A. Criteria for determining whether it constitutes an oligopolistic stockholder under Article 39 subparagraph 2 of the former Framework Act on National Taxes and Article 20 of the former Enforcement Decree of the Framework Act on National Taxes

(b) The burden of proving the existence of shares;

A. Article 39 subparagraph 2 of the former Framework Act on National Taxes (amended by Act No. 4672 of Dec. 31, 1993) and Article 20 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 14475 of Dec. 31, 1994) provide that a group of shareholders holding not less than 51/100 of the total issued and outstanding stocks of a corporation shall be an oligopolistic shareholder and impose secondary tax liability for such person shall be deemed to be in a position of de facto controlling the company's management through the exercise of voting rights at the general meeting of shareholders according to the number of the stocks held. Thus, the determination of whether a company is an oligopolistic shareholder under the same Act shall be made based on whether the group of stocks owned by the majority of the company is the cause of the company reorganization, unless there are special circumstances such as the company reorganization, etc., and in detail, it shall not be determined as an oligopolistic shareholder, and it shall not violate the principle of substantial taxation, the principle of equality, the principle of proportionality, and the principle of proportionality.

B. The fact of ownership of shares is to be proved by the tax authority’s data, such as the list of shareholders, the list of changes in the shares, the list of the certified transcript of the register of shareholders, etc. However, even if it appears to be a single shareholder in light of this data, where there are circumstances, such as where the actual shareholder was stolen or registered in a name other than the name of the de facto ownership, the nominal owner who asserts that he is not a shareholder is not a shareholder,

A. (B) Article 39 subparagraph 2 of the former Framework Act on National Taxes (amended by Act No. 4672 of Dec. 31, 1993); Article 20 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 14475 of Dec. 31, 1994)

A. (b) Supreme Court Decision 93Nu23411 delivered on March 11, 1994; 94Nu622 delivered on August 12, 1994; 94Nu7997 delivered on January 20, 1995; 91Nu1721 delivered on July 23, 1991; 92Nu10906 delivered on December 11, 1992

Plaintiff 1 and one other, Plaintiffs et al., Counsel for the plaintiff-appellant and one other, Counsel for the plaintiff-appellant)

Head of Seocho Tax Office

Seoul High Court Decision 93Gu26429 delivered on September 16, 1994

All appeals are dismissed.

The costs of appeal are assessed against the plaintiffs.

We examine the grounds of appeal.

Article 39 subparagraph 2 of the former Framework Act on National Taxes (amended by Act No. 4672 of Dec. 31, 1993) and Article 20 of the Enforcement Decree of the Framework Act on National Taxes impose secondary tax liability on a shareholder group that owns not less than 51/100 of the total issued and outstanding stocks of a corporation as an oligopolistic shareholder because it is deemed that the shareholder group is in a position of de facto control through the exercise, etc. of voting rights at the general meeting of shareholders according to the number of its shareholding. Thus, whether it is an oligopolistic shareholder under Article 39 of the same Act shall be determined based on whether it is the cause of the majority shareholder, unless there are special circumstances such as during the company reorganization procedure, etc., and it shall not be determined as an oligopolistic shareholder even if there is no specific fact in the company management (see, e.g., Supreme Court Decision 94Nu6222 of Aug. 12, 194), and it does not violate the principle of substantial taxation, the principle of equality, the principle of proportionality, and the principle of proportionality.

In addition, the facts of stock ownership should be proved by the tax authorities through the data such as the list of shareholders, the list of stock transfer status, the list of the certified transcript of register, etc., and in the case where there are circumstances such that even if a single shareholder appears to be a single shareholder in light of this data, the actual shareholder is stolen or registered in the name other than the real shareholder registration, the nominal owner who asserts that he is not a shareholder should be proved (see, e.g., Supreme Court Decision 94Nu622, Aug. 12, 1994; 92Nu10906, Dec. 11, 1992; 91Nu1004, Nov. 12, 1991).

In the same purport, the court below cannot avoid liability as the secondary taxpayer of the non-party company unless it proves special circumstances, such as that his name was stolen or the fact was merely a nominal shareholder, not a substantial shareholder, and the name was merely a nominal shareholder. The evidence revealed that the above special circumstances exist, and there is no other evidence to acknowledge it, and thus, the court below is just in holding that the plaintiffs have secondary tax liability, and there is no error of law such as the theory of lawsuit.

All arguments are without merit.

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

Justices Lee Yong-hun (Presiding Justice)