Seoul Special Metropolitan City Typ Co., Ltd. (Attorneys Ba-sik et al., Counsel for the plaintiff-appellant)

The director of the tax office

May 25, 2012

1. The Defendant’s disposition of collecting corporate tax withheld for the business year 2006 to the Plaintiff on March 2, 201, as KRW 688,517,420, corporate tax withheld for the business year 2007, corporate tax withheld for the business year 867,74,750, corporate tax withheld for the business year 2007, corporate tax withheld for 25,071,881,810, corporate tax withheld for the business year 2008, corporate tax withheld for the business year 269,132,670, corporate tax withheld for the business year 208, and corporate tax withheld for the business year 208

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

The same shall apply to the order.

1. Details of the disposition;

A. On June 9, 1977, the Plaintiff was established as the main business purpose of the real estate leasing and selling business, and owned the Seoul Jung-gu Seoul Special Metropolitan City Tact Building ( Address omitted), Jung-gu, Seoul Special Metropolitan City (Internet 23 floors and underground 8 floors).

B. ProbH&C. KG (hereinafter “TMW”) is a part-time limited partnership in Germany, established as an investment fund under the German Commercial Code, and investors of the fund are as shown in attached Form 1. On August 13, 2003, as a special purpose company on the basis of the German Limited Liability Company Act, TMW GabH 1, and TMW 1, under the German Limited Liability Company Act, acquire and hold 100% of each outstanding share of the company. GmbH 2, each company has acquired and held 50% of the Plaintiff’s share from August 28, 2003.

C. From 2006 to 2008, the Plaintiff paid to GmbH 1 and 2 a total of KRW 131,663,835,005 (hereinafter “instant dividend income”). As regards the instant dividend income, the Plaintiff withheld corporate tax of KRW 8,437,018,460 and paid to the Defendant by applying the limited tax rate of Article 10(2)(a) of the Convention between the Republic of Korea and the Federal Republic of Germany for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital (hereinafter “Korea- Germany Tax Treaty”).

The amount of dividends paid in the table taxable period (won) contained in the main sentence of April 3, 2006 shall be April 3, 2006,06,07,07,422,139,094,428, 428 April 13, 2007,856,776,666 175,308,0308,0308, 123,419,645,645 8,062,062, 280,580, 280, 196,145, 21254,370, 2370, 2375, 131,234,065, 965, 131,6385, 005, 0684, 3086, 406, 208

D. The Defendant: (a) deemed that the beneficial owner of the instant dividend income was the parent company of GmbH 1 and 2; and (b) deemed that WT established GmbH 1 and 2 for the purpose of benefiting from the application of the limited tax rate under the Korea- Germany Tax Treaty; and (c) applied 25% tax rate under Article 98(1)3 of the Corporate Tax Act (amended by Act No. 9267, Dec. 26, 2008; hereinafter the same) to exclude the application of the Korea- Germany Tax Treaty; and (d) on March 2, 2011, by applying 2006 the tax rate of 25% under Article 98(1)3 of the Corporate Tax Act (amended by Act No. 9267, Dec. 26, 2008; 867,74,750, 71,810, corporate tax withheld for the business year 208; and (b) imposed corporate tax withheld at source (hereinafter “the corporate tax”).

E. On April 29, 201, the Plaintiff dissatisfied with the instant disposition and filed a petition for an adjudication with the Tax Tribunal on April 29, 201, but the said petition was dismissed on November 9, 201.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 4, 7, Eul evidence No. 1, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The parties' assertion

1) The plaintiff's assertion

This case is a case in which WT, a limited partnership company incorporated as an investment fund under the German Commercial Act, established GmbH 1 and GmbH2, a German limited liability company, in accordance with the German Limited Liability Company Act, attracting investment funds from investors in Germany, Luxembourg and Austria, subject to the limited tax rate under the tax treaty. GmbH 1 and 2 have maintained the Plaintiff’s shares for a long period of not less than 3 years, and received the instant dividend income from the Plaintiff, and the investors are residents of Germany and Luxembourg, and both investors are residents of Luxembourg and Austria and its investment fund and its investment purpose company, which are duly established by German law, and the limited tax rates under the tax treaty are all applicable to WT, GmbH 1 and 2. Accordingly, the investment funds, which are not entitled to benefits from tax reduction or exemption under the tax treaty, are unlawful as long as they are reasonably established under the tax treaty 20% of the dividend income subject to the tax treaty, establishing a limited tax rate of 10% of the investment dividend income in order to benefit from the tax treaty.

2) The defendant's assertion

The beneficial owner of the instant dividend income is TMW, and the establishment of TMbH 1 and 2, which is merely a partnership that is not subject to the Korea-Japan Tax Treaty, is solely intended to benefit from the limited tax rate under the Korea- Germany Tax Treaty, and the application of the limited tax rate under Article 27(2) of the Korea- Germany Tax Treaty is excluded from the original source on the grounds that no other reasonable economic reason exists. Thus, the instant disposition that applied 25% of the base tax rate under the Korea- Germany Tax Treaty is lawful.

B. Relevant provisions

Attached Form 2 shall be as shown in attached Table 2.

C. Determination

1) Status of the tax treaty and the principle of strict interpretation

Article 6 (1) of the Constitution provides that "any treaty concluded and promulgated by the Constitution and any generally accepted international law shall have the same effect as domestic law," so a tax treaty concluded with the consent of the National Assembly shall have the same effect as that of domestic law, and in the legal relationship governed by the tax treaty, the treaty shall have the same effect as that of domestic law, and in the legal relationship governed by the tax treaty, the

In addition, the Constitution provides that "All citizens shall have the duty to pay taxes under the conditions as prescribed by Act (Article 38), and that "the items and rates of taxes shall be determined by Act" (Article 59) shall be adopted the principle of no taxation without the law (Article 59). In determining the requirements for taxation, tax exemption, etc., the principle of no taxation without the law shall be prescribed by the law enacted by the National Assembly as the representative body of the people, and it shall be interpreted and applied strictly in the enforcement of the law.

In addition, Articles 26, 27, and 31 of the Vienna Convention on the Law of Treaties to which Korea is a party shall be observed, and the provisions of the domestic law shall not be invoked in such a way as to justify the non-performance of the treaty, and the wording of the treaty shall be interpreted faithfully in accordance with its ordinary meaning. Thus, in the case of a tax treaty which is a kind of tax law, an administrative convenience expansion interpretation or analogical application is not allowed.

2) Domestic legal basis of substance over form principle

Article 11(1) of the Constitution provides, “All citizens shall be equal before the law, and no person shall be discriminated against in all areas of political, economic, social, and cultural life on account of gender, religion, or social status.” The principle of tax equality can be regarded as an expression of tax law in the principle of equality under the above Constitution or the principle of prohibition of discrimination. Therefore, in granting tax legislation, the State shall not only enact laws so as to ensure the fair allocation of tax burden among the people, but also have the obligation to treat all citizens equally in interpreting and applying the tax law. One of the legal systems to realize such principle of tax equality is the principle of substantial taxation as provided for in Article 14 of the Framework Act on National Taxes (Amended by Act No. 9911, Jan. 1, 2010; hereinafter the same shall apply). In addition, the principle of tax equality can be seen as the principle of equal treatment in accordance with the concept of justice and the principle of equal treatment in the process of legislation or enforcement of tax justice (see, e.g., the principle of tax justice).

Therefore, the ideology of the principle of tax equality under the Constitution cannot be an exception to the interpretation of the tax treaty having the effect corresponding to the law. Therefore, the application of the principle of substance over form cannot be deemed to violate the principle of strict interpretation

3) As to the proposal of the Model Convention on the Economic and Development Cooperation Organization (hereinafter “the OECD”) Model

With the increase in international trade, the OECD established a company on the document in a tax haven place that is not related to the actual transaction with the purpose of tax avoidance through changes in the crepan tax treaty and avoided taxes on capital transaction income, such as interest, dividend, and stock transfer margin, through the international discussion in the OECD's Harmful Tax Forum that began from 1999.

Accordingly, the OECD has widely dealt with the type and method of tax evasion, interpretation related to treaties, etc. In the 2003 Model Convention, which is the basis for interpreting the Model Convention of the 2003 amended Tax Treaty, and provided a basis for preventing the act of tax evasion. As a representative example, Article 1(7) of the Model Convention provides that "the fundamental purpose of the Convention on the Prevention of Double Taxation is to facilitate exchanges of goods and services, capital and human resources by preventing international double taxation, and to facilitate exchanges between goods and services, and to prevent avoidance and the prevention of Fiscal Evasion with respect to taxes," and Article 1(2) through (23) of the said Convention provides that "the basic purpose of the Convention is to prevent double taxation," and that "the Convention on the Prevention of Double Taxation shall also be aimed at preventing tax evasion and the prevention of Fiscal Evasion" in its respective laws, which are defined in its own domestic law, and that it does not need to be affected by the general provisions of the Tax Treaty."

The note of the OECD Model Convention is not a treaty concluded and promulgated by Article 6(1) of the Constitution, but a treaty generally accepted international law. Thus, legal binding force cannot be recognized. However, this is a standard for recognizing international authority for the correct interpretation of a tax treaty concluded between Korea and Germany and other member countries of the OECD including Germany, which can be a reference for the interpretation of a treaty between OECD members in relation to the substance over form principle, etc. under domestic law.

4) Provisions and interpretation method of the Korea- Germany Tax Treaty

Article 10(2)(a) of the Korea- Germany Tax Treaty provides that “The Korea- Germany Tax Treaty stipulates that “The Korea- Germany Tax Treaty shall, by stating that “the Republic of Korea and the Federal Republic of Germany have entered into a treaty in order to promote mutual economic relations by avoiding double taxation and preventing tax evasion.” Article 10 of the Korea- Germany Tax Treaty provides that “The allocation of the right to impose tax on dividend income at issue in this case shall be prohibited not only from double taxation but also from tax evasion.” Article 10(2)(a) of the Korea- Germany Tax Treaty provides that “the corporation paying dividends may be taxed in accordance with the laws of a Contracting State which is a resident, but the tax imposed shall not exceed five percent of the total amount of dividends if the corporation which pays dividends is directly owned by at least 25 percent of the capital of the corporation which pays dividends.” Meanwhile, Article 3(2) of the Korea- Germany Tax Treaty provides that “ Unless the context otherwise requires, the terms not defined in this Agreement in this Agreement shall have the meaning of the law at the time of application, and the meaning given in its other laws.”

In determining the normative meaning of “beneficial owner” under Article 10(2) of the Korea-U.S. Tax Treaty, first of all, the principle of strict interpretation in accordance with the principle of no taxation without the law and the principle of faithful interpretation in accordance with the ordinary meaning prescribed in the Vienna Convention shall be observed. However, within the meaning of the possible language, the systematic and logical interpretation method that clearly expresses the ordinary and logical meaning of the language in accordance with the legal systematic relationship that takes into account the legislative intent and purpose of the relevant provision is intended for the interpretation of the essential substance of the provision, so it cannot be said that the principle of substantial taxation, which is the derived from the principle of no taxation without the law, is one of the general principles concerning the interpretation and application of the tax law, and even if Article 14 of the Framework Act on National Taxes does not expressly provide for this, it cannot be deemed that the said provision does not apply to a tax treaty which is a special law under the domestic tax law, and since Article 31(1) of the Vienna Convention does not expressly state the meaning of a treaty and the standards for the treaty in good faith.

Furthermore, the tax treaty does not create an independent tax authority, but functions as a part of allocating or restricting the right to impose taxes established under the tax laws of a Contracting State. Thus, in determining the existence of the right to impose taxes, the domestic tax laws of a Contracting State is bound to apply in determining certain facts as a premise of the application of the tax treaty. In addition, the Korea- Germany tax treaty does not stipulate the normative meaning of the “beneficial owner” and does not seem to have any circumstances that can be interpreted differently from the domestic tax laws in light of the context of the Korea- Germany tax treaty. Therefore, in order to determine the occurrence of the right to impose taxes after the determination of certain facts, the application of the principle of substantial taxation under the domestic tax law does not violate the Korea- Germany tax treaty in interpreting the normative meaning of the “beneficial owner” as stipulated in Article 10(2) of the Korea- Germany tax treaty

5) A beneficial owner of the instant dividend income

A) The text of the OECD Model Agreement

(1) Note 1) Section 10 of Article 1: Some forms of tax avoidance have already been dealt with in the Convention, and the introduction of the concept of “beneficial owner” is the example.

Note 2) Paragraph 12 to Article 10: The term "beneficial owner" is not used in a narrow mechanical sense, but rather should be understood within the context, objectives, and intention of the Convention. It is the prevention of double taxation, tax avoidance, and tax evasion.

B) The principle of substantial taxation and the beneficial owner of dividend income

The issue of whether a taxpayer can choose one of the various lawful and effective legal relations to achieve the same economic purpose is the matter of his own choice in consideration of the efficiency of the purpose and the degree of bearing related expenses, such as taxes, etc. Thus, if a taxpayer selects one of the two methods and forms the legal relations, the content and scope of the tax resulting therefrom must be decided individually in accordance with the legal relations (see Supreme Court Decision 2000Du963, Aug. 21, 2001, etc.). If a taxpayer's pertinent transaction is an act of tax avoidance and intends to deny the validity of the calculation in accordance with the economic observation method or the principle of substantial taxation notwithstanding the legal form, it should be decided individually and specifically under the principle of no taxation without law (see, e.g., Supreme Court Decision 95Nu5301, May 10, 1996). Thus, in this case, since the beneficiary of the dividend income of this case is a resident of GmbH in the form of the dividend income of this case, the Plaintiff cannot withhold the tax treaty to the Defendant.

However, the actual subject of the transaction is the original investor, and the status as the German resident of GmbH 1 and 2 is only for the purpose of tax avoidance of the original investor, and in cases where it is deemed that only the objective of the original investor’s tax avoidance is for the tax avoidance, GmbH 1 and 2 cannot be deemed as the beneficial owner under the Korea-Pacific Tax Treaty. In such cases, the original investor cannot invoke the provisions of the Korea- Germany Tax Treaty on the ground that he/she is the subject of the transaction only on the basis of such transaction form or appearance. Therefore, in such cases, the original investor recognized as the actual subject of dividend income pursuant to the principle of substantial taxation is a taxpayer under the domestic law, and is liable for tax under the Corporate Tax Act.

Under the premise of the above legal doctrine, we examine who is the beneficial owner of the dividend income of this case.

C) the facts of recognition

(1) TMW is a German limited partnership established under the German Commercial Code for the main purpose of investing in real estate and real estate rights in Asian countries, including Japan, Australia, Singapore, Thailand, China, Hong Kong, Malaysia, Korea, India, and India, and is subject to various investment-related advice, including law, tax, and finance, upon entering into an investment management contract with a Singapore company on September 17, 2004. TMW is not subject to corporate tax under the German Corporate Tax Act as a human company, but subject to corporate tax under the German Corporate Tax Act, and the income from TMW is directly attributed to the investor.

⑵ 독일의 유한회사법은 ㈎ 1인 또는 2인 이상의 발기인, ㈏ 회사의 상호, 주소, 목적 등을 기재한 공증을 받은 정관, ㈐ 25,000유로 이상의 자본금, ㈑ 자연인으로서 완전한 행위능력이 있는 1인 이상의 이사를 유한회사 설립의 요건으로 하는바, GmbH 1 및 GmbH 2는 TMW Immobilien AG(TMW의 최초 유한책임사원)가 2003. 8. 13. 부동산 및 부동산에 관한 권리, 부동산 회사 등에 투자하는 것을 주된 목적으로 독일 유한회사법에 따라 설립된 독일 유한회사로서 독일의 적법한 거주자이다. GmbH 1, 2는 매년 TMW에 영업보고서를 송부하였고, 자신의 명의로 PREI(ASIA) Private Limited와 투자관리계약을 체결한 후 이에 대한 수수료를 지급하였다. 다만, GmbH 1, 2는 TMW와 소재지, 연락처, 이사가 동일하고, 인적 구성원이 없다.

Fifth, from May 2003 to October 2009, the company of Germany and Hong Kong had a total of 29 investments in respective Asian countries, including Japan, China, India, Singapore, Malaysia, Hong Kong and Thailand, and each of the investment targets owned 34 German limited companies and 24 local subsidiaries, such as GmbH 1 and 2, and owned real estate through the established investment company, and owned 19.8 billion won as of December 31, 2010. In the tax treaties concluded between Germany and China, India and Japan, the tax treaty between Germany and Hong Kong does not vary depending on the applicable legal entity or partnership. Moreover, in light of the structure of investment, the company of TmbH 1 and 2, and the company of TMW Do directly re-investment in the company of Japan, separate from the company of TMW Do, and the company of TMW Do.

And TMW decided on June 2003 by the member of the Investment Committee to acquire the Plaintiff’s shares. GmbH 1 and 2, a subsidiary company, acquired 100% of the Plaintiff’s shares in each of the United States corporations, Yuwa Yuwa I LLC and Yuhwa Ⅱ LLC.

(v) Around March 2007, TMW decided to sell the Seoul Metropolitan City Tact Building by a member of the Investment Committee. Accordingly, GmbH 1 and 2 decided to sell the said building at the Plaintiff’s general meeting of shareholders on July 18, 2007. On July 18, 2007, TMW transferred the said building at KRW 318.5 billion to KOCREF NPS REIT REIT RED RED. ( real estate investment trust company for coppirirs EPpirirs EPS Nos. 200, and transferred the ownership on July 20, 2007.

⑹ 원고는 2006. 4.경부터 2008. 5.경까지 서울시티타워빌딩 임대수익과 양도수익 등으로 발생한 소득금액을 처분의 경위 다.항과 같이 주주인 GmbH 1, 2에게 각 50%씩 배당하였다. GmbH 1, 2는 이 사건 배당금을 지급받고 2005. 5. 6.부터 2008. 3. 11.까지 사이에 다음과 같이 각 6,546만 유로를 배당할 것을 결의하였고, 자본이득세를 제한 나머지 금액을 TMW에 지급하였으며, 독일에서 이 사건 배당소득에 대한 법인세를 납부하였다. TMW는 2008. 3. 14. 이 사건 투자와 관련된 유한책임사원들에게 출자금 반환 및 이익 배당을 실시하였다.

The amount paid on May 6, 2005 as the date of dividend payment (for oil), which is included in the main sentence of this paragraph, on the date of dividend payment (for 600,000 - June 29, 2005, August 1, 2005; 285,000 on August 21, 2005; 1,125,000 on May 29, 2006; 31, 125,006; 36. 8. 6. 6. 8, 125,00 on May 31, 2006; 308, 9. 6. 6. 8, 125,000 on September 60, 200; 8, 3008; 8. 19,6. 7. 16. 8, 2007;

⑺ 한편, 서울특별시 중구청장은 2006. 3. 10. TMW를 원고의 실질적 소유자인 과점주주로 판단하여 TMW에게 서울시티타워빌딩에 대한 취득세 2,151,307,390원 및 농어촌특별세 197,203,170원을 각 부과하였다. TMW는 이에 불복하여 2007. 2. 5. 이 법원에 취득세부과처분취소의 소( 2007구합5332 )를 제기하였으나, 이 법원은 2007. 9. 28. GmbH 1, 2가 원고의 발행주식을 취득한 것 이외에는 표면적인 사업실적과 인적·물적 조직이 없어 그 자체로서는 독자적으로 의사를 결정하거나 사업목적을 수행할 수 없는 명목상의 회사에 불과하므로, TMW를 과점주주로 보아 이루어진 취득세 부과처분이 적법하다는 이유로 TMW 패소판결을 선고하였고, TMW가 항소를 하지 않음에 따라 위 판결은 2007. 10. 23. 확정되었다.

[Ground of recognition] Facts without dispute, Gap 3 through 10, 12 through 22, 24 through 31, 34, Eul 3 through 8, the purport of the whole pleadings

D) Determination

In light of the aforementioned legal principles, it is reasonable to view the beneficial owner of the instant dividend income as GmbH 1 and 2 in full view of the following circumstances, which can be acknowledged by the purport of the entire argument as seen earlier in light of the foregoing legal principles.

(1) In managing funds, the necessity of an investment holding company, such as GmbH 1 and 2, cannot be denied for the efficient management and operation of investment funds and investment assets, and in principle, the actual person in charge of actual source of substantial funds, actual person in charge of investment and asset management activities through an investment holding company, the ultimate person in charge of investment and assets management, and the ultimate person in charge of investment profits, may not be reconvened by taking into account the issue.

Luxembourg did not establish an investment company via a third country favorable to the tax application in relation to the instant investment, and in light of the circumstances where the limited tax rate is not differentiated depending on whether it is a corporation or partnership, or where the investment target country has adopted the investment structure of the same kind as the instant GmbH 1 and 2 even in the investment target country where no tax treaty was concluded with the German tax treaty, it cannot be readily concluded that TMW performed investment by establishing GmbH 1 and 2 as intended to avoid taxes under the Corporate Tax Act of Korea or derived from the application of the Korea-Japan Tax Treaty.

Secondly, even if the establishment of GmbH 1 and 2 was for the purpose of evading acquisition tax on the Seoul Typ Building, acquisition tax is not subject to Article 2 of the Korea- Germany Tax Treaty, and thus cannot be deemed as the intent to abuse tax treaty benefits, and it is reasonable to respect the substance of the special purpose company, in principle, in relation to other taxes that are not taxes for the purpose of avoidance.

Applicant GmbH 1 and 2 are a limited liability company duly established under the German Limited Liability Company Act, and the Plaintiff was invested in the name of GmbH 1 and 2, and a legal act, such as the conclusion of an investment management contract and the payment of fees, was done in its own name. Under the German Corporate Tax Act, a taxpayer of corporate tax on the instant dividend income under the German Corporate Tax Act is also GmbH 1 and 2, and TMWWH 1 and 2 in the same location as TMW, in relation to TMW, disposes of funds separately from TM. In light of the circumstances in which TmbH 1 and 2, GmbH 1 and 2 shall be deemed the subject of independent rights and obligations from a legal point of view.

(v) the dividend income is reverted to the owner of the shares, and in principle, the owner of the shares is the owner of the shares, and TMW is not a person entitled to exercise the right to claim the dividend payment against the plaintiff as a shareholder, but the sole subject entitled to exercise the right to claim the dividend payment by GmbH 1 and 2, the owner of the shares of the plaintiff, and it also accords with the economic substance perspective that the dividend income in this case was reverted to GmbH 1 and 2

⑹ GmbH 1, 2가 TMW와 소재지, 연락처, 이사가 동일하고, 인적 구성원이 없다 하더라도, 국내법에서도 이를 법인으로 인정하고 있고, 이는 특수목적회사(SPC)의 고유하고 본질적인 특성으로서 GmbH 1, 2가 이 사건 배당소득의 수익적 소유자가 될 수 없다는 근거로 삼을 수 없다( 자산유동화에 관한 법률 제20조 , 제23조 에 의하면, 특수목적법인인 자산유동화전문회사는 본점 외의 영업소를 설치할 수 없고 직원을 고용할 수 없으며, 유동화자산의 관리와 회사의 업무 처리를 제3자에게 위탁해야 한다).

⑺ 이 사건에 적용되는 세법에서 이 사건의 투자구조와 같은 사안에 대하여 GmbH 1, 2와 같은 법인을 부인하는 개별적·구체적 규정이 존재하지 않고, 뒤에서 보는 바와 같이 한독 조세조약 제27조 제2항의 혜택제한규정에 해당되지도 않는다.

6) Whether it falls under Article 27(2) of the Korea- Germany Tax Treaty

(A) Contents and requirements of the provisions;

(1) Article 27(2) of the Korea-Japan Tax Treaty provides that “The creation or grant of shares or other rights to the payment of dividends, or the creation or grant of a right to the payment of interest, or the creation or grant of a right to the payment of other income, or the creation or grant of a right to the payment of other income, shall not be applicable if it is the principal purpose of a related person to use Article 10 (Distribution) by creation or grant of a right without reasonable economic reasons for the operation of the business concerned.

The case where the limited tax rate is applied to the establishment of Luxembourg's right newly created between the residents of Korea and Germany and the case where the limited tax rate under the tax treaty is applied to the dividend income, etc., and the related persons of the third country make investments or loans to the residents of Germany and the case where the residents of Germany newly acquire the issued stocks or bonds of Korean residents. Thus, when the residents of Germany directly acquire the bonds of Korean residents, the limited tax rate under the tax treaty is applied to the case where the related persons of the third country use the Korea- Germany tax

Article 2(1) of the Korean Tax Treaty provides that a person who is not subject to the limited tax rate under the Korean Tax Treaty shall transfer his right to the person to whom the limited tax rate under the Korean Tax Treaty is applied and the limited tax rate under the Korean Tax Treaty shall be applied. The transfer of right between German residents is also a transfer between the persons to whom the limited tax rate under the Korean Tax Treaty is applied.

Applicant Even if there is creation or grant of the right to dividend payment, it is reasonable to interpret that the application of the limited tax rate cannot be excluded, unless there is a reasonable economic reason or the use of the limited tax rate of dividend income is the main purpose of the interested parties.

B) Determination

In light of the above requirements under Article 27(2) of the Korea-Japan Tax Treaty, Article 27(2) of the Korea-Japan Tax Treaty provides that the resident of a third country who is unable to be subject to the limited tax rate on dividend income shall not benefit from the application of the limited tax rate by taking advantage of the Korea-Japan Tax Treaty. Even if the final investor of WT has invested directly in the Seoul City TMF building, it would have been able to be subject to the limited tax rate of 15% as stipulated in the Korea-Luxembourg Tax Treaty or the Korea-Luxembourg Tax Treaty, and the Austria Tax Treaty. The form of the investment in this case does not appear to be the form of investment aimed at preventing the above provision. If the final investor of WT intends to be subject to the limited tax rate of 5% as stipulated in the Korea-ASEAN Tax Treaty, it appears that it would have been possible to achieve the purpose of the transaction method by establishing and investing WT in the form of a limited liability company, and the Plaintiff’s investment company’s investment and disposal of its shares will not be able to obtain and utilize its investment and investment in the 2 treaty.

7) Sub-determination

Therefore, since the beneficial owner of the instant dividend income is GmbH 1 and 2 and Article 27(2) of the Korea- Germany Tax Treaty cannot be deemed to apply, it is legitimate for the Plaintiff to withhold at source by applying the limited tax rate of 5% pursuant to Article 10(2)(a) of the Korea- Germany Tax Treaty with respect to the instant dividend income, and the instant disposition based on a different premise is unlawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is justified and it is so decided as per Disposition.

[Attachment]

Judges Lee Jae-hee (Presiding Judge)

주1) For instance, some forms of tax avoidance have already been expressly dealt with in the Convention, e.g. by the introduction of the concept of “beneficiary owner”.

주2) The term “beneficiary owner” is not used in a narrow technical sense, rather, it should be understood in its context and in light of the object and purposes of the Convention, including avoiding double taxation and the prevention of fiscal evasion and avoidance.