bonus disposal to the actual representative who has not been represented by the representative in a simple name and who has earned economic benefits;

As long as it is difficult to deem that the Plaintiff was in a position to actually manage the corporation of this case and enjoy economic benefits, the Plaintiff is merely a representative director under the simple name of the corporation of this case, and thus, is unreasonable.

Article 67 of the Corporate Tax Act

1. The Defendant’s disposition of imposition of global income tax of KRW 33,761,960 against the Plaintiff on January 1, 2006 shall be revoked.

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

As set forth in the text.

1. Circumstances leading to the disposition;

A. On August 22, 2002, the Plaintiff completed the registration as the representative director of the company 00 ordinary trade (hereinafter “the corporation of this case”) with its head office in Seoul 00-Gu 00-0,000-0, for the purpose of the business of manufacturing and selling rooftop products and bedclothes.

B. On May 20, 2005, the director of the tax office sent a notice of change in the amount of income to the Plaintiff on the ground that the instant corporation’s disposal of 121,05,000 won was disclosed out by the processing purchase tax invoice received from 00 commercial company, 00,000 and 00 Textiles Co., Ltd. during the business year 2003.

C. On January 10, 2006, the Defendant was notified by the head of the tax office of the transfer of the notice of change in the amount of income to the Plaintiff, and subsequently notified the Plaintiff of the correction and notification of KRW 33,761,960 in global income tax for the year 2003.

[Ground of recognition] The purport of the whole pleadings in the absence of dispute, Gap 1-4, Eul 1 and two (where there are branch numbers, including branch numbers; hereinafter the same shall apply)

2. The assertion and judgment

A. The plaintiff's assertion

The Plaintiff only lent the name of the representative director upon the request of Kim 00 at the time of the establishment of the instant legal entity. From March 20, 2003 to February 2004, the Plaintiff actually operated the instant legal entity. Since the Plaintiff was not fully involved in the management of the instant legal entity, the instant disposition was unlawful since it violated the substance over form principle.

(b) Related statutes;

○ Framework Act on National Taxes

Article 14 (Real Taxation) (1) If the ownership of any income, profit, property, act or transaction subject to taxation is merely nominal, and a person to whom it actually belongs exists exists, the tax-related Acts shall apply to such person as a taxpayer.

○ Corporate Tax Act

In filing a report on the tax base of corporate tax on income for each business year pursuant to the provisions of Article 60 or in determining or revising the tax base of corporate tax pursuant to the provisions of Article 66 or 69, the amount included in gross income shall be disposed of as bonus, dividend, other outflow from the company, internal reservation, etc. according to the person to whom it belongs as prescribed by Presidential Decree

○ Enforcement Decree of Corporate Tax Act

Article 106 (Disposition of Income) (1) The amount included in the calculation of earnings under the provisions of Article 67 of the Act shall be disposed of in accordance with the provisions of each of the following subparagraphs. The same shall also apply to nonprofit

1. Where the amount included in the calculation of earnings has clearly leaked out of the company, it shall be excreta, bonus from the disposition of profits, other income, and other outflow from the company under each of the following items according to the person to whom it reverts: Provided, That where the accrual is unclear, it shall be deemed as accrual to the representative (where the total number of stocks held by an officer who is not a minority shareholder under the provisions of Article 87 (2) and persons with a special relationship under the provisions of paragraph (4) of the same Article is 30% or more of the total number of stocks issued or total investment amount of the concerned corporation and the officer actually controls the operation of the corporation, he shall be deemed as the representative, and where a corporation which has been exempted from withholding taxes under the provisions of Article 46 (12) of the Restriction of Special Taxation Act reports that there is a separate representative among the officers of the stockholders, etc., the reported person shall be the representative, and

○ Income Tax Act

Article 20 (Earned Income)

(1) Earned income shall be the following income generated during the relevant year:

1. Class A:

(c) Amount treated as a bonus under the Corporate Tax Act;

(c) Fact of recognition;

(1) On August 22, 2002, the Plaintiff received KRW 1,500,00 per month upon the request of Kim 00, the actual owner of the instant corporation, and the representative director of the instant corporation was the representative director of the instant corporation, but Kim 00 operated the instant business in Seoul 00,000, which is the location of the instant corporation, as the representative director, and the Plaintiff used the said agreed amount or the office leased by the Plaintiff and did not pay the office rent. The Plaintiff claimed delivery of the said office to Kim 00 around March 8, 2003, and received delivery of the said office from Kim 00 on March 20, 2003.

(2) On April 2003, the Plaintiff decided to transfer the right of operation and the status of representative director of the instant corporation to Lee 00. However, before completing the acquisition procedure of the instant corporation, such as change of shareholder name, change of officer, etc., the Plaintiff received the processing purchase tax invoice under the name of the instant corporation and reported the amount of value-added tax for 1 and 2 years for 2003.

(3) On March 25, 2004, the Plaintiff resigned from the office of representative director of the instant legal entity, and on the same day, the name of the instant legal entity was changed to 000.

[Ground of recognition] The facts without dispute, Gap 3, 4-1 and 2, 5-1 and 2, 8, 9-1, Eul 5 and 6-1, the purport of the whole pleadings, and the purport of the whole pleadings

D. Determination

According to the substance over form principle, if the ownership of the income, profit, property, act or transaction which is the object of taxation is nominal, and there is another person to whom it actually belongs, the person to whom it actually belongs shall be the taxpayer. However, in the application of the substance over form principle under Article 14(1) of the Framework Act on National Taxes, the fact that the ownership of the transaction which is the object of taxation is merely the nominal title, and

According to the above facts, as long as it is difficult to view that the Plaintiff was the principal manager of the instant legal entity, not the Plaintiff, and that only the Plaintiff actually operated the instant legal entity, or that the Plaintiff belonged to the business income or profit of the instant legal entity, or that the Plaintiff enjoyed economic benefits due to the management of the instant legal entity, it is reasonable to deem that the Plaintiff was the representative director under the mere name of the instant legal entity, and thus, the instant disposition was unlawful.

3. Conclusion

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

[Seoul High Court Decision 2007Nu23974, May 06, 2008]

1. Revocation of a judgment of the first instance;

2. The plaintiff's claim is dismissed.

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

1. Purport of claim

The Defendant’s disposition of imposing global income tax of KRW 33,761,960 on the Plaintiff on January 1, 2006 is revoked.

2. Purport of appeal

The judgment of the first instance is revoked. The plaintiff's claim is dismissed.

1. Details of disposition;

A. On August 22, 2002, the Plaintiff was registered as the representative director of a corporation 000 (hereinafter referred to as the “instant corporation”) with its head office located in 00,000,000 Dong-dong 00-0, and for the purpose of manufacturing, selling, etc. of office products and bedclothes.

B. On May 20, 2005, the director of the tax office sent a notice of change in the amount of income to the Plaintiff on the ground that the instant corporation’s transfer of KRW 121,05,000 via the processing purchase tax invoice received from 000,000 Co., Ltd. and 000, etc. during the business year 2003.

C. On January 1, 2006, the Defendant notified the Plaintiff of the notice of change in the amount of income to the Plaintiff, and issued the instant disposition to correct and notify the Plaintiff of KRW 33,761,960 as global income tax for the year 2003.

[Reasons for Recognition] No. 1-2, Gap evidence No. 3, 4, Eul evidence No. 1-2, Eul evidence No. 2-1, Eul evidence No. 2-2, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff only lent the name upon the request of Kim 00 at the time of the incorporation of the corporation of this case, and Kim 00 at the beginning of the establishment, and from March 2003 to February 2004, 2000, the corporation of this case actually operated the corporation of this case, and the plaintiff was not actually involved in the management of the corporation of this case and was merely a nominal representative director, and thus, the disposition of this case was unlawful in violation of the substance over form principle.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

Article 106 (1) of the Enforcement Decree of the Corporate Tax Act does not provide that the representative shall be deemed as a bonus to a unconditional representative regardless of substance with respect to certain facts recognized as such in order to prevent an unfair act under tax law by a corporation, rather than based on the fact that such income has accrued to the representative. Thus, the representative shall be a de facto manager of the company. Thus, even if the representative of the company was registered as a representative in the corporate register, if the company is not actually operated, such recognized income shall not be attributed to the representative and shall not be imposed on the representative. However, since it can be presumed that the representative of the company is actually operating the company, the representative of the company shall prove that the representative of the company has actually failed to operate the company.

Therefore, it is difficult to believe that the testimony of Gap 5-1, 2-2 and witness of the first instance court as to whether the plaintiff was merely a nominal representative director who did not participate in the management of the corporation of this case, and the testimony of Gap 3, 6 through 8, 10, 12 through 31, and Gap 4-1, 2-9-1, 9-1, 3-2 are insufficient to acknowledge it, and there is no other evidence to acknowledge it. Rather, in light of the overall purport of the arguments, the plaintiff is a shareholder who owns 40% of the shares of the corporation of this case as of December 2, 2002 and December 2, 2003, the representative director of this case is not a representative director of the corporation of this case, and the plaintiff can not be acknowledged as a change of the name of the corporation of this case from the date of establishment of the corporation of this case as of March 205, 204.

3. Conclusion

Therefore, the defendant's disposition of this case is legitimate, and the plaintiff's claim seeking its revocation is without merit, and it shall be dismissed. The judgment of the court of first instance is unfair in conclusion, and it is so revoked and the plaintiff's claim is dismissed. It is so decided as per Disposition.

Related Acts and subordinate statutes

○ Framework Act on National Taxes

Article 14 (Real Taxation) (1) If the ownership of income, property, act, or transaction subject to taxation is merely nominal and a person to whom such income, property, or transaction belongs exists, the tax-related Acts shall apply to such person to whom such income,

○ Corporate Tax Act (amended by Act No. 8831 of Dec. 31, 2007)

Article 67 (Disposition of Income) In reporting the tax base of corporate tax on income for each business year under Article 60, or in determining or revising the tax base of corporate tax under Article 66 or 69, the amount included in gross income shall be disposed of as prescribed by the Presidential Decree, such as bonus, table, clause, and other outflow from the company according to the person to whom it belongs.

○ Enforcement Decree of Corporate Tax Act

Article 106 (Disposition of Income) (1) The amount included in the calculation of earnings under the provisions of Article 67 of the Act shall be disposed of in accordance with the provisions of each of the following subparagraphs. The same shall also apply to nonprofit

1. Where the amount included in the calculation of earnings has clearly leaked out of the company, the dividends, bonuses from the disposition of profits, other income, and other outflow from the company under the following items according to the leader: Provided, That where the accrual is unclear, it shall be deemed that it has been reverted to the representative (where the total number of stocks held by an officer who is not a minority shareholder under the provisions of Article 87 (2) and persons with a special relationship under the provisions of paragraph (4) of the same Article is 30% or more of the total number of stocks issued or total investment amount of the relevant corporation and the officer actually controls the operation of the corporation, he shall be deemed the representative, and where a corporation which has been exempted from withholding taxes under the provisions of Article 46 (12) of the Restriction of Special Taxation Act reports that there is a separate representative among the officers who are stockholders, etc., the reported person shall be the representative, and where there are 2 or more

○ Common Rules of Corporate Tax Act

67-106-17 (Definition of de facto Representative)

The term "the de facto representative" in Article 106 (1) 1 of the Decree means not only the externally representative of the company, but also the person who participates in the decision making as a member of the board of directors in the execution of duties and has the authority of execution and authority of representation and is responsible for the cremation.

67-106-19 (Liability of the representative in form)

Unless it is proved by objective evidence that the representative of the juristic person is not the representative of the juristic person concerned or by the judgment of the court, the representative in registration shall be regarded as

○ Income Tax Act

Article 20 (Earned Income)

(1) Earned income shall be the following income generated during the relevant year:

1. Class A:

(c) Amount treated as a bonus under the Corporate Tax Act;