Cho High Court Decision 2010No3378 (Law No. 111.08)

No liability for tax payment can be imposed as a general partner solely on the ground that the company is registered as a general partner of the corporation.

In order to impose secondary liability for tax payment on a general partner of a corporation, it is required that the liability for tax payment is in fact a position to participate in the operation of the corporation as of the date when the liability for tax payment of delinquent national taxes is established, and only the reason why the corporation is registered as a general partner in the register of the corporation may not

Article 39 of the Framework Act on National Taxes

2011Revocation of disposition imposing value-added tax, etc.

XX Kim

Head of Seocho Tax Office

April 6, 2012

May 4, 2012

1. Value-added tax, wage and salary income tax, as described in the attached Form 1 List against the Plaintiff on August 5, 2010;

The imposition of business income tax shall be revoked in full.

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 law firm XX (hereinafter referred to as the “foreign law firm”) was established on January 13, 2006 for the purpose of attorney-at-law, etc. on February 25, 2010, and was dissolved upon revocation of its establishment authorization.

B. When the non-party corporation failed to pay the value-added tax as stated in the separate sheet No. 1 and the property of the non-party corporation is difficult to appropriate the amount of delinquent tax, the defendant designated the plaintiff as a member of the non-party corporation as the second taxpayer on August 5, 2010 and notified the plaintiff of the payment of value-added tax, etc. stated in the separate sheet No. 1 for the plaintiff (hereinafter referred to as "the

C. On August 20, 2010, the Plaintiff raised an objection against the Defendant. However, the Defendant dismissed the said objection on September 16, 2010. The Plaintiff again filed an appeal with the Tax Island Board on October 20, 2010, but the Tax Tribunal dismissed the said appeal on June 8, 201.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 9, Gap evidence No. 10-1, 2, Gap evidence No. 11-1 through 9, Eul evidence No. 1 and 3, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff was registered as a member in the form to establish and maintain the non-party corporation upon the request of the former AA or KimB attorney-at-law who established the non-party corporation and did not actually contribute to the non-party corporation or participated in the management of the non-party corporation, and is merely an employee employed by the non-party corporation. Therefore, the plaintiff cannot be actually a member of the non-party corporation, so it is not subject to the second tax liability under Article

B. Relevant statutes

Attached Form 2 is as shown in the relevant statutes.

(c) Fact of recognition;

1) The GuA and KimB decided to establish a law firm around December 2005 and decided to employ the Plaintiff and ParkCC as its affiliated attorney-at-law.

2) However, in order to establish a law firm, there is a need for more than five members under the Attorney-at-law Act, and at least one of them must be an attorney-at-law with work experience of not less than 10 years, the former AA and KimB requested the Plaintiff and ParkCC to employ them formally as a member attorney-at-law for the establishment of the law firm, and they would pay 00 won per month if they become a member attorney-at-law with work experience of not less than 10 years, and they accepted both the Plaintiff, ParkCC and bestD.

3) On January 13, 2006, the former AA and Kim BB established a non-party legal entity by investing KRW 000,000 in cash, and in the corporate register, the former A, KimB, Plaintiff, ParkCC, and tearD were registered as members of the corporate register as 00 each invested KRW 00.

4) The Plaintiff worked in the non-party corporation from January 2006 to April 2009, and only received dividends from the case that the formerA and KimB accepted, and performed the litigation and received a certain amount of wages every month, and did not participate in the management of the non-party corporation.

5) While working in a non-party corporation, the Plaintiff received benefits of KRW 000 in 2006, KRW 000 in 2007, and KRW 000 in 2008. The Plaintiff did not receive benefits in 2009.

6) On April 15, 2009, the corporate register of the non-party corporation stated that the plaintiff was withdrawn from the member of the non-party corporation.

7) Since then, the Plaintiff filed a report on the delayed payment of wages with the representative of the non-party corporation at the Seoul Gangseo-gu Seoul Regional Employment and Labor Office on the ground that the non-party corporation did not pay 000 won in total as wages and retirement allowances.

[Basis] Facts without dispute, Gap evidence Nos. 1 through 9, Gap evidence Nos. 3 through 6, Gap evidence No. 10-1, 2, Gap evidence Nos. 13, 15, 16, Eul evidence No. 1. 3, and the purport of the whole pleadings

D. Determination

Except as provided in this Act, Article 58(1) of the Attorney-at-Law Act provides that the provisions pertaining to unlimited partnerships in the Commercial Act shall apply mutatis mutandis to law firms. Article 212(1) of the Commercial Act provides that each partner shall be jointly and severally liable for payment when the unlimited liability of a juristic person is unable to fully pay its obligations with its assets. Meanwhile, Article 39(1)1 of the Framework Act on National Taxes requires that the unlimited liability of a juristic person is in a position to substantially participate in the operation of the juristic person as of the date on which the liability to pay delinquent national taxes is established, and the mere fact that the juristic person is registered as a general partner in the register of a juristic person is registered as a general partner in the form of a juristic person cannot be imposed (see Supreme Court Decision 90Nu4235, Sept. 28, 190).

In light of the above provisions and the legal principles, the following circumstances revealed as to the instant case, namely, ① the investment of 00 won to establish a non-party corporation in cash, ② all the Plaintiff invested in the non-party corporation; ② the Plaintiff was paid a certain amount of money each month in return for providing labor in the non-party corporation; ③ it is not deemed that the Plaintiff was able to participate in the management of the non-party corporation because the Plaintiff did not have made an investment in the non-party corporation; ③ it is not deemed that the Plaintiff was able to participate in the management of the non-party corporation, and it appears that the Plaintiff was merely an employee employed by the non-party corporation and did not participate in the management of the non-party corporation, as a member of the non-party corporation pursuant to Article 58(1) of the Attorney-at-Law Act and Article 212(1) of the Commercial Act. However, it is reasonable to deem that the Plaintiff was registered as a member of the non-party corporation in the form of a non-party corporation, not in the position of actually participating in the operation of the non-party corporation.

Therefore, the Plaintiff is not in the position of the investor who bears the secondary tax liability under Article 39(1) of the Framework Act on National Taxes. Thus, the instant disposition based on a different premise is unlawful.

3. Conclusion

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