The meaning of oligopolistic stockholders liable for secondary tax liability

In order to have a shareholder of a corporation bear the secondary tax liability pursuant to subparagraph 2 of Article 39 of the Framework Act on National Taxes, it is necessary to have an oligopolistic shareholder be in a position to substantially control the operation of the corporation, and only the reasons registered as a shareholder in the register of stockholders of the corporation in the form of a shareholder cannot be said to be an oligopolistic shareholder.

Article 39 subparagraph 2 of the Framework Act on National Taxes

Supreme Court Decision 83Nu272 delivered on September 27, 1983; 83Nu607 delivered on January 24, 1984; 84Nu570 Delivered on October 23, 1984

Plaintiff 1 and four plaintiffs' attorneys Ansan-gu, Counsel for the plaintiff-appellant

Head of Guro Tax Office

Seoul High Court Decision 84Gu637 delivered on June 24, 1985

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal by the defendant litigant are examined.

In order to impose secondary tax liability on the shareholders of a corporation pursuant to Article 39 subparagraph 2 of the Framework Act on National Taxes, it requires that the oligopolistic shareholders be in a position in which the operation of the corporation may be substantially controlled, and the shareholder registry of the corporation is registered as a shareholder in the form of the shareholder registry of the corporation cannot immediately impose tax liability on the oligopolistic shareholders (see, e.g., Supreme Court Decision 83Nu272, Sept. 27, 1983; 83Nu607, Jan. 24, 1984; 84Nu570, Oct. 23, 1984).

According to the reasoning of the judgment below, the court below held that the plaintiffs were registered as shareholders of the non-party Yang Dong-si Co., Ltd. in form, but they did not participate in the management of the above company from the beginning as the plaintiff's non-party 1 and the plaintiff 1 operated the above company as a major shareholder and representative director and operated the above company as a representative director (two years before the date of establishment of the tax liability in this case) around October 23, 1980 and appointed the non-party with a large number of business experience as representative director and was in charge of the company's management. The court below held that the plaintiff transferred the whole shares and management rights of the non-party 1, 83,737,050 won as well as the above non-party 1's stocks and management rights of the above company to the above company from the date of establishment of the tax liability in this case to the above non-party 1 and the above non-party 1 as the representative director, and thus, the plaintiff transferred them under the premise that the above disposition was unlawful by the defendant 39.

In light of the records, the above fact-finding and judgment of the court below are just, and there is no error of misconception of facts or violation of the rules of evidence such as the theory of lawsuit.

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim Young-ju (Presiding Justice)