Whether a shareholder who is registered only in the register of shareholders and did not participate in the management of the company is subject to secondary tax liability (negative)

Under Article 39 subparagraph 2 of the Framework Act on National Taxes, a shareholder is required to be in a position to substantially control the operation of the legal entity as an oligopolistic shareholder in order for the shareholder of the legal entity to bear the secondary tax liability in accordance with Article 39 subparagraph 2 of the same Act. Therefore, if the founder of the non-party company voluntarily entered in the register of shareholders without the consent of the plaintiffs, and the plaintiffs did not participate in the management of the non-party

Article 39 subparagraph 2 of the Framework Act on National Taxes

Supreme Court Decision 87Nu938 delivered on December 22, 1987 (Gong1988, 368) 88Nu10961 delivered on July 25, 1989 (Gong1989, 1309)

[Defendant-Appellee] Plaintiff 1 and 2 others (Attorneys Cho Jong-young et al., Counsel for defendant-appellee)

Head of tax office and one other

Seoul High Court Decision 88Gu1457,3231 delivered on January 26, 1989

All appeals are dismissed.

The costs of appeal shall be assessed against the defendants.

The grounds of appeal are examined.

In order to have a shareholder of a corporation bear the secondary tax liability under Article 39 subparagraph 2 of the Framework Act on National Taxes, the shareholder is required to be in a position in which the shareholder can substantially control the operation of the corporation as an oligopolistic shareholder (see, e.g., Supreme Court Decision 87Nu938, Dec. 22, 1987; Supreme Court Decision 88Nu10961, Jul. 25, 1989).

According to the reasoning of the judgment below, the court below's findings and decision are acceptable, and there is no error in the rules of evidence or in the misapprehension of the legal principles as to the violation of the rules of evidence or the incomplete trial, or Article 39 subparagraph 2 of the Framework Act on National Taxes, since the non-party Maddong and the non-party Maddong Co., Ltd. voluntarily entered in the register of shareholders without the plaintiffs' consent at the time of incorporation of the non-party Maddong Co., Ltd. and the non-party Maddong Co., Ltd. and the non-party Maddong Co.,

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

Justices Lee Jong-soo (Presiding Justice) Lee Chang-soo Kim Jong-won