Examination-Income-2016-0054 ( October 28, 2016)

It is registered as a representative director in the name of the corporation and cannot be deemed that the corporation actually operated.

Even if a person is registered as a representative director on the corporate register of the company, if the company does not actually operate the company, no comprehensive income tax shall be imposed because his/her unknown income belongs to the representative director on his/her name.

Article 14 of the Framework Act on National Taxes

Seoul Administrative Court-2017-Gu Partnership-52115 Global Income Detailed and Revocation of Disposition

KimA

s. Head of the tax office

April 19, 2018

1. The Defendant’s disposition imposing global income tax of KRW 223,897,420 (including additional tax) on the Plaintiff on May 26, 2016 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. On February 11, 2010, the Plaintiff: (a) was registered as an internal director from February 11, 201 to November 3, 201; (b) was registered as the representative director from September 26, 201 to November 3, 201; and (c) was registered as an internal director from December 29, 201 to December 3, 201 as of December 31, 201, as of December 31, 201, as of December 31, 201, as of December 31, 201, as of December 31, 201.

B. As the instant corporation did not report corporate tax for the business year 201, the head of thet Tax Office estimated the amount of income for the pertinent business year on May 2, 2013 and imposed corporate tax by estimatinging the amount of income for the pertinent business year as KRW 565 million, the said estimated amount of income was disposed of as bonus to the Plaintiff who was registered as the representative director of the instant corporation, and notified the Defendant of the taxation data.

C. On May 16, 2016, the Defendant issued a revised and notified the Plaintiff of the amount of the above recognized bonus as global income tax of KRW 267,234,250 (including additional tax) for the year 201.

D. On October 28, 2016, the Plaintiff filed a request for review against the foregoing corrective disposition, and the Commissioner of the National Tax Service rendered a decision that “the amount of the corporation’s income for the business year of this case, calculated by dividing the amount of the corporation’s income by the number of days in office in the Plaintiff’s corporate register, and corrected the tax base and amount of the bonus.” The Defendant corrected the amount of KRW 43,336,830, global income tax for the year 201 (hereinafter referred to as “instant disposition”) by reducing the amount of KRW 43,336,830, global income tax for the year 201 according to the above decision around early 2017 (including additional tax) (hereinafter referred to as “instant disposition”).

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1 through 3, 6, Eul evidence Nos. 1 and 2 (including each number), the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

1) A de facto operator of the instant legal entity at the time of the business year 2011 is ParkF, which is the seat of the Plaintiff’s wife KimE, and the Plaintiff was formally registered as the representative of the instant legal entity at the request of ParkF and did not operate the said legal entity.

2) The instant disposition was based not only on estimated income amount illegally calculated in violation of Article 104(2) of the Enforcement Decree of the Corporate Tax Act, but also on the basis of whether the tax base calculated as above was included in the gross income of the instant corporation.

B. Whether the Plaintiff is a substantial representative

1) Relevant legal principles

The purpose of the corporate tax law is not to establish the basis of the fact that such income has been generated, but to have certain facts recognized as such in order to prevent an unfair act under the tax law by a corporation be considered as a bonus to a de facto representative regardless of their substance. As such, even if a person is registered as a representative on the corporate register of a company, if there is no actual operation of the company, then the person who is registered as the representative on the corporate register of the company shall be the de facto representative of the company, he/she shall not be able to impose a comprehensive income tax on him/her (see, e.g., Supreme Court Decision 87Nu1238, Apr. 12, 198). Meanwhile, the fact that it constitutes a representative director of the corporation who is subject to income disposition on the corporate register is proved by data, such as the register of corporate register, and the fact that it constitutes a representative director of the corporation who is not a de facto representative should be attested by the party asserting such fact (see, e.g., Supreme Court Decision 2010Du1616, Dec.

(ii) the facts of recognition

As seen earlier, the Plaintiff, as the representative of the instant legal entity at the time of the business year 2011, was registered as a director or a representative director, and thus, the Plaintiff must prove the circumstances that are not the actual representative. The following facts can be acknowledged in full view of the following: (a) evidence Nos. 4 through 14; (b) evidence Nos. 3 and 7 (including each number); and (c) witness Park F’s testimony and the overall purport of pleading

A) From October 31, 201 to December 9, 2011, ParkF transferred the entire stocks and management rights of the instant corporation to Park G, and received total of KRW 87 million from 31 October 31, 201 to 87 million from 19 December 9, 2011 from ParkF’s account.

B) On December 19, 2014, Park G was the value of the instant legal entity and filed a complaint against the Plaintiff and ParkF on suspicion of fraud. At an investigation agency, Park G was the actual shareholder of ParkF, on the premise that the Plaintiff was a shareholder of ParkF, and only filed a complaint against the Plaintiff on the premise that the Plaintiff was the representative of the instant legal entity’s registry, and that the Plaintiff was not involved in the said transfer transaction. ParkF also stated that the Plaintiff was registered as the representative director on the registry upon the Plaintiff’s request by her husband, and that the actual operator of the instant legal entity stated that the Plaintiff was the principal (the prosecutor in charge dismissed the complaint against the Plaintiff on April 24, 2015) (the prosecutor in charge). ParkF consistently testified testified testified to the same effect as a witness at this court.

C) From August 2007 to October 201, 201, the Plaintiff earned approximately KRW 45 million wage and salary income each year while working in ii stone Co., Ltd, and j Construction from November 201 to July 2012. On the other hand, the Plaintiff did not receive any wage from the instant corporation.

3) Determination

In addition to the following circumstances revealed by the statements in Gap evidence 15 through 18, Eul evidence 3, 6, and 12 (including paper numbers), the actual operator of the corporation of this case at the time of the business year 2011 is deemed to be ParkF. The plaintiff was registered only in the form of representative director or director under the name of the corporation of this case, and cannot be deemed to have actually operated the company of this case.

A) At the time of December 31, 201, the head of theu tax office, as an oligopolistic shareholder, deemed the Plaintiff as the second taxpayer, imposed and imposed corporate tax on the estimated income for the business year 2011 on the Plaintiff on April 22, 2014, asserting that the Plaintiff is not an oligopolistic shareholder, filed a lawsuit seeking nullification of the disposition of imposing corporate tax with the Gwangju District Court2014 Gu ConsolidatedOOO, and the said person who actually proceeded with the said lawsuit was the FF (However, the Plaintiff was ruled against the Plaintiff on the ground that the ground that the Plaintiff’s assertion alone does not constitute grounds for invalidation in the disposition of imposing corporate tax).

B) Although there exist a large number of financial transactions between KimE and HaH from January 2010 to June 2012, the Plaintiff’s husband and wife, from May 2010, the amount of investment or loans to k Special Transmission Co., Ltd. (hereinafter “Sk Special Transmission Co., Ltd.”) which is a logistics company for which ParkF works until May 2010, which is a logistics company (hereinafter “SkN”) and the Plaintiff’s husband and wife, has been changed into mlouses, and it appears that it would have been agreed that it would have been repaid from April 2011 to June 2014 (Evidence No. 16). In light of the foregoing, it is difficult to see that the said monetary transaction was conducted in relation to the Plaintiff’s operation of the instant legal entity solely on the foregoing basis.

C) No other data can be found to deem that the Plaintiff, other than ParkF, participated in the operation of the instant legal entity or received money from the instant legal entity.

C. Sub-committee

Therefore, the instant disposition based on the premise that the Plaintiff actually operated the instant legal entity in the business year 2011 is unlawful without the need to further determine the Plaintiff’s other allegations.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.