Cho-2014-west-2308 (Law No. 14.23, 2014)

Where there is no possibility of exercising shareholders' rights as at the date of establishment of the tax liability, the second tax liability shall not be applied.

In order to constitute "a person who actually exercises the right to shares exceeding 50/100 of the total number of shares issued by the corporation" among oligopolistic shareholders, the person must be in a position to exercise the shareholder's right to shares held as of the date of establishment of the tax liability, even if the actual exercise of shareholder's right is not a

Article 39 (Secondary Liability to Pay Taxes by Investor)

2014Guhap67505 Disposition to revoke the imposition of value-added tax

LAA

O Head of tax office

August 20, 2015

September 24, 2015

1. On November 5, 2013, the Defendant: (a) designated the Plaintiff as the secondary taxpayer of BB Company B; and (b) revoked each disposition of imposition of value-added tax of KRW 72,755,440 for the first period of January 2012; (c) value-added tax of KRW 1,202,830 for the first period of January 2012; and (d) value-added tax of KRW 16,156,92 for the second period of February 2012.

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;

A. On March 2, 2012, Nonparty BB Co., Ltd. (hereinafter “Nonindicted Company”) was incorporated with the representative director as the Plaintiff on March 2, 2012, and all shares issued by the said Company were owned by the Plaintiff at the time of incorporation.

B. On March 2, 2012, the non-party company registered its business with OOO-gu OOO as OO-gu OO, and transferred the location of the place of business to OO-O-O-O-O-O-O-O-O-O-type on July 19, 2012 while engaging in clothing wholesale and retail business, and closed on September 3, 2012.

C. The non-party company failed to pay value-added tax of KRW 63,252,570, value-added tax of KRW 1,057,00, value-added tax of KRW 14,049,540 for the first quarter of year 2012, and value-added tax of KRW 1,057,00 for the second quarter of year 2012. The defendant determined that the above delinquent tax cannot be collected from the non-party company, and determined that the above delinquent tax could not be collected from the non-party company, and that the non-party company was in the status of oligopolistic shareholder as of the date of establishment of tax liability based on the register of shareholders submitted by the company at the time of application for the registration of its business, the non-party company designated the non-party company as the second taxpayer, and on November 5, 2013, notified the plaintiff of the payment of value-added tax of KRW 72,75,40, value-added tax for the first quarter of year 2012 (hereinafter referred to as "each of the above case").

D. The Plaintiff, who was dissatisfied with the instant disposition, filed an objection on February 6, 2014 and filed an appeal with the Tax Tribunal on April 15, 2014, but was dismissed on June 23, 2014.

[Ground of Recognition] A without dispute, Gap evidence 1 through 6, Gap evidence 16-1, 2, Gap evidence 17, 19-23, Gap evidence 24-1 through 3, Gap evidence 27, 32, 33, Eul evidence 35-1 through 3, Eul evidence 1-2, Eul evidence 2-3-1, 2, Eul evidence 3-1, 3-2, Eul evidence 4-1 through 3, Eul evidence 5-1 through 5, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

At the time of incorporation of the non-party company, the Plaintiff only lent the name of the representative director and the shareholder to the non-party SongCC, and did not actually operate the above company, and all shares owned by the Plaintiff were transferred to the non-party company to KimD, RedE, JeongF, and KimG before the date of establishment of the tax liability ( June 30, 2012). Thus, the non-party company is not legally liable as the second taxpayer of the non-party company.

B. Relevant statutes

The entries in the attached Table-related statutes shall be as follows.

(c) Fact of recognition;

1) On February 2012, the Plaintiff participated in the establishment of the non-party company at the proposal of the non-party company, and the relationship between the Plaintiff, the SongCC, and the non-party H, which was to be incorporated together with the non-party company at the time, was the most favorable relationship between the Plaintiff, the representative director, and the shareholder of the non-party company.

2) However, after the incorporation of the non-party company, the Plaintiff lost its trust in the SongCC, including that contact with the non-party company was not well known, and from May 2012, the Plaintiff requested the SongCC to arrange the vehicle under the name of the Plaintiff as the Plaintiff wanting to retire to the non-party company. Accordingly, the SongCC decided to change the representative of the non-party company to the non-party company to the non-party KimD, which is the wife of the non-party HongE, and completed the process of changing the name of the representative on the corporate register and the business registration name of the non-party company on May 8, 2012.

3) After that, on June 30, 2012, the non-party company was transferred to the KimJ and KimG, at the time, KimJ paid 1.5 million won as the share transfer price to KimD and RedE, and on July 13, 2012 and July 19, 2012, the name of the representative on the corporate register and business registration of the non-party company was changed to the non-party JungF. According to the register of shareholders of the non-party company submitted to the defendant on July 5, 2012 at the time of the above report of business registration, according to the list of shareholders, PF and KimG owned 60% and 40% of the shares issued by the non-party company.

4) As above, the Plaintiff did not fully take part in the process that the representative and shareholder name of the non-party company were changed to KimD, JeongF, KimG, etc.

[Ground of Recognition] The facts without dispute, Gap's statements, Gap's statements, 4, 5, 11 through 15, 25 through 31, 34, 36 through 45, 48 through 52, witness staticF, forest KK, and KimG's testimony and the purport of the whole pleadings

D. Determination

1) Relevant legal principles

Article 39 Subparag. 2 of the former Framework Act on National Taxes (amended by Act No. 11845, May 28, 2013) provides that “the person who actually exercises the rights to shares exceeding 50/100 of the total number of issued and outstanding shares of the relevant corporation among oligopolistic shareholders” shall be subject to secondary tax liability. In light of the legislative intent and amendment process, etc. of the aforementioned provision, in order to constitute “the exercise of the rights to shares exceeding 50/100 of the total number of issued and outstanding shares of the relevant corporation”, the person who actually exercises the rights to shares must be in the position to exercise the rights to the shares held at least as at the date when the tax liability is established, even if there is no actual exercise of the rights to shares (see, e.g., Supreme Court Decision 2011Du9287, Dec. 26, 2012).

2) In the instant case:

In light of the following circumstances revealed in the facts as seen earlier, i.e., ① at the time of incorporation of the non-party company: (a) at the request of the Plaintiff that both the name of the representative and the name of the shareholder in its corporate register and business registration were left as Plaintiff 1; (b) all the above representative’s name was changed to KimD upon the Plaintiff’s request that the non-party company would resign; (c) the Kim J also paid the transfer price of shares to the non-party company upon the acquisition of the non-party company on June 30, 2012; (c) before the process of changing the name of the representative of the non-party company was completed, the non-party company changed the name of the non-party company’s shareholder; and (d) the non-party company’s name and the name of the shareholder were changed to KimD; and (e) it appears that at the time of incorporation of the non-party company, the representative of the non-party company had already been changed to DoD12, 2012.

In light of the above, the Plaintiff did not have the status of exercising the shareholder rights of the instant shares after May 11, 2012, as seen earlier, since the Plaintiff did not have been engaged in all of the company’s representative, shareholder change, and other matters after consultation with the SongCC around May 2012.

Therefore, the Plaintiff is not an oligopolistic shareholder who bears the secondary tax liability regarding the value-added tax of this case as of June 30, 2012 or December 31, 2012, and thus, the Plaintiff’s disposition of this case by the Defendant is unlawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is justified and it is so decided as per Disposition.