The meaning of oligopolistic stockholders with secondary tax liability

In order to erase secondary liability for tax payment to the stockholders of a corporation under Article 39 subparagraph 2 of the Framework Act on National Taxes and Article 20 of the Enforcement Decree of the same Act, it is essential that as of the date when the liability for tax payment of delinquent national taxes is established, the corporation is in a position to substantially control the operation of the corporation as of the date when the liability for tax payment of delinquent national taxes is established, and on the sole ground that

Article 39 subparagraph 2 of the Framework Act on National Taxes, Article 20 of the Enforcement Decree of the Framework Act on National Taxes

Supreme Court Decision 86Nu175 Decided November 15, 1986, 86Nu699 Decided April 14, 1987, Supreme Court Decision 87Nu215 Decided June 9, 1987

[Judgment of the court below]

Head of Yongsan Tax Office

Seoul High Court Decision 87Gu221 delivered on August 28, 1987

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal by the defendant litigant are examined.

Article 39 subparag. 2 of the Framework Act on National Taxes and Article 20 of the Enforcement Decree of the same Act requires that, in order to erase secondary liability for tax payment to the shareholders of a corporation pursuant to Article 20 of the same Act, as of the date the liability for tax payment of delinquent national taxes is established, the oligopolistic shareholders are in a position to substantially control the operation of the corporation, and only the reason that they are registered or reported as shareholders in the form of a shareholder cannot be said to be the oligopolistic shareholders (see, e.g., Supreme Court Decision 86Nu699, Apr. 14, 1987; Supreme Court Decision 86Nu74, Dec. 9, 1986; 87Nu215, Jun. 9, 1987).

According to the reasoning of the judgment below, the court below decided that the non-party 1, the plaintiff's birth together with the non-party 1, who was the plaintiff's birth, was an oligopolistic shareholder's acquisition of 50 percent of shares of the non-party 3's above non-party 1 in order to conduct business activities in Korea, and that the non-party 1, who was the plaintiff's living together with the above non-party 5's shares were transferred to the non-party 9's shareholder's shareholder registry and the non-party 1 did not know of the facts that the non-party 9's shares were transferred to the non-party 1's shareholder registry or the non-party 9's shares were transferred to the non-party 1's shareholder registry and the non-party 1 did not know of the facts that the non-party 9's shares were transferred to the non-party 1's shareholder registry or the non-party 1's shares were transferred to the non-party 2's shareholder registry and the non-party 1's shares were not held.

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Man-hee (Presiding Justice)