unpaid and the amount of 150,000 won interest thereon.

However, the conciliation between the Plaintiff, EA, and BB was established in around 2013, which was after the taxable period of each of the dispositions of this case, and the testimony of No. 9-1, No. 2, and No. 10-2, and witness EA is insufficient to deem that the Plaintiff actually paid the goods price or interest of the Chinese subsidiary to the Plaintiff and EAB, and there is no other evidence to acknowledge otherwise.

3) Therefore, the second argument is without merit.

D. Judgment on the third argument

As seen earlier, the remainder of the issue amount, excluding KRW 000,000, which was used as expenses for the business of a Chinese local corporation, is attributed to the Plaintiff, the representative of a Chinese local corporation, by releasing the profits of the Chinese local corporation out of the company, and it is not clear that it was used for the business of a Chinese local corporation. Accordingly, this constitutes the Plaintiff’s bonus or temporary salary, which constitutes earned income as a

Before the Defendant imposes income tax on the grounds of such occurrence of income, it shall be subject to Chinese taxation.

It is not necessary to take a bonus disposition by the representative of the authority. The third argument is without merit.

E. Scope of revocation

In a lawsuit seeking revocation of a taxation disposition, the subject matter of adjudication is whether the tax base and tax amount notified by the tax authority are objectively existing, and where the tax base and tax amount recognized by the disposition are excessive compared to the legitimate tax base and tax amount, the disposition of imposition is unlawful within the scope exceeding the reasonable tax base and tax amount (see Supreme Court Decision 88Nu6504, Mar. 28, 1989).

The legitimate tax amount of each global income tax (including additional tax) imposed on the Plaintiff on November 1, 2013 and November 5, 2013, 2009, 2010, and 2012 as global income tax (including additional tax) imposed on the Plaintiff on November 5, 2013 must be calculated by subtracting KRW 000 from the revenue amount accrued in 2009, KRW 000 from the revenue amount accrued in 2010, and KRW 000 from the revenue amount accrued in 2012, respectively (see the aforementioned Table 2). Accordingly, the justifiable tax amount of each global income tax (including additional tax) accrued in 2009, 2010, and 2012 as stated in the separate sheet of calculation of the legitimate tax amount. Accordingly, the exceeding portion should be revoked by unlawful means.

3. Conclusion

Since the plaintiff's claim concerning the portion exceeding the above legitimate amount among the plaintiff's claim of this case is well-grounded, the plaintiff's remaining claim is dismissed as without merit, and the lawsuit costs are shared according to the ratio of loss. It is so decided as per Disposition.