[1] Where an individual is a domestic resident under the Income Tax Act at the same time as a foreign resident and constitutes a taxpayer of income tax, etc. under the relevant foreign law, the method of determining which country is deemed a resident, and the person who bears the burden of proving that country is a dual resident

[2] Whether the provisions of the Income Tax Act that allow withholding and payment of interest income tax are unconstitutional (negative)

[1] If an individual falls under both a domestic resident and a foreign resident under the Income Tax Act and thus falls under a person liable to pay income tax, etc. under the relevant foreign law, it may be imposed twice on the same income. To prevent this, a separate provision is established through the conclusion of a tax treaty among countries. If a taxpayer is recognized as a dual resident, the determination of which country shall be deemed a resident under the provisions of the tax treaty concluded with the country concerned, and the resident country and its tax rate shall be determined under the relevant tax treaty. However, as to the fact that the taxpayer who is a domestic resident is also a resident of a foreign country, the taxpayer bears the burden of proving that the relevant tax treaty

[2] In light of the fact that the withholding system, one of the methods of income tax collection, corresponds to the public interest requests such as contributing to the securing of national tax revenues and convenience in tax collection, it cannot be deemed that the provision that the income tax law allows the payer of interest to withhold and pay the interest income tax to be paid by the payer of the interest income violates the principle of excessive prohibition or proportionality guaranteed under the Constitution.

[1] Article 1 (1) 1 of the Income Tax Act, Article 2 (1), (2), and Article 4 (1) and (3) of the Enforcement Decree of the Income Tax Act / [2] Article 130 of the Income Tax Act

[2] Supreme Court Decision 87Nu551, 552 delivered on January 17, 1989 (Gong1989, 304)

New Bank of Korea (Attorney Cho Young-soo et al., Counsel for the defendant-appellant)

The director of the tax office

Seoul High Court Decision 2004Nu23171 Delivered on January 13, 2006

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

1. As to whether a resident falls under the Income Tax Act

Article 1 (1) 1 of the Income Tax Act provides that an individual who has a domicile in Korea or a temporary domicile in Korea for not less than one year (hereinafter referred to as "resident") shall be liable to pay income tax under the Income Tax Act, and Article 2 (1) and (2) of the Enforcement Decree of the Income Tax Act provides that an address under Article 1 of the Income Tax Act shall be determined based on objective facts of his/her living relationship, such as the existence of a family living together in Korea and of an asset located in Korea, and the term "place of residence" means a place where a person has a living in Korea for a considerable period other than his/her domicile, and in which no close general living relationship is formed as his/her domicile. Article 4 (1) and (3) of the Enforcement Decree of the Income Tax Act provides that the period from the date of his/her entry to the date of his/her departure shall be the date of his/her entry, and

In full view of the adopted evidence, the court below recognized the fact that the non-party 1, 2, and 3 (hereinafter "the deposit holders of this case") who are the deposit holders of the plaintiff bank entered Korea during each of their respective taxable periods and left Korea repeatedly during each of their respective taxable periods, and judged that the deposit holders of this case are residents under the Income Tax Act because the period of their residence in Korea has been at least one year over 2 taxable periods, barring any special circumstance. In light of the relevant provisions and records, the judgment of the court below is just, and there is no violation of the misunderstanding of the legal principles as to residents under the Income Tax Act and the principle of strict interpretation of tax laws, as otherwise alleged in the grounds of appeal.

On the other hand, if a certain individual is both a domestic resident under the Income Tax Act and a foreign resident under the foreign law, it may be imposed twice on one income. Thus, in order to prevent this, separate provisions are established through the conclusion of a tax treaty among countries. If the fact that a taxpayer is a dual resident is recognized, the decision of which country's resident shall be made in accordance with the provisions of the tax treaty entered into between the country concerned, and the decision of the resident country and its tax rate shall be the tax requirement. However, the taxpayer bears the burden of proving that a taxpayer who is a domestic resident shall be subject to the tax treaty at the same time as a foreign resident.

After finding the facts as stated in its holding, the court below rejected the plaintiff's assertion that the non-party 1 shall be subject to a tax treaty concluded with a foreign country on the premise that the non-party 1 is a dual resident of the Republic of Korea and the United States, and the non-party 1 and his wife are entered in the medical insurance policy in the United States and the non-party 1's children have worked in the United States in the United States, but the non-party 2 and 3 paid taxes to the Government of the United States because their domicile was entered in the register of overseas Koreans residing in the Republic of Korea. However, the non-party 1, non-party 2 and 3 cannot be deemed a resident of the United States in the United States, the non-party 2 and 3 are a dual resident of the Republic of Korea and the United States, respectively. In light of the aforementioned legal principles and records, the judgment of the court below is just and there is no error in the misapprehension of legal principles as to resident judgment as alleged in the grounds for appeal.

2. As to whether withholding income tax is unconstitutional

In light of the public interest request such as contributing to the securing of national tax revenues and convenience in tax collection, one of the methods of collecting income tax, the provision that a payer of interest income shall withhold and pay the interest income tax to be paid by the payer of interest income cannot be deemed as a violation of the principle of excessive prohibition or the principle of proportionality guaranteed under the Constitution (see Supreme Court Decision 87Nu551, 552, Jan. 17, 1989).

The judgment below to the same purport is just, and there is no violation of law as otherwise alleged in the 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.

Justices Kim Young-ran (Presiding Justice)