Main Issues
In a case where: (a) a foreign corporation Company A transferred the stocks of a domestic corporation and did not report or pay corporate tax on capital gains from the transfer of stocks of a domestic corporation; (b) a tax authority imposed and notified corporate tax to Company A; and (c) the corporate tax was in arrears thereafter; and (d) the State filed a lawsuit seeking confirmation of the existence of a tax claim against Company A for the interruption of extinctive prescription
Summary of Judgment
In a case where: (a) a foreign corporation Company A transferred the stocks of a domestic corporation and did not report and pay corporate tax on capital gains from the transfer of stocks of a domestic corporation; (b) the tax authority imposed and notified corporate tax on Company A; and (c) the tax authority filed a lawsuit seeking confirmation of the existence of a tax claim against Company A for the interruption of extinctive prescription, the case holding that: (a) in a case where a taxpayer is insolvent or is missing and thus the location of his/her tax obligor cannot be commenced; and (b) where special circumstances exist that make it impossible to interrupt the extinctive prescription pursuant to the method prescribed by the Framework Act on National Taxes, the “judicial claim” under Article 168 subparag. 1 of the Civil Act may be acknowledged as the grounds for interrupting extinctive prescription of a tax claim; (c) as the company A did not own any property in Korea, it cannot realize a tax claim against Company A by exercising its own enforcement right; and (d) the extinctive prescription period cannot be interrupted pursuant
[Reference Provisions]
Article 27(1) and (2), and Article 28(1) of the Framework Act on National Taxes; Article 24 of the National Tax Collection Act; Article 168 subparag. 1 of the Civil Act
Plaintiff
Republic of Korea (Law Firm LLC, Attorneys Choi Young-han et al., Counsel for the defendant-appellant)
Defendant
Co., Ltd. (Law Firm LLC, Attorneys Choi Yong-hwan et al., Counsel for the plaintiff-appellant)
Conclusion of Pleadings
August 24, 2016
Text
1. It is confirmed that the Plaintiff’s 33,112,029,040 won ( corporate tax 22,338,248,920 won and additional dues 10,773,780,120 won as of May 26, 2015) and the corporate tax related to the Defendant’s amount of additional dues from May 27, 2015.
2. The costs of the lawsuit are assessed against the defendant.
Purport of claim
The same shall apply to the order.
Reasons
1. Basic facts
A. The defendant was established on May 7, 1964 for the purpose of running a golf course and its principal office is a foreign corporation in Japan.
B. From October 2, 2006 to April 6, 2007, the Defendant transferred 32,000 shares of the Seoul Rad Co., Ltd.’s 32,000 shares to MMland development, a domestic corporation, and received payment of 9,780,000,000 UN with the transfer proceeds.
C. As a result of conducting a tax investigation with respect to the Defendant, the Director of the Central Tax Office confirmed that the Defendant did not report and pay corporate tax on the capital gains from the shares stated above B, and notified it to the Director of the KU
D. On March 2, 2011, the Director of the Chungcheongnam-do Tax Office imposed and notified the Defendant of KRW 13,643,072,950 for corporate tax of 2006 and KRW 8,695,175,970 for corporate tax of 2007.
E. On May 31, 201, the Defendant filed an appeal with the Tax Tribunal on the grounds that he/she was dissatisfied with the disposition of imposition of corporate tax stated in the above D, but the Tax Tribunal dismissed the Defendant’s appeal on July 4, 2012.
F. As of May 26, 2015, the Defendant’s corporate tax arrears amounting to KRW 33,112,029,040 in total (including KRW 10,773,780,120 as of May 26, 2015).
[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1 and 2, Eul evidence No. 3-1, 2, Eul evidence No. 4-1 and 2, and the purport of the whole pleadings
2. The parties' assertion
A. The plaintiff's assertion
The defendant is in arrears with additional dues from May 27, 2015 on corporate tax of 22,338,248,920 won, additional dues as of May 26, 2015 (total 33,112,029,040 won) and corporate tax of 32,00 shares of Seoul Rad Co., Ltd. on capital gains from transfer of 32,000 shares, and the defendant seeks confirmation of the existence of the above taxation claim against the defendant for the interruption of the extinctive prescription period.
B. Defendant’s assertion
As the “judicial claim” does not constitute grounds for suspending extinctive prescription, there is no benefit to file a lawsuit seeking confirmation of the existence of a taxation claim for the interruption of extinctive prescription.
3. Relevant statutes;
The entries in the attached Table-related statutes are as follows.
4. Determination
(a) Competent courts;
Article 39 of the Administrative Litigation Act provides that "party litigation shall be the defendant of the State, public organization, and other subject of rights." The term "other subject of rights" refers to a private person who is an administrative body that has been granted public authority, i.e., an agent entrusted with official duties. [The litigation in this case where confirmation of a tax claim is sought against a corporation is not a party litigation prescribed by the Administrative Litigation Act, but a civil lawsuit. However, since the defendant has made a pleading on the merits without a defense of violation of jurisdiction, it shall be subject to jurisdiction pursuant to Article 8 (2) of the Administrative Litigation Act and Article 30 of the Civil Procedure Act (see Supreme Court Decision 2010Du22368, Feb. 28, 2013).
B. As to the existence of interest in confirmation
1) Article 27(1) of the Framework Act on National Taxes provides that “The State’s right to collect national taxes shall be ten million won or more from the time when it can be exercised, and ten years for other national taxes shall expire if it is not exercised for a period of five years.” Article 28(1) of the same Act provides that “the notice of tax payment, demand or demand notice of payment, demand for delivery, demand for delivery, and seizure” shall be deemed as the cause interrupting the extinctive prescription. As such, whether “judicial claim”, the cause interrupting the extinctive prescription under the Civil Act, can be acknowledged as the cause interrupting the extinctive prescription
In order for a civil obligee to realize a claim by compulsory execution, a judicial claim shall be made by a final and conclusive judgment and subject to compulsory execution procedures provided for in the Act on the debtor's property based on the final and conclusive judgment, but the head of a tax office may seize the taxpayer's property where "where the taxpayer fails to pay completely national taxes and the additional dues by the designated deadline after receiving a notice of demand (including a notice of demand)" or "where the taxpayer fails to pay in full within the designated deadline after receiving a notice of payment prior to the payment deadline," (Article 24 of the National Tax Collection Act). It may change the attached delinquent's property in money and dispose of realization against the delinquent taxpayer's will (Article 24 of the National Tax Collection Act), and transfer the ownership against the delinquent taxpayer's will (Article 24 of the National Tax Collection Act, tax law, 2016, 262 pages, and
However, in full view of the following legal principles and circumstances, in cases where there are special circumstances where the interruption of extinctive prescription pursuant to the method prescribed by the Framework Act on National Taxes, such as in a case where the taxpayer is insolvent or his/her whereabouts is unknown, etc., it is reasonable to determine the “judicial claim” under Article 168 subparag. 1 of the Civil Act as the grounds for interrupting extinctive prescription of the tax
(1) Article 27(2) of the Framework Act on National Taxes provides that “The extinctive prescription shall be governed by the Civil Act, except as otherwise provided for in this Act or other tax-related Acts.” If the aforementioned provision is interpreted formally, a judicial claim, which is the cause interrupting extinctive prescription, may also be acknowledged as the cause interrupting extinctive prescription of a tax claim
② The ground for the existence of the prescription system lies in respecting the permanent state of fact and not protecting a potential person above the right, and in particular, in the extinctive prescription, the latter’s meaning is strong. Thus, if the right holder expresses that he/she is not a locked person above the right by asserting his/her right, the cause for interruption of prescription becomes the cause for interruption of prescription (see Supreme Court en banc Decision 91Da32053, Mar. 31, 192
③ The National Tax Collection Act provides for a tax notice procedure at the first stage of the collection procedure and the subsequent demand procedure at the next stage. In the interpretation of the relevant provisions, each of the above procedures is limited to one time, respectively. The notification of tax payment is not allowed again (this crime, several issues concerning the interruption of the statute of limitations for taxes, research of special Acts, research right 2, special litigation practical council, 349 pages), and where the tax authority asks for the same demand again after demanding the payment of delinquent taxes or additional dues, the first demand is an administrative disposition subject to appeal litigation as a collection disposition, and the subsequent demand is merely a simple peremptory notice under the Civil Act (see Supreme Court Decision 97Nu119, Jul. 13, 199). As long as the payment notice and demand are effective as grounds for interruption only once after the payment notice and demand are suspended, it is necessary to secure tax claims by applying mutatis mutandis the provisions of the Civil Act.
④ In a case where a civil obligee has won a favorable judgment and the judgment became final and conclusive, an exceptional case where: (a) the ten-year extinctive prescription period of a claim based on a final and conclusive judgment becomes more difficult to enforce compulsory execution; and (b) a judicial claim with the same content is inevitable for the interruption of extinctive prescription, regardless of whether compulsory execution was possible prior to the judgment; (c) thus, the same legal claim cannot be deemed to have been made for the interruption of extinctive prescription or the prohibition of double lawsuit with respect to the same claim for the interruption of extinctive prescription (see Supreme Court Decisions 87Meu1761, Nov. 10, 1987; 2005Da74764, Apr. 14, 2006); (d) where a payment notice and demand was issued in the case of a tax claim but it is difficult to enforce compulsory execution, it is reasonable to allow the interruption of extinctive prescription through a judicial claim other than the grounds for interruption of extinctive prescription as provided in Article 28(1)
2) In the instant case, since the Defendant did not own any property in Korea, it cannot realize a taxation claim against the Defendant by exercising its own right to enforce its taxation, and as such, the extinctive prescription cannot be interrupted according to the method prescribed in Article 28(1) of the Framework Act on National Taxes. Therefore, there is a benefit to file a lawsuit seeking confirmation of the existence of a taxation claim against the Defendant for the interruption
C. As to the existence of a taxation right
2,338,248,920 corporate tax on capital gains of 32,00 shares of Seoul Rad Co., Ltd. ( corporate tax of 13,643,072,95,970 as corporate tax of 2006 + corporate tax of 8,695,175,970 as of May 26, 2015; additional dues of 10,773,780,120 as of May 26, 2015; and additional dues of 33,12,029,040 corporate tax of 22,338,248,920 as of May 26, 2015; additional dues of 10,773,780,780,920 as of the corporate tax of 200, and additional dues of 205,205,205) as of May 26, 2015.
5. Conclusion
The plaintiff's claim of this case is reasonable, and it is so decided as per Disposition.
[Attachment] Relevant Statutes: omitted
Judges Choi Jin-young (Presiding Judge)