Actual Representative

Even if the company was registered as the representative director of the company, it should not be deemed that such income does not belong to the representative, unless it was actually operated by the company.

Incheon District Court 2017Guhap5063 global income and revocation of disposition

westO

Kimpo-hoon

2018.04.26

oly 2018.17

1. The Defendant’s disposition of imposition of global income tax (including additional tax) of KRW 50,260,329 against the Plaintiff on May 16, 2016 shall be revoked.

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

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

From October 23, 2009 to February 3, 2012, the Plaintiff was registered as the representative director in the corporate register of the corporation that runs the wholesale and retail business of the O, O-O, radio communication equipment, wholesale and retail business as the OO in Bupyeong-gu Incheon, Bupyeong-gu. (hereinafter referred to as the “instant company”).

On May 16, 2016, the head of the North Incheon District Tax Office corrected the corporate tax base by adding the processing purchase amount for the business year 2010 to the deductible expenses and adding the omitted sales amount to the gross income. Since the ownership of KRW 153,789,90 is unclear, it was disposed of as a bonus to the Plaintiff as the representative. Accordingly, on May 16, 2016, the Defendant decided and notified the Plaintiff of KRW 50,260,329 as global income tax (including additional tax) for the year 2010 (hereinafter “instant disposition”).

[Ground of recognition] Evidence Nos. 1, 2, Eul Nos. 1, 2, and 3, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The company of this case was established and operated jointly by the UO and the UO.S., and the plaintiff was merely registered as the representative director of the company of this case by lending only the name, and did not actually work as the representative director or participated in the management of the company. Therefore, the disposition of this case on the premise that the plaintiff was the actual representative of the company

B. Determination

Article 106(1)1 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 26981, Feb. 12, 2016) where it is clear that the amount included in the calculation of earnings has been leaked to the company other than the company when the tax authority determines or revises the corporate tax base, the amount included in the calculation of earnings shall be the dividends, bonuses from the disposition of profits, other income, and other outflow from the company according to the person to whom the income belongs: Provided, That where the attribution is unclear, it shall be deemed that it has been reverted to the representative. Here, the representative shall be a de facto representative operating the company. Although the company was registered as the representative director of the company, if the company had not been actually operated, such recognized income shall not be attributed to the representative (see, e.g., Supreme Court Decisions 2008Du10461, Dec. 23, 2010; 2014Du4764, Nov. 10, 2016).

In other words, the company of this case was established on October 19, 2009 based on the transfer/acquisition agreement entered into between the former spouse's OO (Divorce on March 26, 2003) and O. The contents of the transfer/acquisition agreement decided to establish a new corporation by taking over the pre-existing business chain C&C of O with OO and O, and the plaintiff was not a party to the transfer/acquisition agreement. The plaintiff was not a party to the transfer/acquisition agreement, the O, O, O, and O was either a representative director or affiliate management of the company of this case, O-general management and telecommunications business management, O-O's spouse's management, and O-O's management of the company of this case, and the plaintiff did not have any special role in the operation of the company of this case.

Therefore, the disposition of this case, based on the premise that the Plaintiff was the representative who actually operated the instant company in 2010, is unlawful.

3. Conclusion

The plaintiff's claim shall be accepted on the grounds of its reasoning, and it is so decided as per Disposition.