Jeju District Court-2015-Gu Partnership-213 ( December 16, 2015)

If it is found that any registration was made as a representative director on the corporate register that the registration was not actually carried out by the company, it shall be taxed on the actual owner.

Although the Plaintiff was registered as the representative director on the corporate register, it is sufficiently recognized that he did not actually operate the company, the instant disposition taken on the premise that the Plaintiff is the actual representative in accordance with the principle of substantial taxation is unlawful.

Article 67 of the Corporate Tax Act

(Disposition)2016Nu106 global income and revocation of disposition

AA

○ Head of tax office

Jeju District Court Decision 2015Guhap213 Decided December 16, 2015

November 16, 2016

December 7, 2016

1. Revocation of a judgment of the first instance;

2. The Defendant’s imposition of global income tax of KRW 8,924,500 against the Plaintiff on June 11, 2014 shall be revoked.

3. All costs of the lawsuit shall be borne by the defendant.

The same shall apply to the order.

A. The plaintiff's assertion

1. Basic facts

A. BB Co., Ltd (hereinafter “instant company”) was established on December 1, 1996 and closed on November 25, 2013, when it was established on December 1, 1996.

B. As the representative director of the instant company, CCC was appointed on August 27, 2001 and retired on August 26, 2007, and thereafter, the Plaintiff (name ○○○○○○ prior to his name) was appointed on January 17, 201 and resigned on February 22, 2013, and was registered on each corporate register on February 22, 2013.

C. Meanwhile, according to the current shareholder status of the instant company in 201, CCC out of the total 00,000 shares (0.00%) holding 00,000 shares (0.00%), EE held 0,000 shares (0.00%), FF’s 0,000 shares (0.00%), GG’s 0,000 shares (0.00%) and HH’s 0,000 shares (0%).

D. As a result of the investigation following the occurrence of non-conforming data on the tax invoice of the instant company, the Defendant deemed the supply price of KRW 00,000,000 received from another company in the taxable period of value-added tax for the second quarter of 2011 as the processing tax invoice received from the other company without real transaction, and revised corporate tax by including the amount of KRW 00,000,000 in the gross income. Furthermore, the Defendant, as the bonus for the Plaintiff who was the representative director, disposed of the amount included in the above gross income as the bonus for the Plaintiff who was the representative director and notified the change in the income

E. On June 11, 2014, the Plaintiff received the notice of the change in the amount of income and did not file a return on the global income tax for the year 201. The Defendant determined and notified KRW 0,000,000 as global income tax for the year 201 by aggregating the total amount of KRW 00,000 to the Plaintiff’s global income (hereinafter “instant disposition”).

F. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on September 3, 2014, but the Tax Tribunal dismissed the Plaintiff’s appeal on December 3, 2014.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

At the time of the instant disposition, the actual representative director of the instant company was not the Plaintiff but the JJ. The Plaintiff was registered as the representative director under the name of the JJ and did not participate in the management of the said company. Accordingly, the instant disposition imposing comprehensive income tax on the Plaintiff, who is not the JJ, is unlawful.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

1) Even if a person is registered as a representative director on the corporate register of a company, if the company does not actually operate the company concerned, no comprehensive income tax may be imposed on such person by devolving income of which the company is missing (see, e.g., Supreme Court Decision 88Nu3802, Apr. 11, 1989). Meanwhile, since a person who is registered as the representative director on the corporate register can be presumed to have actually been operating the company, the fact that the representative director on the corporate register actually failed to operate the company must be proved by the party asserting that he/she was actually operating the company (see, e.g., Supreme Court Decisions 2010Du116, Dec. 23, 2010; 2006Du187, Apr. 24, 2008).

2) In light of the following facts and circumstances, it is recognized that the person who actually operated the instant company at the time of the instant disposition is not the Plaintiff, the representative director on its corporate register, in light of the following facts and circumstances, which can be seen by comprehensively taking account of the evidence set forth in Gap’s evidence Nos. 3 through 13, Eul’s evidence Nos. 3 and 6, the testimony by the JJ, and each of the financial transaction information meetings by the court against ○○ Bank.

(1) The JJ’s assertion that the Plaintiff is the actual operator of the instant company is consistent with the Plaintiff’s argument to the effect that the Plaintiff appeared as a witness in the court of trial, and that the witness was practically running by acquiring the instant company. At that time, the witness was unable to participate in the energy-saving project tender under the name of the witness due to bad credit standing, and that only the name of the representative director was requested by the Plaintiff, who was an employee, and that the Plaintiff was involved in the operation of the instant company. Although the Plaintiff did not make any unclear or unreasonable part of the Plaintiff’s statement, it appears that it could be understood in light of the time interval between the time and present time of the Plaintiff’s statement. In particular, it is difficult to find out any special motive or motive for the Plaintiff to appear and operate the instant company by taking account of the circumstance and reason why the Plaintiff’s representative director was registered in the name of the Plaintiff, and the main contents of the JJ on the situation at the time of the Plaintiff’s acquisition and transfer of the instant company. Furthermore, it is difficult to find any special motive or inducing for the instant testimony.

(2) On January 18, 201, 201, the former representative director of the instant company, "CCC entered into a contract for transfer and acquisition of the instant company with the JJ on the part of January 18, 201, and the JJ could not take office as the representative director due to credit problems, and the JJ has taken office as the representative director of the instant company. The actual management of the instant company was conducted by the JJ and KK (AJ) and the Plaintiff did not participate in the said company's management. Since then, the Plaintiff stated that "DD, who was the representative director of the instant company, was employed as the representative director of the instant company, and that the former representative director of the instant company, KK et al. were employed as the employee of the instant company, and that the former representative director of the instant company, the former representative director of the instant company, the former representative director of the instant company, and all of the parties involved in the instant case's operation could not be found to have any reasonable grounds to comply with the purpose of the JCC.

(3) From August 19, 2009 to March 26, 2010, the Plaintiff is confirmed to have been subscribed to each of the instant companies as the insured of the employment insurance, from April 1, 2010 to February 28, 2013, from the JJ’s representative director, to the NN (hereinafter “NN”), and from the instant company, from April 1, 2010 to the February 28, 2013. This seems to be the circumstance in which the Plaintiff was working as the employee of NN and retired from office as the instant company on April 1, 2010, and the Plaintiff’s career and position confirmed by such objective data are consistent with the statements of J, etc. as seen above.

(4) On the other hand, while the Plaintiff was registered as the representative director of the instant company from January 1, 201 to December 31, 2011, the income earned from the instant company for one year from January 1, 2011 is merely 0,000,000 won per month based on the total amount of KRW 00,000,000, and it is doubtful whether it can be viewed as the ordinary income amount of the representative director of the instant company (On the other hand, the first instance court confirmed the details of remitting KRW 00,000 to the Plaintiff on December 30, 201, but in fact, it seems that the said amount was not paid to the Plaintiff, but was deposited in the account under the name of the instant company in the name of KK immediately from the account under the name of the instant company).

(5) Rather, from November 30, 201 to December 31, 2011, it is confirmed that the amount equivalent to the money from the account under the name of the instant company was remitted from the account to the account under the name of KK to the account under the name of the instant company. This also can be deemed that the JJ appears to have been related to the instant company in any form or form (on the other hand, before and after that, there exists a circumstance in which the JJ appears to have been transferred the money from the account under the name of KK to the account under the name of NN via the account under the name of NN in the instant company (i.e., the form of monetary transactions made in the actual operation of NN and the instant company).

(6) It is also difficult to view that the Plaintiff, who had been employed as an employee of NN in 2009 and worked for NN, had actually acquired and operated the instant company around 201. It is also more so in view of the Plaintiff’s age (which was 1951 by JJ, and whose son’s son in JJ was 1977) and the Plaintiff’s age (which was merely 1982 students), the relationship between the Plaintiff and the JJ, the JJ in NN, and the KK’s position or status in NN, and the transaction relation between the instant company and NN.

3) Therefore, the instant disposition imposing a comprehensive income tax on the Plaintiff who cannot be deemed to have actually operated the instant company is unlawful and thus should be revoked.

4. Conclusion

Therefore, the plaintiff's claim of this case shall be accepted on the grounds of its reasoning, and the judgment of the court of first instance which has different conclusions is unfair, so it shall be revoked and the disposition of this case shall be revoked and it shall be so decided as per Disposition.