Any gains from forward exchange transactions arising from the swap transactions shall constitute interest income.

It is reasonable to classify profits from forward exchange transactions as interest income in the nature of payment due to the use of money as income similar to interest on deposits received in Korea.

1. The part of the Plaintiff’s claim for revocation of imposition of global income tax exceeding KRW 107 among the instant lawsuit is dismissed.

2. The plaintiff's remaining claims are dismissed.

3. The plaintiff bears the costs of lawsuit.

The Defendant’s disposition of imposition of KRW 414,100 against the Plaintiff on March 1, 2007 is revoked (the difference between the amount stated in the claim and the amount stated in the correction resolution is caused by whether it is less than KRW 10 won).

1. Details of disposition;

A. In around 2004, the Plaintiff subscribed to the so-called 'the swap deposit' (hereinafter referred to as the "the transaction in this case') designed by the AA Bank (hereinafter referred to as the "A Bank") (hereinafter referred to as the "the transaction in this case"). In order to subscribe to the above goods, the Plaintiff entered into three contracts with the AA Bank (hereinafter referred to as the "the same contract in this case").

① The contract for the purchase of goods in kind (original?) : A contract under which the Plaintiff immediately pays won currency in kind to AA bank and receives the goods in kind (hereinafter referred to as “the contract for the said in kind”) calculated at the rate of exchange in the instant case from AA bank at the time of the contract (hereinafter referred to as “the contract for the said in kind”).

② On-the-spot deposit contract: a contract under which the Plaintiff deposits the full amount of the goods in this case to AA bank and receives the amount of the principal and interest of 0.095% per annum or 0.2437% per annum or 0.35% per annum from AA bank (hereinafter “the same contract”).

(3) Onwardd contract for sale of futures ex.: AA bank shall pay the principal and interest of the instant goods in the spot (in the case of the amount equivalent to the global currency interest, the amount excluding the interest income tax withheld; hereinafter the same shall apply) at the maturity of the contract for the instant goods in the spot, and a contract under which the Plaintiff would be paid the spot currency at the rate of exchange (N/won) agreed upon at the time of each of the instant contracts from AA bank (hereinafter referred to as the "unit currency contract in the instant case").

B. The Plaintiff, as a result of the instant transaction, was paid in kind in addition to the amount equivalent to the won currency paid to the AA bank at the time of the agreement from the AA bank at the maturity, ① the amount calculated by multiplying the difference between the gift exchange rate of the instant contract and the exchange rate of the instant goods by the principal of the instant spot cash deposit (hereinafter “the instant income”) and ② the sum calculated by multiplying the interest on the instant spot cash deposit by the gift exchange rate of the instant contract was paid in kind.

C. Under the principle of substantial taxation, the Defendant issued a disposition to increase the comprehensive income tax as stated below on the Plaintiff on the ground that the instant income constitutes interest income under Article 16(1) of the former Income Tax Act (amended by Act No. 8144, Dec. 30, 2006; hereinafter the same shall apply). Following the Plaintiff’s request (amended by Act No. 8144, May 29, 2007) as a result of a national tax proceeding, the portion of the tax return and payment penalty tax for the amount of the above disposition is reduced, and only the amount indicated in the column of the remaining tax amount is remaining (hereinafter the “disposition of imposition of global income tax”).

[Ground of recognition] Facts without dispute, Gap evidence 1, Eul evidence 1-1 and Eul evidence 1-2, the purport of the whole pleadings

2. Whether the action against the additional tax is proper; and

According to the facts found in Paragraph 1, the part of the Plaintiff’s claim for revocation of imposition of global income tax exceeding KRW 107 among the instant lawsuit is related to the part already extinguished due to the correction of reduction.

3. Issues related to the disposition of the instant case.

The main issues related to the instant disposition are (1) whether the pertinent income is deemed income generated from the entire transaction in this case; (2) whether the pertinent income is in the nature of consideration for the use of money as income similar to the interest on deposits, bonds, or repurchase/back agreement marginal profits on bonds or securities received in Korea; and (3) whether the instant disposition violates the principle of respect for tax practice under Article 18(3) of the former Framework Act on National Taxes (amended by Act No. 8830, Dec. 31, 2007; hereinafter the same) or the original rule of protection for trust. The key issues are as shown in the attached Form.

4. Whether the income of this case is of a nature of consideration following the use of money as income generated from all of the transactions of this case

A. Summary of the plaintiff's order

Each contract of this case has separate legal and economic substance, so it should be identified as separate transactions. However, the income of this case is "the gains from conversion into the currency contract of this case and the gift contract of this case (hereinafter referred to as "the gift from conversion into the currency contract of this case")" and its legal and economic substance is merely capital gains, not the interest income with the nature of payment for the use of money. In addition, since the object of the swap contract of this case is a currency, the income of this case is not the income similar to the gains from buy-back agreement of bonds or securities. Accordingly, the income of this case is not the income similar to the gains from buy-back agreement of securities. Thus, even though the interest income tax under Article 16 (1) 13 of the former Income Tax Act cannot be imposed on the income of this case, the defendant's disposition of this case is unlawful in

(b) Fact of recognition;

1) Each of the instant contracts is concluded between the same parties at the same time, and is entirely combined with both its establishment, existence, and termination, and the subject of transactions.

① In other words, AA Bank designed the instant transaction goods as a single product for the purpose of leading to the new attraction of large-amount customers of Korean currency deposits that are traded with other financial institutions, and concluded each of the instant contracts at the same time to eliminate exchange risks and to ensure that deposits or bonds provided at the time of forward exchange transactions or foreign exchange swap transactions need not be separately provided. In addition, the instant transaction is not the return by each of the instant contracts, but rather the return by each of the instant contracts, but is anticipated and designed to allocate to customers and banks the amount of 0.50%, which is the difference in return after the tax return with the Korean won deposit at the time of the entire transaction of this case, based on the return rate based on the results of the entire transaction of this case. In general, the interest rate announcement on large-amount foreign currency deposits in the financing division, and the gift exchange rate announcement is respectively in the financial market division, and in the case of the instant transaction, AA Bank has been set up to make the gift exchange rate and the deposit interest rate publicly notified in a lump sum.

② The AA Bank explained that the instant transaction was more favorable than ordinary deposit at the time of the 3rd effective return of profit, while publicizing the Plaintiff as a single product to customers including the Plaintiff. Accordingly, both the Plaintiff and the customer including the Plaintiff and the AA Bank entered into each of the instant contracts at the same time for the purpose of trading one product. The customer, including the Plaintiff, compared to ordinary won deposit based on the yield that can be gained from the entire instant transaction, compared to ordinary won deposit. In fact, there was no example that only part of each of the instant contracts was entered into.

③ Among each of the instant contracts, only the spot currency regular deposit contract of this case or the gift of this case cannot be terminated separately, and where the gift of this case is terminated at the same time, the gift of this case shall be liquidated at the same time. The same applies to the spot currency deposit of this case. In this case, the interest rate on early termination (for less than seven days: 30% of agreed interest rate and less than six months: 50% of agreed interest rate) shall apply to the spot currency deposit of this case, and the gift of this case shall be terminated by applying the maturity and exchange rate newly, and the gift exchange premium shall be paid a fair valuation amount. The fair valuation value of the gift exchange shall be the difference in Korea won by conducting the counter-trade in the market at the time of the transfer of the gift, and the opposing price discount and interest rate shall be determined by the bank of this case. However, there are no incomes accrued at the time of termination and no income accrued at the time of termination in Korea.

④ The maturity date of the instant contract on the spot deposit and the settlement date of the instant gift agreement are always consistent. Moreover, the general foreign currency deposit may be agreed in advance to be re-deposited under the automatic uniform terms and conditions, barring any separate declaration of intent at maturity. However, the instant contract on the spot deposit is automatically terminated unless there is any separate declaration of intent at maturity.

⑤ At all times, the amount of the gift internationalization contract of this case is equal to the principal amount of the contract for the spot currency deposit of this case with the total amount of subsequent interest. The Korean won amount agreed to the transaction of this case is to be paid together with the designated account in advance.

2) From 2002 to 2004, the interest rate on time deposits in Korean won in kind was 3% per annum after the tax year, and the rate of return arising from the instant transaction was 3% to 4% per annum. The difference was 0.5% near the instant transaction, and there was a number of cases where the annual rate of return arising from the instant transaction was lower than that on the spot won deposit account. In addition, when imposing the income tax on the instant income, there was a number of cases where the annual rate of return arising from the instant transaction was lower than that on the spot won deposit account. The rate of exchange for telegraph redemption publicly notified by the AA bank was 0.9% higher than that on the spot deposit account, the rate of exchange for telegraph redemption was calculated by subtracting 0.9% from the base rate of sale. Moreover, the AA Bank was calculated from BBBBBB Korea Korea’s transmission of USD / source swap points and USD/N swap, based on this, calculated and used the financial exchange rate of exchange rate through cr.

[Ground of recognition] The facts without dispute, evidence described in paragraph (1), evidence described in paragraphs (2) and (5) and the purport of the whole pleadings described in Gap evidence Nos. 2 through 5 and evidence Nos. 9 through 21 (including each number)

(c) Provisions and legal principles of the former Income Tax Act;

1) old Income Tax Regulations

Article 16 (1) of the former Income Tax Act (Article 3 of the former Income Tax Act) provides that income subject to income tax shall be imposed only on the income specified as income subject to income by identifying the type of income and not on taxation (Article 3 of the former Income Tax Act). However, Article 16 (1) of the former Income Tax Act provides that "interest and discount amount on deposits (including installment savings, installments, deposits and postal transfers) and bonds or securities as prescribed by the Presidential Decree (Article 9) as interest income shall be listed as interest income. From January 1, 2002, Article 16 (1) of the former Income Tax Act provides that "the income subject to income tax shall be imposed uniformly on similar income as provided in subparagraphs 1 through 12 in the form of a type of comprehensive taxation that allows uniform taxation of similar income in order to enhance the fairness of taxation from January 1, 202."

2) Legal principles

Meanwhile, the tax authority should respect the legal relationship chosen by the taxpayer in the course of carrying out economic activities. However, in light of the purport of the provision on interest income adopting the principle of substantial taxation and the principle of tangible comprehensive taxation, whether the profit earned from any transaction constitutes an interest income under Article 16 (1) 13 of the former Income Tax Act shall not be determined simply based on the content or form of the relevant contract, but shall be determined by considering the characteristics of the transaction object, transaction practices, parties’ intent, relationship between each contract, the process of conclusion of the contract, and the outcome of the contract (see, e.g., Supreme Court Decisions 91Nu254, Jan. 21, 1992; 95Nu15476, Jun. 13, 1997; 2001Du6227, Dec. 26, 2002; 205Du120379, Oct. 13, 2006).

D. Specific determination

Comprehensively taking account of the aforementioned legal principles and the following facts, the instant transaction is a single transaction that is similar to the regular deposit in Korean won. The entire profit accrued from the instant transaction is similar to the interest of the spot deposit in Korean won. Therefore, it is reasonable to view the entire profit as the price for cash use. Therefore, the instant income, which is a part of the entire profit of the instant transaction, constitutes interest income under Article 16(1)13 of the former Income Tax Act. The Plaintiff’s assertion on this part is rejected.

① The instant spot exchange rate and futures exchange rate applied to the instant transaction were determined differently from the case where only each contract is concluded on a separate basis. AA bank could appropriately adjust the overall return rate of customers, including the Plaintiff, by adjusting the pressd (the exchange rate, including a bank, would simultaneously offer two trade prices (exchange rate) for the same currency to the high-class customer. In the event that a bank sells foreign exchange to the high-class customer, the purchase exchange rate applied at the time of the purchase and the sale rate applied by the bank at the time of the purchase and the sale of the foreign exchange to the high-class customer.

② In the instant transaction, the exchange risk or swap point (the swap point is the transaction price to adjust the actual profit and loss on an equal basis by revising the difference in the interest rate of two currency exchanged in the swap transaction) that appears in the general foreign exchange transaction, and thus, there was no risk of change in the transaction to avoid such risk.

③ Each of the instant contracts was legally completely combined, inasmuch as either of the instant contracts is unable to achieve the purpose of transaction solely by the remaining contracts, and thus, it is impossible to conclude only a part of the instant contracts.

④ Since there is a contract for the international currency deposit in the instant case, the customer including the Plaintiff did not pay the deposit money for the foreign currency swap transaction to the AA bank.

⑤ In general foreign exchange swap transactions, holding and using won currency and the UN currency funds are practically exchanged, and as a result, swap points are given and received. On the other hand, in the instant transaction, only won currency deposits in the same kind as the ordinary won regular deposit are deposited in the bank at maturity, and the swap points were given and received even if the actual funds of the spot currency are not available.

(6) The total profits that a customer, including the Plaintiff, can obtain through the instant transaction are the same as the interest for time deposits in Korean won provided for the instant transaction. The instant income, i.e., swap points serve to adjust the difference between the interest on the Korean won regular deposit and the interest on the Korean won regular deposit as some of them, and have no independent economic substance or meaning otherwise.

7. If the interest income tax is not imposed on the instant income, the bank and the customer including the Plaintiff, instead of the Korean won deposit on which the interest income tax is imposed, have been able to substantially avoid taxes by engaging in transactions in the same form as the instant transaction using a currency with a lower interest rate than the Korean won deposit rate.

8. It is clear that, at the same time, AA bank borrows its funds in kind from abroad (the Plaintiff’s legal brief (1) dated June 8, 2010 that it is the initial interest rate) and if it borrows its funds in kind, it has the nature of the consideration for the use of the funds. If AA bank borrows its funds in kind from abroad to its holding it as it is, it does not bear the risk of redemption in kind due to the fluctuation in the initial interest rate. If BA bank borrows its funds in kind from its foreign countries to its domestic customers in lieu of the initial interest rate, it continues to obtain the payment in kind, other than the initial interest rate, and if it receives the deposit in kind from its domestic customers in lieu of the initial interest rate, it shall not obtain the payment in kind in addition to the initial interest rate in kind. If BA bank continues to obtain the payment in kind in excess of the UN interest rate in exchange in kind, it shall not obtain the adequate interest rate in Korean currency in addition to the initial interest rate in kind.

9) The product designer for the instant transaction is the AA Bank and the AA Bank unilaterally determines the transaction variables, and the AA Bank constituted each of the instant contracts as a single product. It is not a structure for customers, including the Plaintiff, to determine an exchange rate, exchange rate, exchange rate, return rate, return rate, etc. under their respective responsibilities, but rather a structure for which the customer, including the Plaintiff, determines the exchange rate, exchange rate, exchange rate, return rate, return rate, etc., and the customer, including the Plaintiff, has no power to make any decision on the exchange rate, exchange rate, exchange rate, deposit rate in Korean won, etc. The AA Bank shall consider the loan rate, exchange rate, deposit interest rate in Korean won, etc. (the Korean won value at the time of purchase and sale, the exchange rate, exchange rate, exchange rate, etc., even if there is no change in the purchase and sale rate, but the AA Bank may reduce customer losses by adjusting the purchase rate, sale rate, and exchange rate. The AA Bank finally determined the rate of exchange rate of exchange rate, including the Plaintiff’s pre-sale rate of interest and interest.

5. Whether it has violated the principle of good faith, etc.

A. Summary of the plaintiff's order

Although most commercial banks, including AA bank, engaged in the instant transaction from around 2002 to deal with non-taxation on the income of this case, the tax authorities did not impose tax on the income of this case only once until the disposition of this case, and thus, it should be deemed that the non-taxation practice accepted by many and unspecified general taxpayers, such as the Plaintiff, as legitimate. In addition, the National Tax Counseling Center, around September 2003, sent a reply to the purport that the transaction of this case is not subject to taxation on questioning as to whether the benefits arising from the forward exchange transaction are subject to taxation. Nevertheless, the disposition of this case is contrary to the principle of respect for tax practices under Article 18(3) of the former Framework Act on National Taxes or the principle of protection of trust.

B. Determination

1) Legal principles

In general, in the tax law relationship, in order to apply the principle of trust and good faith to the tax authority's act, first, the tax authority must give the taxpayer a public opinion that is the subject of trust, second, the taxpayer should not be responsible for the taxpayer's reliance on the legitimacy of the tax authority's expression of opinion, third, the taxpayer should be reliance on the expression of opinion, and third, the tax authority should make the disposition against the above expression of opinion, thereby infringing the taxpayer's interest.

In addition, “the construction of tax-related Acts or practices in tax administration, which are generally accepted by taxpayers” under Article 18(3) of the former Framework Act on National Taxes, refers to a wrongful interpretation or practice, which is accepted by an unspecified general taxpayer, who is not a specific taxpayer, without any objection, to the extent that it is not unreasonable for the taxpayer to trust such interpretation or practice. The burden of proving the existence of such interpretation or practice lies on the taxpayer, who is the claimant. In addition, in order to form a non-taxation practice, the tax authority must not impose tax due to special circumstances knowing that the tax authority is able to impose tax on the matter (see, e.g., Supreme Court Decisions 97Nu1315, Aug. 21, 1998; 2001Du403, Sept. 5, 2003).

2) Specific determination

In this case, each statement of Gap evidence Nos. 4 through 8 and Gap evidence Nos. 17 alone cannot be deemed to have expressed a public view that the tax authority would not impose interest income tax on the income of this case other than the futures exchange premium appearing in general futures exchange transactions, and it is difficult to deem that the non-taxation practice has been formed on the income of this case (no evidence exists to prove that the defendant or the State has encouraged the instant transaction while actively providing tax reduction and exemption benefits; the plaintiff or the AA bank did not ask the tax authority in writing by reflecting all the conditions, and provided the legal counsel with the law firm without indicating all the facts of the instant transaction, and the legal counsel with the law firm rather than confirming the non-taxation practice). The plaintiff's assertion on this part cannot be accepted.

6. Method by which the State realizing litigation and economy, etc.

In the event that there are a number of the same issues, and one of the parties is the state, rather than responding to or appeal by the State, if they make a definite statement to be followed by the final judgment of the judiciary on the preceding or specific cases, or make a promise to the same contents as above to the people and the State, they may benefit all of the people and the State, such confirmation, etc. in terms of the protection of the rights of the people and the economy of litigation, should be encouraged. However, in this case, there is no defendant's opinion, and it seems that there is no defendant's opinion in this case, and that it would be sufficient that they will not stay in the case, but

7. Conclusion

Therefore, the part of the Plaintiff’s claim for revocation of imposition of global income tax exceeding KRW 107,00 among the instant lawsuit, is unlawful, and thus, the Plaintiff’s remaining claims are dismissed.