Cho Jae-2017-China-4000 ( November 08, 2017)

It is not only a nominal business operator due to the name lending but also an actual business operator.

The plaintiff was registered as the representative director of the company of this case in the form of corporate register and cannot be deemed to have actually operated the company of this case.

Article 67 of the Corporate Tax Act

Incheon District Court 2018Guhap50462 Revocation of the imposition of global income tax, etc.

○ ○

○ Head of tax office

November 16, 2018

December 07, 2018

1. The Defendant’s global income tax amounting to 32,937,609 won for the year 2013 owed to the Plaintiff on November 1, 2016

The imposition disposition shall be revoked.

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. ○ Timber Building Business Co., Ltd. (hereinafter referred to as the “instant company”) is a company incorporated for the purpose of the wood manufacturing business, wholesale and retail business, etc., and the Plaintiff was registered as the representative director of the instant company from March 22, 2013 to December 7, 2015.

B. As a result of the follow-up verification of the details of the instant company’s return of corporate tax for the business year 2013, the Defendant: (a) calculated the sales revenue of KRW 102,726,600, which was omitted in the report while exporting the wooden machine to China Limited Corporation (hereinafter “amount omitted in the instant sales”); (b) disposed of the Plaintiff as the representative director of the instant company, and notified the Plaintiff of the change in the amount of income on November 1, 2016; and (c) determined and notified the amount of global income tax of KRW 32,937,60 for the year 2013 to the Plaintiff (hereinafter “instant disposition”).

C. The Plaintiff appealed and filed an objection on March 3, 2017, but was dismissed on April 20, 2017. Accordingly, the Plaintiff filed an appeal with the Tax Tribunal on August 9, 2017, but was dismissed on November 8, 2017.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 4, Eul evidence Nos. 1 and 4, the purport of whole pleadings

2. Determination

A. The plaintiff's assertion

From March 22, 2013 to December 7, 2015, the Plaintiff was registered as the representative director on the corporate register of the instant company, but the Plaintiff was merely lent only the name upon the request of new ○○○ at the time, and there was no substantial involvement in the operation of the instant company. Therefore, the instant disposition based on the premise that the Plaintiff was the actual representative director of the instant company was unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Article 106(1)1 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 26981, Feb. 12, 2016) provides that, in determining or revising the corporate tax base, where it is clear that the amount included in the calculation of gross income has leaked out of the company, it shall be the bonus, dividend, other income, and other outflow from the company based on the disposition of profits according to the person to whom the income belongs, but where it is unclear, it shall be deemed that it has been reverted to the representative. In this context, the representative shall be the person who actually operates the company, and even if the company was registered as the representative director in the corporate register, it shall not be attributed to the representative (see, e.g., Supreme Court Decision 2008Du10461, Dec. 23, 2010).

Meanwhile, since a person who is registered as a representative director on the corporate register can be presumed to have actually been operating the company, the representative director on the corporate register must prove the fact that he/she actually failed to operate the company (see, e.g., Supreme Court Decision 2006Du187, Apr. 24, 2008).

2) In light of the following circumstances, the Plaintiff was registered as the representative director of the instant company in the form of corporate register, and cannot be deemed to have actually operated the instant company. Thus, the instant disposition against the Plaintiff, who deemed the Plaintiff as the representative director of the instant company and recognized the Plaintiff as having accrued income accrued to the Plaintiff and imposed the comprehensive income tax, should be revoked on the grounds that the Plaintiff’s disposition was unlawful.

① In around 1999, the Plaintiff joined as an employee of ○ Timber Industry Co., Ltd., a related company of the instant company, and served as the head of the business division of the said company and the instant company from around 201, and even after being registered as the representative director in the corporate register, the Plaintiff performed his duties as the head of the business division

② The Plaintiff’s annual salary was 30,030,000 won in 2008, 30,960,000 won in 2009, 27,390,000 won in 201, 45,860,000 won in 201, 44,100,000 won in 2012, 46,500,000 won in 2013, 48,000,000 won in 2014, and 39,50,000,000 won in 2015, which was paid by the head of the business division, but there was no significant change in the representative director’s salary in 201.

③ A contract (Evidence No. 6 to 9) of the instant company was prepared by new ○○ by means of signing on its own name or on behalf of the Plaintiff, the representative director, and each written resolution (Evidence No. 12) and each written resolution (Evidence No. 22) signed by new ○○○ in the column for approval of the representative director. Accordingly, it can be presumed that new ○○○ was in a position to exercise the power of representation of the instant company.

④ On March 22, 2013, the Plaintiff’s name as the representative director, written in the column for the person in charge of the order (Evidence A No. 19) of the instant company, which was made after March 22, 2013, stating that “○○○○○○○○○○○○○” was written in the column for receipt of a written request for delivery (Evidence A No. 20).

⑤ Although the Plaintiff entered the business feasibility review report (Evidence A No. 11) prepared by ○ Bank on the instant company as a representative director of the instant company, the latter part is indicated as the real manager who established the instant company. As such, it is difficult to view the Plaintiff as the real representative of the instant company on the ground of this, on the ground that the latter part is indicated as the real manager who established the instant company.

④ According to the witness statement (Evidence No. 10) written in a lawsuit between the instant company and the instant company, ○○ stated on September 4, 2015 that ○○ was a person who actually conducts the instant company’s business. According to a fact-finding certificate (Evidence No. 5) written by ○○○, ○○, which was written by ○○, stated that ○○ was a person who actually was in control of the instant company, and the Plaintiff was a representative director under the name of ○○.

7) On December 7, 2012, new ○○ and ○○○) owned 10,000 shares (50%) respectively at the time of filing an application for registration of business on December 7, 2012. During the business year 2013, Plaintiff 12,00 shares (30%), 10,00 shares (25%), 10,000 shares (25%), 10,00 shares (25%), 00 shares (20%), 00 shares (20%), 00 shares for 2015, 10,000 shares (25%), ○○○○○,00,000 shares (25%), ○○○8,000 shares (20%), 12,000 shares (30%), each of the instant companies is likely to substantially control the new ○○ company.

④ On May 7, 2012, 2012, ○○ entered into a share purchase contract with the Plaintiff, New○, Lee ○, and Lee ○○○, and received from the said transferee a letter of intent to waive ownership of the shares of the instant company. The said share purchase contract seems to be merely a title trust.

3. Conclusion

Therefore, the plaintiff's claim is reasonable, and it is so decided as per Disposition.