early 2010west0299 ( November 18, 2010)

Amount to be compensated for stock options shall be deductible expenses as personnel expenses.

The rejection of a claim for correction is unlawful on the premise that the expenses to be borne by officers and employees following the exercise of stock option are the personnel expenses incurred in connection with their business in order to conduct business profit activities.

Article 15 of the Restriction of Special Taxation Act

Article 19 of the Enforcement Decree of Corporate Tax Act

2011Guhap4503 Revocation of revocation of request for rectification

△ Bank Co., Ltd.

○○ Head of tax office

May 13, 2011

June 10, 201

1. The defendant's rejection disposition against the plaintiff on November 10, 2009, as stated in the separate sheet of rejection disposition against the plaintiff, shall be revoked.

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

The same shall apply to the order.

1. Details of the disposition;

A. The Plaintiff was a previous listed corporation, which was engaged in banking business. On December 1, 2005, the Plaintiff was incorporated into a complete subsidiary of BB financial branch (hereinafter “BB financial branch owner”) due to the comprehensive transfer of shares, and the Plaintiff’s share certificates were newly listed on December 12, 2005.

B. The Plaintiff granted stock options to its executives and employees, and granted the Plaintiff’s stock options to purchase BB financial branch shares after the Plaintiff’s stock certificates were delisting.

C. The Plaintiff’s officers and employees exercised their stock options over the year 2006 to 2008, the BB financing branch made cash payments to them according to the difference settlement method. The Plaintiff made up for the BB financing branch’s KRW 12,807,106,040 in the business year 2006, KRW 6,306,741,140 in the business year 2007, and KRW 5,126,81,626 in the business year 2008 (hereinafter “instant amount”). However, when filing a corporate tax return, the amount was not included in the calculation of losses.

D. On September 28, 2009, the Plaintiff filed a request for correction with the Defendant to include the amount of the instant preservation in the deductible expenses as indicated in the separate sheet as to the disposition rejecting the request for correction. However, on November 10, 2009, the Defendant rejected the request on the ground that the amount of the preservation of the instant case cannot be subject to special taxation pursuant to Article 15 of the former Restriction of Special Taxation Act (amended by Act No. 9272, Dec. 26, 2008; hereinafter the same) on the ground that the amount of the preservation of the instant case cannot be subject to special taxation (hereinafter “instant disposition”).

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1, 3 through 6 (including branch numbers), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion (1)

The amount of the preservation in this case is a kind of "work cost" required for the plaintiff to pay a bonus in kind to its officers and employees, which falls under Article 19 subparagraph 3, 19, and 20 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 22035, Feb. 18, 2010; hereinafter referred to as the "former Enforcement Decree"). The amount of the preservation in this case should be included in the deductible expenses under the Corporate Tax Act. Article 15 of the former Restriction of Special Taxation Act as to the application of the provisions after wrongful calculation, is irrelevant to the inclusion of the preservation amount in the deductible expenses

(2) The defendant's assertion

The provisions of subparagraph 19 of Article 19 of the Enforcement Decree of the former Enforcement Decree apply from the amount of compensation for the first exercise cost after February 4, 2009 pursuant to Article 6 of the Addenda, so the amount of compensation for the case previously paid is not subject to the above provision, and Article 15 of the former Restriction of Special Taxation Act does not apply to stock options granted by employees of the relevant corporation to the holding company, and thus, it does not constitute losses

(b) Related statutes;

The provisional materials of the attached Table related Acts and subordinate statutes shall be as follows.

C. Determination

(1) Article 19 of the former Corporate Tax Act (amended by Act No. 9267 of Dec. 26, 2008) provides that deductible expenses shall be the amount of losses incurred from transactions which reduce the net assets of the corporation, except as otherwise provided for in this Act and other Acts and subordinate statutes, such as refund of capital or financing, disposal of surplus funds, and losses incurred from transactions which reduce the net assets of the corporation. Except as otherwise provided for in this Act and other Acts, losses or expenses generated or spent in connection with the business of the corporation shall be generally accepted and directly disturbed with profits or losses. Paragraph (3) provides that matters necessary for the scope, classification, etc. of such losses shall be prescribed by Presidential Decree. Article 19 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 21302 of Feb. 4, 2009; hereinafter referred to as the "former Enforcement Decree") provides that deductible expenses shall be deductible expenses under the following subparagraphs, and subparagraph 3 shall be attributed to the corporation or shall be deductible expenses.

(2) According to Article 38 (1) 17 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 21301 of Feb. 4, 2009), "the stock option, etc. is the right to acquire new shares at a predetermined price or to purchase one's own shares to executives and employees who will contribute to or will contribute to the management and technological innovation of the company, etc." (Article 87 of the Enforcement Decree of the Corporate Tax Act), which is a system established to maximize the performance of the business by inducing them to acquire future profits from purchase of shares, and (2)" under Article 38 (1) 17 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 21301 of Feb. 4, 2009), "the profits from the exercise of the stock option granted to the relevant corporation or its employees by the relevant corporation, etc." is deemed as one of the wage and salary income.

3. Conclusion

The plaintiff's claim of this case is justified, and the costs of lawsuit are assessed against the losing party.