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The instant lawsuit is dismissed.
Costs of lawsuit shall be borne by the defendant.
Reasons
1. Details of the disposition and subsequent circumstances;
A. B was established on December 3, 2012, and was merged into A on March 31, 2015 with the merger date.
(hereinafter referred to as the "Plaintiff" without distinguishing A, a surviving company, after the merger with the merged company.
The Plaintiff entered into a license agreement with C (C; hereinafter referred to as "C") which is a corporate body located in Hungary for the domestic distribution of motion pictures produced by D, and as a result, C did not withhold corporate tax pursuant to Article 12(1) of the Convention between the Government of the Republic of Korea and the Government of the Lao People's Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (US$ 341,503,277 (US$ 319,013), 95,305,533 (US$ 89,029), on October 14, 2013, including KRW 587,651,90,08 (US$ 140,594).
C. The Defendant: “C is merely a conduit company that performs only the role of a formal transaction party, and the actual beneficial owner is deemed to be the Netherlands corporation E, which is the parent company of C, and thus, should collect corporate tax (in full part) from the Government of the Republic of Korea and the Netherlands in accordance with Article 12(2)(a) of the Convention between the Government of the Netherlands and the Government of the Republic of Korea for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (including additional tax) on the said royalty income that the Plaintiff paid without withholding from C, according to
(hereinafter “instant disposition”) D.
The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on January 2, 2019, but the Tax Tribunal dismissed the appeal on December 26, 2019.
E. The Supreme Court held on November 15, 2018 that FF corporation paid to C the royalty of approximately KRW 13.5 billion is the beneficial owner of royalty income as prescribed by Article 12(1) of the Korea-Hungary Tax Treaty.