Neglected Food Co., Ltd. (Attorney Yellow-gu et al., Counsel for the defendant-appellant)

Director of the National Tax Service (Attorney Lee Jae-in et al., Counsel for the plaintiff-appellant)

Daejeon District Court Decision 2008Guhap725 Decided February 10, 2010

January 13, 2011

1. The part against the plaintiff falling under any of the following subparagraphs among the judgment of the court of first instance shall be revoked:

The Defendant’s disposition of imposition of KRW 9,264,530,282 in excess of KRW 9,264,530,282 among the disposition of imposition of KRW 11,017,098,460 for the business year of May 14, 2008 against the Plaintiff shall be revoked.

2. The plaintiff's remaining appeal is dismissed.

3. Of the total litigation costs, 80% is borne by the Plaintiff, and the remainder is borne by the Defendant, respectively.

1. Purport of claim

The Defendant’s imposition of dividend income amounting to the Plaintiff for the business year of 2002, Dec. 12, 2007 (originalcheon) and the imposition of KRW 11,017,098,460 for the business year of 2005, and the imposition of KRW 11,017,098,460 for the business year of 2005, shall be revoked.

2. Purport of appeal

The part of the judgment of the court of first instance against the plaintiff shall be revoked. The defendant shall revoke the disposition of imposition of KRW 11,017,098,460 on May 14, 2008 against the plaintiff, which is imposed by the defendant on the plaintiff in the business year of 2005.

1. Scope of the judgment of this court;

On December 12, 2007, the Plaintiff filed a lawsuit seeking revocation of the disposition of imposition of KRW 11,017,098,460 on May 14, 2008 on the dividend income (source) accrued to the Plaintiff in the business year of 2002 and the disposition of imposition of KRW 11,017,098,460 on the business year of 2005. The court of first instance revoked the disposition of imposition of KRW 210,071,560 on the dividend income accrued to the Plaintiff in the business year of 2002 and dismissed the remainder of the claim. Accordingly, the Plaintiff and the Defendant appealed all of the judgment of the first instance on the part against the Plaintiff among the judgment of the court of first instance on February 14, 2011, and the Defendant revoked the disposition of imposition of KRW 10,000 on the portion of the Plaintiff’s loss only for the business year of 2008,51,2015.

2. Details of the disposition;

A. UBS Capital B.V., which is a Netherlands, and Korea Confery (Luxbourg) in Korea, which is a Luxembourg corporate, established a consortium (hereinafter referred to as “UBS consortium”) by organizing a consortium, on June 19, 2001, Korea Conferboldings NVV (hereinafter referred to as “KCH”) (hereinafter referred to as the “Korea Confering”), which is an investment and manager of the Luxembourg, as well as S.A.R.L. L. L.R. L. L.C. L.R. L.R., UBS Capital, which is an investment and manager of the Luxembourg.

B. On July 12, 2001, KCH acquired 70,050,000 won as part of the manufacture and business of H&C stock companies, a domestic corporation, and established the Plaintiff for the purpose of manufacturing and selling dry, milk products, and frozen foods by becoming 100% shareholders.

C. On the other hand, the Crine System and the Military Mutual-Aid Association established a special company for the purpose of taking over (hereinafter “SPC”) by organizing a consortium.

D. LAPC acquired 2,810,000 shares of the Plaintiff from KCH on January 12, 2005 in KRW 334,459,57,000 (hereinafter “instant stock transfer income”), and KAPC submitted an application for non-taxation and exemption of corporate tax to SPC on the ground that it is a corporation located in Belgium for the avoidance of Double Taxation and the prevention of Fiscal Evasion with respect to Taxes on Income (hereinafter “Korea-Belgium Tax Convention”), on the ground that it is a juristic person located in Belgium, on the ground that it is “the Republic of Korea and the Kingdom of Belgium for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income” (hereinafter “Korea-Belgium Tax Convention”), and neglected to submit it to the Defendant on February 2, 2005.

E. Since April 4, 2005, MPC was merged with the Plaintiff.

F. The Defendant is merely a conduit company established for the purpose of evading taxes in Korea by using the Korea-Belgium Tax Convention (UBS consortium) and thus, the actual owner of the transfer income of the instant shares (i.e., Belgium) is merely 300 companies established for the purpose of evading taxes in Korea (i., e. 200). (ii) Korea Confery (Luxbour) S.A.R.L. shareholders, only CVCP, Inc., a corporation of Ireland, and 36.5% of shares (i.e., 5% of shares) x 365% of shares (i. 6.e., 5% of shares) x 365% of shares (i., 5% of shares) x 365% of shares (i.e., 50% of shares) x 365% of shares (i., 65% of shares) x 36% of shares (i.e., 365% of the shares) x3685% of the tax treaties).

G. On June 4, 2007, the Plaintiff filed an appeal with the National Tax Tribunal on the above corporate tax collection disposition, but the National Tax Tribunal dismissed the appeal on December 6, 2007.

H. On May 14, 2008, the Defendant: (a) calculated on May 14, 2008, the capital gains from the shares belonging to the Korea Convey (Luxbour) S.A.R.C. LC, as the shareholders of the Hong Kong, on the basis that the shares actually belong to the Hong Kong corporation, a partner of the Lveers LveC; (b) 30,000 won, 110,170, 984, 63 won [30,40,000 won, 30,000 won, 308,000 won, 40,000 won, 208,000 won, 30,000 won, 281, 305,000 won, 208, 360,000 won, 208, 360,000 won, 281, 3605,081, 3685, etc.

[Ground of recognition] Facts without dispute, Gap evidence 1-1, 2-2, Gap evidence 2-1, 2-2, Gap evidence 3, 5, 6, 7, Eul evidence 1-3, and the purport of the whole pleadings

3. Determination on the legitimacy of the instant disposition

A. The plaintiff's assertion

1) The denial of the legal form that parties to a transaction take according to the substance over form doctrine, which is merely a legal principle under the domestic law, and the imposition of withholding tax on the Plaintiff, which is not a taxpayer, rather than a taxpayer, is contrary to the principle of no taxation without the law and the principle of strict interpretation of tax treaties. The imposition of withholding tax on the Plaintiff is against the principle of no taxation without the law and the principle of strict interpretation of tax treaties, which excessively expands the burden on the withholding agent, and is also against the principle of proportionality

2) A) The Defendant applied the substance over form principle to KCH merely to the Docit Company. Of the shareholders of the Korea Conferny (Luxembourg) S.A.R.L, the Defendant: (a) applied the substance over form principle; (b) the actual holders of the transfer income of the instant shares were deemed to have disposed of the instant shares as shareholders of CVC Capital Pacific LP, Korea Conferbour (Luxembour) S.R.L. L, the shareholders of CVP, a corporation of the Hong Kong, a shareholder of the LLC, the Hong Kong corporation, the Hong Kong corporations, the shareholders of the Hong Kong corporations, and (c) the Citorp Measures of the United States, a corporation of the United States, and the Poveers Inc., a corporation of the United States, and on the disposal of the instant shares as shareholders of the Doc Capital, the corporation of the United States and the corporation of the United States, and on the disposition of the Loveers.

B) However, KCH is not a legal entity that has a legal entity, and thus, KCH is illegal for the instant disposition that is based on the premise that KCH is a conduit company.

C) (1) If domestic KCH is not a person to whom income belongs as a conduit company, but a shareholder of KCH, Korea Confcery (Luxembour) S.A.R.L, AOF Hai (Luxembour) S.A.R.L, Korea Conferbour (Luxembour) S.A.R.L, a shareholder of S.A.R.L.R.L, can not be a person to whom income belongs, and CVCPP cannot be a person to whom income belongs, and CVCP’s Pacific LPP’s ultimate investors of CVCPsn Pacifies should be regarded as the person to whom income belongs.

(2) Furthermore, if the CVC Capital Agent Pocific LP is deemed to be the actual attribution of income, there is no reason to regard the Gyeonggi-do Incheon Metropolitan City Investmenter LLC as the limited liability company, and if the Doc is a Do government-related subsidiary, the Doctrimen should also be deemed to be the actual attribution of income. If the Doc is a Do government-related subsidiary, the Doctrimen c., a listed corporation of the United States, a shareholder of the 100% of the 100% of the Doctribu, which is the Do government-related subsidiary, should also be deemed to be the actual attribution of income.

(3) Therefore, the ultimate investors of CVC Capital Group Pacific LP and the local economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic economic

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Whether tax treaties and the principle of substantial taxation are applied

A)Relation between a tax treaty and a domestic tax law

Article 6 (1) of the Constitution of the Republic of Korea provides that "any treaty concluded and promulgated by the Constitution and any generally accepted international law shall have the same effect as domestic law," so a tax treaty concluded with the consent of the National Assembly shall have the same effect as that of domestic law, and in the legal relationship governed by a tax treaty, the treaty shall take precedence over domestic law, as the treaty concerned is in a special

On the other hand, the purpose of the tax treaty is to prevent double taxation and tax avoidance by adjusting the issue of the taxation right between the contracting parties. As a matter of principle, the tax treaty does not create an independent taxation right, but functions to distribute or restrict the tax right already established under the tax law of the contracting state. Matters concerning the occurrence of the taxation right are first governed by the tax laws of each country, the tax treaty determines the place where the tax treaty is finally imposed on matters which are otherwise defined in the domestic tax law, and in the application of the tax treaty, the term otherwise defined in the tax treaty shall, in principle, be interpreted in accordance with the meaning contained in the domestic tax law, which serves as the basis for the taxation right of the country concerned, unless the context otherwise

B) Principle of no taxation without law and strict interpretation of tax treaties

Article 38 of the Constitution provides that “All citizens shall have the duty to pay taxes under the conditions as prescribed by Act,” and Article 59 provides that “types and rates of taxes shall be determined by Act,” thereby declaring the principle of no taxation without the law. In determining the requirements for taxation, tax exemption, etc. in accordance with such principle of no taxation without the law, the National Assembly, which is the representative body of the people, shall be stipulated by the law enacted by the people, and shall be strictly interpreted and applied to the enforcement of the law. Furthermore, Articles 26, 27, and 31 of the Vienna Convention on the Interpretation of a Treaty to which the Republic of Korea is a party, shall be governed by the treaty, and shall not be invoked by domestic law in a manner that justify the nonperformance of a treaty, and the text of a treaty shall not be faithfully interpreted in accordance with its ordinary meaning. Thus, in the tax treaty, the expansion of administrative convenience or analogical interpretation is not allowed.

C) Domestic legal basis of substance over form principle

Article 11(1) of the Constitution provides, “All citizens shall be equal before the law, and no person shall be discriminated against in any area of political, economic, social, or cultural life on the basis of gender, religion, or social status.” The principle of tax equality can be deemed an expression of tax law in accordance with the foregoing constitutional provision or in the principle of equality or the principle of prohibition of discrimination. Therefore, in granting tax legislation, the State must establish laws so that the burden of tax can be distributed fairly among the citizens, and have the duty to treat all the citizens equally in interpreting and applying the tax law. One of the legal systems to realize the principle of tax equality can be deemed as the principle of substance over form provided in Article 14 of the Framework Act on National Taxes and Article 4 of the Corporate Tax Act, and such principle of tax equality can be deemed as the principle of equality in accordance with the principle of justice and the principle of tax justice in the process of legislative process or enforcement (see, e.g., Constitutional Court Decision 200Hun-Ga38, Jul. 28, 1989).

D) The basis for the notes of the OECD Model Convention

With the increase in international trade, the OECD established a company on the document in a tax haven place that is not related to the actual transaction with the purpose of tax avoidance through changes in the crepan tax treaty and avoided taxes on capital transaction income, such as interest, dividend, and stock transfer margin, through the international discussion in the OECD's Harmful Tax Forum that began from 1999.

Accordingly, the OECD has widely dealt with the type and method of tax evasion, interpretation related to treaties, etc. in its Articles 1(7) of the Model Convention, which are the basis for interpreting the Model Convention of the amended Tax Treaty in 2003, and provided a basis for preventing the act of tax evasion. As a representative example, Article 1(7) of the Model Convention provides, “The fundamental purpose of the Convention on the Prevention of Double Taxation is to prevent international double taxation, thereby promoting exchanges between goods and services, capital and human resources. The Convention on the Prevention of Double Taxation also aims to avoid tax and the prevention of Fiscal Evasion.” Article 22(2) through (24) of the same Note provides, “The substance over form rule prescribed in the laws of each country, the Act on the Control Companies, and the Convention on the Prevention of Abuse of Tax Treaty is not inconsistent with the tax treaty, and the provisions on the prevention of abuse of residence, which is an important provision for the prevention of tax evasion under the laws of each country and regulations on the prevention of tax evasion, which is an important provision of domestic tax treaties.”

The note of the OECD Model Convention is not a treaty concluded and promulgated by Article 6(1) of the Constitution, but an generally accepted international law, so legal binding force cannot be recognized. However, this is a standard for recognizing international authority for the correct interpretation of a tax treaty concluded between Korea and member countries of the OECD including Belgium, and it can be a reference for the interpretation of a treaty between OECD member countries in relation to the substance over form principle, etc. under the domestic law.

E) Provisions and interpretation methods of the Korea-Belgium Tax Treaty

The Korea-Belgium Tax Treaty provides that "The Government of the Republic of Korea and the Belgium Government has entered into a treaty to avoid double taxation and to prevent double taxation on income and tax evasion," and that "this Convention shall apply to one party or a resident of the other country, who is a resident of the other country."

Article 13 of the Treaty provides that the allocation of the right to taxation on capital gains at issue in this case shall be subject to the taxation in the Contracting State where the property is located, whereas Article 13 of the Treaty provides that "the profits accruing from the transfer of the property other than the property provided for in paragraphs (1) and (2) of Article 6 may be taxed in the Contracting State where the property is located. 2. The profits accruing from the transfer of the movable property owned by an enterprise of a Contracting State to form a part of the business property of a permanent establishment in the other Contracting State and those accruing from the transfer of such a permanent establishment (the sole or together with the entire enterprise) may be taxed in the other Contracting State. However, the profits accruing from the transfer of a ship or aircraft operated for international transportation by an enterprise of a Contracting State and from the transfer of the movable property attached to the operation of such a ship or aircraft shall be exempted from the taxation in the other Contracting State." Meanwhile, Article 3(2) of the Convention provides that "the profits accruing from the transfer of property other than the property provided for in paragraphs (1) and (2) of this Article 4) shall not be subject to taxation."

In determining the normative meaning of “resident” and “transfer” under the Korea-Belgium Tax Treaty, first of all, the principle of strict interpretation in accordance with the principle of no taxation without the law and the principle of faithful interpretation in accordance with the ordinary meaning prescribed in the Vienna Convention shall be observed. However, within the meaning of the possible language, a systematic and logical interpretation method that clearly expresses the ordinary and logical meaning of the language and text in accordance with the systematic relationship that takes into account the legislative intent and purpose, etc. of the pertinent provision within the meaning of the relevant provision is intended for the interpretation most adjacent to the essential contents of the relevant provision. Therefore, the principle of substantial taxation, which is the derived principle of the principle of no taxation equality, is one of the general principles concerning the interpretation and application, etc. of the tax law, and even if Article 14 of the Framework Act on National Taxes does not expressly stipulate it, it is derived from the constitutional

Furthermore, the tax treaty does not create an independent tax authority, but functions to allocate or restrict the right to taxation established under the tax laws of a Contracting State. As such, the issue of whether the right to taxation of the other Contracting State has arisen under the tax laws of a Contracting State shall be determined by the domestic law of a Contracting State. As such, Article 3(2) of the Korea-Belgium Tax Treaty provides that “The term otherwise defined in the application of this Convention shall have the meaning to be contained in the laws of the Contracting State related to the tax of this Convention unless the context otherwise requires.” Thus, it is difficult to deem that the substance over form principle is in violation of the Korea-Belgium Tax Treaty in determining the normative meaning of “resident” and “transferor” as stipulated in Articles 1 and 13 of the Korea-Belgium Tax Treaty.

F) Sub-decision

As seen above, Article 14 of the Framework Act on National Taxes and Article 4 of the Corporate Tax Act provide for the principle of no taxation without the law and the basic principles on the interpretation of treaties, the basis and contents of the principle of no taxation without the law, the purpose of the Korea-Belgium Tax Treaty, and the purport of Article 13 of the Korea-Belgium Tax Treaty, and the substance over form principle under Article 4 of the Corporate Tax Act are to realize the principle of fair taxation burden and equality, and are equally applied to both residents and non-residents under domestic law. In interpreting the provisions of tax treaties between countries, the substance over form principle can be interpreted as the basis of interpretation unless it expands the meaning of the language itself or it does not go against the language itself. (2) As to the ownership of the stocks of this case, the tax authority as the defendant recognizes the ownership of the stocks of this case as KCH as a resident in the Belgium under the Korea-Belgium Tax Treaty, or as the resident of the Netherlands Tax Treaty, the resident of KCH, the resident of the Republic of Korea-Luxembourg Tax Treaty, and thus, it can be determined as the above tax treaty.

On the other hand, in the tax withholding method, it seems that there is no tax exemption, duty to investigate tax exemption requirements, or burden of proof, and the plaintiff seems to have known or could have known that the actual owner of the transfer income of this case was not the actual owner of the transfer income of this case, as seen thereafter, it cannot be deemed unlawful in light of the principle of proportionality as it excessively expands the burden on the plaintiff, who is a withholding agent, who is not the taxpayer, to bear the withholding duty by identifying the actual owner of the transfer income of this case according to the substance over form principle, and it cannot be said that there is any public opinion expressed by the defendant, which served as the basis for the formation of the plaintiff's trust, and thus, it is not a problem.

2) The person to whom the transfer income of the instant shares actually accrues

A) Determination on the substance over form principle and the actual owner of income

Article 91 (2) of the former Corporate Tax Act (amended by Act No. 7388 of Dec. 31, 2005) provides that "in the case of a foreign corporation with a domestic place of business, a foreign corporation with real estate income under Article 93 subparagraph 3 of the Corporate Tax Act, and a foreign corporation with no income from the domestic place of business under subparagraph 8, the amount of each domestic source income under the classification under each subparagraph of Article 93 of the Corporate Tax Act shall be the corporate tax base for the income of the concerned corporation for each business year." Article 93 of the same Act provides that "domestic source income of a foreign corporation shall be classified as follows." Article 98 (1) of the same Act provides that "income from transfer of stocks, investment certificates, or other securities issued by a domestic corporation" under subparagraph 10 (a) provides that "income from the domestic place of business under subparagraphs 2 and 4 of Article 93 of the same Act which is not substantially related to the domestic place of business or from the income of the corporation not attributable to the domestic place of business shall withhold the income under subparagraph 10-1 of subparagraph 30-1 of Article 90."

However, as alleged by the Plaintiff, the transferor of the instant shares is KCH, which is a Belgium resident, and thus, in applying Articles 10 and 13 of the Korea-Belgium Tax Treaty, the Defendant is unable to withhold corporate tax on the instant capital gains since the Belgium, which is the resident state, has the authority to impose taxes pursuant to Article 13(3) of the Treaty.

However, as seen earlier, comprehensively taking account of the constitutional interpretation of the no taxation without law and tax treaties, Article 14 of the Framework Act on National Taxes, the purport and content of the substance over form principle under Article 4 of the Corporate Tax Act, the purpose of the Korea-Belgium Tax Treaty, and the purport of Article 13 of the Treaty, etc., the meaning of “transferor” under Article 13 of the Treaty shall be restricted in interpretation pursuant to the substance over form principle to the extent that it conforms to the purpose of the prevention of double taxation or tax avoidance and is not contrary to the language and text of the Treaty. In determining the meaning of “transferor,” a person other than a resident in the Belgium, establishing a corporation in the Belgium for the purpose of making an investment in the Republic of Korea, and acquiring capital gains in the name of the corporation, the corporation did not perform a normal business activity in the Belgium, and the transaction in Korea is performed only in the form of a transaction party for the original investor without independent economic benefits and business purposes, and where it is deemed that the status of the corporation’s resident in the Belgium is only for the purpose of tax exemption and tax treaty.

Under the premise of the above legal doctrine, we examine who is the actual person to whom the transfer income of the instant shares belongs.

B) Whether the actual owner of the instant stock transfer income is a person

(1) Comprehensively taking into account the following circumstances as to whether the parties to the instant transfer income did not dispute or whether Eul evidence 6-1 through 3, Eul evidence 7-1 through 4, Eul evidence 8, Eul evidence 10-1 through 3, and Eul evidence 11-1, and the overall purport of the pleadings, KCH merely is an authorized company established to acquire residents of Belgium, etc. to avoid taxation on the instant transfer income by being subject to the tax treaty. In light of the substance over form principle as seen above, Article 13 of the Korea-Belgium Tax Treaty cannot be applied to the instant transfer income, on the premise that KCH cannot be deemed as the actual owner of the instant transfer income, and instead, it cannot be applied to the instant transfer income, on the premise that Korea's domestic Conferburgs S.R. shareholders, Inc., Inc., which is a corporation of the Republic of Korea, and on the premise that the Plaintiff's taxation right belongs to the Plaintiff, Inc., Inc., Ltd., which is a corporation of the Hong Kong Capital Market, Inc.

① Nonparty 2, who is an employee of UBS Capital Pacific Ltd., Nonparty 1 and CVC Capital branchners (Benux) N.V., submitted a tender with respect to the acquisition of the parts of the manufacture and project of the H&C stock company, made on-site answers, etc., and entered into an underwriting contract with the Korea Concifies (Luxembourg) S.R.L, AOF Hai (Luxembourg) (Luxembourg) S.A.R.L. each of the investment and management companies of the UBS Capital, and UBS Capital is not a Pacific Laned., CV CV Capitalnnxu) and N.V., and the employee of the JP headquarters branch, which is an employee of the Korea Development Agent, was not a party to the underwriting contract with the Korea Stock Company, and was not a party to the underwriting contract immediately before the conclusion of the above underwriting contract.

② In order to borrow a loan to the funds needed to take over in the process of the H&C corporation, the investors in the credit approval application submitted to the R&C bank on September 2001 are deemed to have received the investment, such as UBS Pocific Ltd., CV Capital branch N.V., and the JP M&C branch N.V., and the value of the investment shares as the value of the investment in the JP M&C partner, and the pledge of the investment shares is included in the content of the security.

③ On December 5, 2003, in the letter of notice of the opportunity to submit the final proposal with respect to the transfer of the instant shares, the Masembi, which was a major company for the sale of the instant shares, stated that “The subject of the negotiation related to the sale of the instant shares, shall be the shareholders of KCH, who are shareholders of KCH, not KCH, who are shareholders of KCH, who are not the shareholders of KCH, who are not the shareholders of KCH, in the form of Samsung Securities,” Korea Confery (Luxbour) S.R.L, AOF Hai (Luxembour) on behalf of Korea, and that the said shareholders shall select and commence negotiations after receiving the final proposal,” and that “The subject of the negotiation related to the sale of the instant shares shall be the shareholders of KCH” in the letter of notice sent by KCH on April 8, 2004.

④ At the address of KCH, there is only CVC Capital Group N.V. offices (Benux) N.V. There is no independent place of business, and KCH does not have any employee, there is no employee, nor did there was any fact that there was no other business than this case’s business performance.

⑤ The director of KCH is Nonparty 3 of Belgium’s nationality, Nonparty 4 of Hong Kong’s nationality, and Nonparty 1 of Singapore’s nationality. Nonparty 3 is a managing director of CVC Capitalnx N.V., Nonparty 4 is an employee of the JPP MMnzers, and Nonparty 1 is an employee of the JPMMMners, and Nonparty 1 is an employee of the JPMMnz.

④ On October 7, 2003 and October 26, 2004, the board of directors was held at Belgium’s Belgium’s Belgium’s hotel. The rest of the board of directors was operated by telephone conference in the form of telephone conference. The shareholders’ general meeting delegated to Nonparty 5 by all the attorneys-at-law, and most of the participants in the general meeting are limited to the above attorneys-at-law.

7. Upon completion of the sale of the instant shares on January 12, 2005, KCH disposed of most of the profits accruing from the transfer of shares, and immediately followed the liquidation procedures.

8. It is not recognized that KCH independently engaged in any activity separate from the value of Pocific Ltd., CVC Capital branch N.V., and the value of the JP M&M uniters.

9. Meanwhile, there is no dispute between the parties that Korea Conferny (Luxembour) S.A.R.L and AOF Hita (Luxembour) S.A.R.L. does not correspond to the actual attribution of the transfer income of the instant shares as an authorized company.

(10) In addition, in the case of the Seoul Metropolitan City, local governments are corporations that guarantee the active participation in the same amount of management as the employees of the Corpo Corporation, but are not corporations, but are classified as a part-time partnership, not corporations, and in the case of the United States, only income tax on the dividends corresponding to their respective shares is imposed on each partner without any tax per se on a part-time partnership.

(2) Determination as to the Plaintiff’s assertion on actual attribution

In the tax litigation, the taxpayer bears the burden of proving the non-taxation requirements and the tax exemption requirements (see, e.g., Supreme Court Decisions 98Du16095, Jul. 7, 2000; 93Nu13162, Apr. 15, 1994). The actual partner of the transfer income of the instant shares is CVC Capitaln's ultimate investors and Socific LP's investors, etc., and the fact that the said investors are subject to non-taxation on the transfer income pursuant to the tax treaty with the country in which they reside is located is that the taxpayer must actively prove it. In light of the facts acknowledged in the above paragraph (1), Gap evidence No. 20 and No. 22 is written in each evidence No. 1222, and there is no need to establish the fact that the actual partner of the instant shares is the investors or investors of CVP, and there is no reason to acknowledge it differently.

3) Sub-decisions

A) Therefore, the actual owner of the capital gains from the transfer of the instant shares under the substance over form principle is the shareholder of Korea Conferbourg (Luxembourg) S.A.R.L. The actual owner of the capital gains from the instant shares shall be the shareholder of Korea Conferbour (LA.L) S.A.R.L., which is a corporation of Ireland, and the Hong Kong corporation, as the shareholder of CVC Capital LAP, which is a corporation of Ireland, and the Hong Kong corporation, and the Real Estate Holdings Co. Ltd., Ltd., which is a corporation of the United States, and Tveers, which is the de facto corporation of the Hong Kong corporation.

B) However, according to the evidence evidence No. 22 of this case, among the transfer income of this case, the ratio of shares to which the domestic tax law applies is 32.94% of the total equity ratio because there is no dispute between the parties or no non-taxation provision regarding the transfer income of shares under the tax treaty between the countries in which the above actual holders are residents, among the transfer income of shares of this case (i.e., the share ratio of 31.32% of the share ratio in the CVI Capital Pocif LP, which is the residence of Kmando, + 6.38% of the share ratio of 10,170,984,63634, 304, 3054, 3079, 3074, 309, 3074, 3079, 3074, 309, 307, 309). The defendant neglected to dispose of the shares of this case among the shareholders of S.L.

Therefore, the disposition of this case, which was imposed as corporate tax, shall be deemed to fall under the above shareholders, and the above shareholders shall be deemed to fall under the tax liability of the defendant who is the tax office. As such, the above shareholders' assertion and burden of entry about the existence of taxation requirements, such as the taxpayer, etc., in the tax lawsuit, shall be deemed to fall under the above-mentioned shareholders. As such, it is acknowledged that the above shareholders are corporations, the facts of the CVC Capital PHP and Citurd are corporations, as above, but there is no evidence to acknowledge that the shares ratio among the shareholders of the AOF HHai (LLburg) is 5.24% of the shares ratio of the taxable residents, and the defendant, on the premise that the above shares ratio belongs to the shareholders of the above AFH 24% of the corporation (LL) and on the premise that the shareholders are the effective owners of the AO, the defendant's submission of the list of residents, i.e., the source of taxation, and the whole form of taxation.

C) Furthermore, if the Defendant calculated the reasonable source tax amount to be collected from the Plaintiff who succeeded to the obligation to pay SPC as a corporation in the business year 2005, among the transfer income of the instant stocks, as the transfer income of the stocks of this case, the amount of 27.7% corresponding to the share ratio recognized as a corporation among the said share ratio of 32.94% of the total equity ratio applied by the domestic tax law because the said substantial source of the transfer income of the stocks of this case did not enter into a tax treaty with the countries where the said substantial source of ownership is a resident or there is no non-taxation provision on the transfer income of the stocks of this case (=32.94% - 5.24%) equivalent to 92,645,302,829 won (=334,459,577,000 won) x 27.7%, and the amount below hereinafter the same shall apply) subject to the withholding tax rate.

4. Conclusion

Therefore, the part of the corporate tax collection disposition of this case exceeds KRW 9,264,530,282 among the corporate tax collection disposition of this case shall be revoked as unlawful. Thus, the plaintiff's claim of this case shall be accepted within the scope of the above recognition and the remaining claims shall be dismissed as it is without merit. The judgment of the court of first instance shall be revoked in part of the conclusion, and the part against the plaintiff corresponding to the above revocation part of the judgment of the court of first instance shall be revoked, and the remaining appeal of the plaintiff shall be dismissed. It is so decided as per Disposition by the assent of all participating Justices.

[Attachment Form 5]

Judge Shin Young-young (Presiding Judge)