Whether the plaintiff is merely a representative director in the name of the non-party company

The plaintiff is merely a representative director under the name of the non-party company and thus imposed a comprehensive income tax on the plaintiff.

Article 67 of the Corporate Tax Act

Article 106 (Disposition of Income)

1. The Defendant’s disposition imposing global income tax of KRW 59,310,280 on the Plaintiff on June 12, 2007 shall be revoked.

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

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. On February 1, 2001, 00 ○ building-processing Co., Ltd. (hereinafter “instant company”) was established for the purpose of ○○○ Do and retail business, etc., and closed on March 25, 2005. The Plaintiff was registered as the representative director on the corporate register of the instant company since May 23, 2002.

B. As a result, the head of ○○ Tax Office confirmed that the instant company failed to sell KRW 170,450,000 for the early 2004 tax base return of corporate tax base for the business year 2004, the said omitted amount was included in the income amount of the instant company in the business year 2004, and disposed of KRW 187,495,000, which is the aggregate amount of the above purchase price and the value added tax, to the Plaintiff who was the representative director of the instant company, and notified the Plaintiff of the change in the amount of income reverted to the year 204.

C. On June 12, 2007, the Defendant notified the head of ○○ Tax Office of the foregoing taxation data, and issued the instant disposition that corrected and notified the Plaintiff of the global income tax amounting to KRW 59,310,280 for the year 2004.

D. The Plaintiff dissatisfied with the instant disposition and filed a request for examination with the Commissioner of the National Tax Service via an objection against the Defendant. On December 21, 2007, the Commissioner of the National Tax Service dismissed the Plaintiff’s request for examination.

In addition to the grounds for recognition, Gap evidence Nos. 1, 2, 3-1, 2, and 4-2, Eul evidence Nos. 1, 2, and 3-1, 2-1, 2, and 3-2, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff, a substantial manager of the instant company, and the Plaintiff’s birth, permitted the use of the name upon the request of ○○○○, and was registered as the representative director on the corporate register of the instant company, and there was no participation in the management of the instant company. Therefore, the instant disposition against the Plaintiff, a mere representative in the name

B. Relevant statutes

It is as shown in the attached Form.

C. Facts of recognition

(1) During the operation of ○○○ Chang-ho, a defaulted on April 30, 1996, and closed the business of ○○○○-hoho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho (hereinafter “○○-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho)

(2) On February 1, 2001, ○○○ established the instant company and registered the instant company as its representative director on the corporate register, a concern that credit transaction would be restricted if the person in arrears was registered as his/her representative director, thereby registering his/her parent in the instant company’s corporate register as his/her parent, ○○ and ○○, which is his/her wife, as the auditor, and ○○, as the representative director, registered the instant company as the largest director. On February 23, 2001, ○○ lent the instant company’s corporate register from October 12, 2001 to February 5, 2002 to 30 to 20.20 to 20.25, 200 to 200 to 20.25, 200 to 200 to 3.25, 200 to 20.

(3) From July 26, 1968 to May 30, 1978, the Plaintiff was a researcher at ○○ University corporate management research institute; from September 26, 1975 to November 17, 1984, as an incorporated foundation, an expert member at ○○ Industrial Development Institute; from January 4, 1986 to January 16, 1992, as an incorporated foundation; from March 1, 1997 to August 31, 198, the Plaintiff was aware of the Plaintiff’s annual salary income at ○ University’s ○ University’s ○ University’s ○ University’s ○ University’s ○ University’s ○ University’s ○ University’s ○ University’s ○ University’s 20th 2nd 20th 2nd 20 to 00, or was paid the Plaintiff’s 2nd 3rd 201st 2nd 201st 20.

(4) At the time of December 31, 2001, and December 31, 2002, 200, ○○○ owned 5,500 shares and 4,800 shares of the instant company (total 10,00 shares). Thereafter, ○○ owned 10,00 shares as of December 31, 203 and December 31, 2004 due to changes in the ownership of shares.

(5) If a transaction amount is transferred from a customer to a deposit account opened in the name of the instant company while running the instant company, ○○○ immediately transferred the transaction amount to the deposit account opened in its name.

(6) The instant company failed to pay multiple taxes subsequent to the default of value-added tax of KRW 35,378,690, which was March 31, 2002, including the time limit for payment.

(7) On January 17, 2005, at the time of establishing ○○ on the corporate register, ○○○ was registered as a director, as an auditor, and ○○○ was registered as a representative director. After running the said company, ○○ was engaged in the same business as the instant company, while closing the instant company on March 25, 2005. After doing so, ○○ was registered as a director on May 25, 2005 on the resignation of ○○○○ upon Kim○’s resignation of ○○○, and on November 29, 2005, ○○ registered himself as a representative director.

In addition to attached grounds for recognition, Gap evidence 1, evidence 5 through 13 (including branch numbers), evidence 14-1 through 6, 15, evidence 4, evidence 6-1 through 5, evidence 6-1 through 5, testimony by the witness ○○○, and the purport of the whole pleadings.

D. Determination

Under Article 106 (1) of the Enforcement Decree of the Corporate Tax Act, the system does not provide that the representative shall be based on the facts that such income has accrued, but it aims to consider certain facts that can be recognized as such in order to prevent an unfair act under tax law by a corporation as a bonus to a unconditional representative regardless of their substance. In such a case, the representative who is subject to the disposition of bonus shall be strictly interpreted, and the representative shall be the representative who actually manages the company, and even if the representative is registered in the corporate register, if the representative is not actually operating the company, it shall not be subject to the comprehensive income tax by devolving such income to the representative director.

In the instant case, considering the following circumstances indicated in the above facts, i.e., the Plaintiff appeared to work in the instant company or did not participate in the management of the instant company during the period in which ○○ was registered as the representative director on the corporate register of the instant company, and was actually in charge of overall management such as the establishment of business plan, fund management, business activities, etc. of the instant company, the Plaintiff did not receive wages, etc. from the instant company, nor owned the shares of the instant company, and ○○○ or ○○○ owned the shares of the instant company, and ○○ transferred the transaction amount transferred from the transaction partner to the deposit account in the name of the instant company to ○○○’s own name. In the instant company’s transaction with the instant company, ○○ was deemed to have been aware that ○○ was the actual manager of the instant company, and thus, the Plaintiff’s comprehensive disposition was unlawful on the ground that the Plaintiff did not actually own the income tax under the name of the Plaintiff’s representative, which was the name of the instant company.

3. Conclusion

If so, the plaintiff's claim shall be accepted for the reasons of the judgment as per Disposition.

Relevant statutes

Basic Act

Article 14 (Real Taxation)

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

former Corporate Tax Act (amended by Act No. 8831 of Dec. 31, 2007)

Article 67 (Disposition of Income)

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

Enforcement Decree of Corporate Tax Act

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 under the provisions of the following subparagraphs. The same shall also apply to nonprofit national corporations and non-profit foreign 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 held by an officer who is not a minority shareholder under the provisions of Article 87 (2) and persons with a special relationship under the provisions of paragraph (4) of the same Article is 30/100 or more of the total number of stocks issued or total amount invested by the relevant corporation and the officer actually controls the operation of the relevant corporation, he shall be deemed the representative, and where a corporation which has been exempted from withholding taxes under the provisions of Article 46 (12) of the Restriction of Special Taxation Act reports that there is a separate representative among the officers who are stockholders, etc., the reported person shall be the representative, and where there are

(b) If the person to whom it belongs is an officer or employee, the bonus to that person;

Income Tax Act

Article 20 (Earned Income)

(1) Earned income shall be the following income generated during the relevant year:

1. Class A:

(c) Amount treated as a bonus under the Corporate Tax Act;