The meaning of oligopolistic stockholders liable for secondary tax liability

In order to have a shareholder of a corporation bear the secondary tax liability in accordance with Article 39 subparagraph 2 of the Framework Act on National Taxes, the shareholder is required to be in a position to substantially control the operation of the corporation as an oligopolistic shareholder.

Article 39 subparagraph 2 of the Framework Act on National Taxes

Supreme Court Decision 86Nu105 Decided July 8, 1986, 86Nu74 Decided December 9, 1986, 86Nu330 Decided December 9, 1986

[Judgment of the court below]

Head of Yongsan Tax Office

Seoul High Court Decision 86Gu167 delivered on September 12, 1986

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

We examine the grounds of appeal.

In order to bear the secondary tax liability to the shareholders of the corporation in accordance with Article 39 (2) of the Framework Act on National Taxes, it is required that the shareholders are in a position to substantially control the operation of the corporation as oligopolistic shareholders.

According to the reasoning of the judgment below, the court below confirmed on January 17, 1983 that the non-party, who is the representative director of the non-party original engineering corporation, was in the form of shareholders' list, which held 3,000 shares of the above company without the plaintiff's consent, and that the plaintiff did not actually control the company's management, such as exercising the rights as a shareholder or participating in management, etc.

In light of the records, the fact-finding and judgment of the court below are just and there is no violation of the rules of evidence as otherwise alleged.

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the defendant. It is so decided as per Disposition by the assent of all participating Justices.

Justices Lee Byung-su (Presiding Justice)