If it is objectively and externally a representative of a company, even if it is not a real representative, the global income tax generated by bonus disposition can not be considered as void as a matter of course.

If there is objective and external factual basis that can be mistaken as the representative of the non-party company, even though it is merely a fact registered in the representative director, such fact constitutes a situation that can only be clarified after accurately investigating the facts. Thus, even if each disposition is defective, it cannot be seen that the defect is apparent. Thus, each disposition does not constitute an invalidation as a matter of course.

Article 66 of the Corporate Tax Act and Article 67 of the Corporate Tax Act

Cheongju District Court 2017Guhap2290 global income and confirmation of invalidity of disposition

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○ Head of tax office

June 21, 2018

July 19, 2018

1. All of the plaintiff's claims are dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The Defendant confirmed that the imposition of KRW 1,276,390 of the global income tax on December 12, 2013 against the Plaintiff and the imposition of KRW 172,808,210 of the global income tax on December 1, 2014, as of December 1, 2014, by the Plaintiff, are null and void.

1. Details of the disposition;

A. AA Co., Ltd. (hereinafter referred to as “A”) is a company established on May 15, 2008 for the purpose of real estate development and sale business. The Plaintiff was registered as the representative director of the non-party company in the corporate register from May 15, 2008 to September 17, 2010.

B. On the other hand, on July 13, 2010, the Defendant rendered an ex officio disposition of closure of business (on June 30, 2010, the reference date), and estimated the amount of income as the non-party company did not report the corporate tax reverted to it on June 30, 2010. On the other hand, the Defendant notified the Plaintiff of the disposition of income and the change in the amount of income by deeming that the amount was reverted to the Plaintiff, the representative director of the non-party company, and notified the Plaintiff of the disposition of income and the change in the amount of income, on December 12, 2013.

C. After that, the Defendant: (a) deemed that the short-term loan amount of KRW 465,600,000 in the financial statements of Nonparty Company was reverted to the Plaintiff, the representative director of Nonparty Company, and accordingly, disposed of the Plaintiff’s income and the change in the amount of income due to the fact-finding contribution for the year 2010; and (b) notified the Plaintiff of the change in the amount of income; (c) on December 1, 2014, the Defendant issued an additional correction notice of KRW 172,808,210, global income tax attributed to the Plaintiff (hereinafter “each disposition of this case”).

[Ground of recognition] Facts without dispute, Gap evidence 1, Eul evidence 1, Eul evidence 1, 2, 3, 7 (including provisional number; hereinafter the same shall apply), the purport of the whole pleadings

2. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

Upon the request of BB, the actual representative of the non-party company, the plaintiff lent the name of BB to BB, and was registered in the corporate register in the form of representative director, but did not actually operate the non-party company.

BB promised to take over the shares of the non-party company to the Plaintiff on January 2009, change the name of the representative director, and take all the taxes incurred in relation to the non-party company during this period, but did not comply with it, and it is merely a fact that each of the dispositions of this case was issued to the Plaintiff on September 17, 2010 by changing the representative director to CCC.

Therefore, each of the dispositions of this case based on the premise that the plaintiff is the actual representative of the non-party company is serious and clear.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Relevant legal principles

Generally, a tax disposition imposed on a person who does not have any factual relation, income or act, etc., which is subject to taxation, shall be deemed to have a significant and apparent defect. However, in a case where there are objective circumstances that could mislead him to believe that it is subject to taxation with respect to certain legal relations or factual relations which are not subject to taxation, if it can only be clarified whether it is subject to taxation or not, it cannot be deemed to have been apparent even if the defect is serious, and thus, it cannot be deemed that the unlawful taxation disposition that misleads the fact of taxation is null and void as a matter of course (see Supreme Court Decision 2001Du7268, Sept. 4, 2002).

2) The lawfulness of each disposition of the instant case

In full view of the following facts, based on the aforementioned legal principles, the details of the disposition as seen earlier and the purport of the evidence Nos. 2, 3, 4, 5, and 6 as a whole, the following facts can be considered: (a) at least objective. Foreign Affairs may be mistaken for the Plaintiff to be the representative of the non-party company; and (b) even if the Plaintiff was formally registered as the representative director as alleged, such facts may only be revealed after accurately investigating the facts. Therefore, even if each of the dispositions in this case is found to be inappropriate, it cannot be deemed that the defect is apparent. Therefore, each of the dispositions in this case does not constitute an inevitable invalidation (the Plaintiff’s request to send investigation records on suspicion of occupational embezzlement by BB, and the Plaintiff’s request to resume the pleadings to the effect that BB would be the substantial representative of the non-party company during the investigation, but this Court did not accept this part of the trial division, even if it was found that the Plaintiff had not received the Plaintiff’s request for permission to send the pertinent document to B for the same purpose as the Plaintiff’s request for examination.

A) The report on the incorporation of the non-party company on September 30, 2008 entered the location of the non-party company's place of business in ○○○○○-dong, ○○○○○-dong, ○○○○○. The above report on establishment is accompanied by DD and the land owner D, real estate lease agreement concluded between the plaintiff and D, the register of the company registered by the plaintiff as the representative director, the articles of incorporation of the non-party company, and the list of shareholders of the non-party

B) From the date of incorporation to the date of ex officio closure, the non-party company filed a return on value-added tax, corporate tax, etc. with the Plaintiff’s representative. The non-party company filed a return on KRW 117,410 of value-added tax, which was 208, and paid KRW 25,000,000 of value-added tax, which was 1,010.

C) On the statement of earned income submitted by the non-party company to the defendant on March 18, 2009, it stated that the plaintiff paid 4 million won to the plaintiff with respect to the period of service from September 2008 to December 2008.

D) The Plaintiff filed a complaint against BB on suspicion of fraud with the purport that “B had the Plaintiff take the name of the representative director and shareholder, and in fact, had the Plaintiff cancelled the Plaintiff from the representative director and the shareholder registry, or had the Plaintiff take the responsibility for relevant expenses and taxes.” However, the Cheongju District Prosecutors’ Office filed a complaint against the Plaintiff on suspicion of fraud with the purport that “the Plaintiff had caused property damage to which the Plaintiff would incur about KRW 200 million as the representative of the non-party company.” However, the Cheongju District Prosecutors’ Office appealed against the Plaintiff, but the appeal was dismissed.

3. Conclusion

Therefore, all of the plaintiff's claims are dismissed as it is without merit. It is so decided as per Disposition.