Seoul Administrative Court 2014Guhap8247, Seoul High Court 2014Nu7039

early 2013west 011

The fictitious payment of stock price is a realistic payment due to the transfer of money, and there is no reference to the transfer of provisional payment, a representative director, under the stock transfer contract.

Although the issue is that the provisional payment was appropriated in the process of making a lump sum payment, it cannot be deemed that the non-party corporation did not hold the provisional payment of this case, and since there is no evidence to deem that the provisional payment was succeeded, it is reasonable to view that the provisional payment was reverted to the plaintiff, who is a specially related person, because it is in the de facto waiver of the collection

Article 67 of the former Corporate Tax Act, Article 106 (1) of the former Enforcement Decree of the same Act

2015du43995 Global income and revocation of disposition

Park AA

The director of the tax office.

Seoul High Court Decision 2014Nu70039 Decided May 14, 2015

October 15, 2015

The appeal is dismissed.

The costs of appeal are assessed against the Plaintiff.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. As to the grounds of appeal Nos. 1 through 4

(1) Article 20 (1) 3 of the former Income Tax Act (amended by Act No. 9897 of Dec. 31, 2009) stipulates that one of the earned income shall be treated as a bonus under the Corporate Tax Act. Article 106 (1) 1 (b) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 21302 of Feb. 4, 2009; hereinafter the same) upon delegation under Article 67 of the former Corporate Tax Act (amended by Act No. 10423 of Dec. 30, 2010) stipulates that where it is clear that the amount included in gross income under Article 67 of the former Corporate Tax Act is leaked out of the company, if the person to whom it belongs is an executive or employee, the person to whom it belongs shall be treated as a bonus for the person to whom it reverts.

(2) The lower court acknowledged the following facts based on the admitted evidence.

① After immediately withdrawing share capital paid in the process of establishing a corporation BB Engineering Co., Ltd. (hereinafter referred to as “BB engineering company”) in which the Plaintiff himself/herself was a major shareholder or a representative director, the Plaintiff has appropriated the share capital as provisional payments and short-term loans paid by the representative director for the Plaintiff on the account books of the non-party company.

② On May 26, 2008, Nonparty Company’s annual settlement of accounts included KRW 2,539,693,350 (hereinafter “instant provisional payment”). However, on May 26, 2008, the Plaintiff transferred all shares of Nonparty Company to SCC (hereinafter “instant transfer”).

③ The Defendant, on June 15, 2012, imposed global income tax on the Plaintiff for the year 2008, on the ground that the instant provisional payment was not recovered until the special relationship between the Plaintiff and the Nonparty Company was extinguished, based on the assessment data of the Yeongdeungpo Military Tax Office that disposed of as bonus to the Plaintiff.

The instant disposition was issued to correct and notify KRW 1,067,243,470.

(3) Next, the court below determined that the disposition of this case is lawful on the ground that: (a) the non-party company did not hold the claim of this case against the plaintiff merely because the provisional payment was appropriated in the course of the plaintiff's constructive payment; (b) the court below did not inspect the assets of the non-party company in order to acquire the entire shares of the non-party company from the plaintiff; and (c) the court below did not have any content that the provisional payment was taken over by the plaintiff under the stock acquisition agreement related to the transfer of this case; and (d) the provisional payment account of this case was formed in the account settlement of the non-party company after the transfer of this case; and (e) the provisional payment obligation of this case cannot be deemed to have been succeeded to CC because the non-party company did not recover the provisional payment until the transfer of this case, which was extinguished by the special relationship with the plaintiff; and (e) the provisional payment of this case was discharged from the company at that time and reverted to the plaintiff.

(4) Examining the records in accordance with the aforementioned provision and related legal principles, the said determination by the lower court is justifiable. In so doing, it did not err by misapprehending the legal doctrine on the interpretation of Article 106(1)1 (b) of the former Corporate Tax Act and the principle of substantial taxation, etc

2. As to the fifth ground for appeal

This part of the argument is the first time in the final appeal, and thus cannot be a legitimate ground of appeal.

3. Conclusion

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.