Daegu District Court-2013-Gu 11354 ( November 07, 2014)

Whether the beneficial owner of the dividend income of this case is a MM corporation that received a formal dividend payment, and whether it is deemed a U.S. parent company behind it.

The Plaintiff claiming a reduction or exemption of the duty to withhold taxes must prove that MM corporation is a beneficial owner under the Korea-Madon Tax Treaty, and it is difficult to recognize it in light of the aforementioned circumstances.

Article 14 of the Framework Act on National Taxes

Daegu High Court-2014-Nu-6976 ( March 25, 2015)

AA Limited Liability Company

Head of the tax office

2015.07.24

2015.25

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance is revoked. The defendant's disposition of imposition of KRW 3,660,00,000 against the plaintiff on June 4, 2012 shall be revoked.

1. Quotation of judgment of the first instance;

The court of first instance that rejected the Plaintiff’s assertion is justifiable even if the grounds alleged by the Plaintiff during appeal are not significantly different from the contents alleged by the Plaintiff in the first instance trial, and both evidence submitted by the court of first instance and evidence Nos. 24 through 32 submitted by the court of first instance are examined.

Therefore, the court's explanation on this case is consistent with the reasoning of the judgment of the court of first instance, except for the addition of the following matters, and thus, it refers to Article 8 (2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

-The following shall be added to the 30th order of the first instance court:

Even though AA corporation currently owns 60 affiliated companies directly or indirectly through four subsidiaries including the Plaintiff, it does not seem to have any reasonable business purpose other than avoiding or exempting taxes on capital transaction income, such as interest dividend, through formal control and transaction as intermediary intermediary of BB, and it is doubtful whether the above governance structure will continue in light of the process of the establishment of AA corporation and the purpose of project flod Korea.

-as above the last third of the decision of the first instance, the following shall be added:

Article 98(1) of the Corporate Tax Act imposes a duty to withhold a certain percentage of money on a foreign corporation as corporate tax. Article 10(2) of the Korea-Pacific Tax Treaty provides that where a corporation which is a resident of the Republic of Korea pays dividends to a resident of another company which is the beneficial owner of dividends, the domestic corporation that pays dividends may also be imposed on the foreign corporation, etc., and the tax so imposed shall not exceed five percent of the total amount of dividends in cases where the beneficial owner directly owns at least 25 percent of the company's capital that pays dividends. Since the burden of proof of non-taxation and tax exemption requirements in tax litigation lies on the taxpayer, the plaintiff who claims reduction or exemption of withholding taxes must prove that the corporation is the beneficial owner under the Korea-Pacific Tax Treaty, and it is difficult to

In addition, the note of the revised OECD Model Tax Convention includes the content that the beneficiary is a beneficial owner of the dividend if the beneficiary has a right to use the dividend without being restricted to contractual or legal obligations to deliver the dividend amount to other persons. However, the note of the OECD Model Tax Convention is not a treaty promulgated by Article 6(1) of the Constitution, but it cannot be deemed that it is generally approved international laws and regulations. Thus, legal binding force cannot be recognized, and it can only be a reference for interpretation of the treaty, and the overall content of the said note is a beneficial owner, and thus, the beneficiary is a person who has a full right to use and benefit from the dividend. Therefore, even when based on the above note, it cannot be deemed a beneficial owner.

2. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit, and the judgment of the court of first instance is just in conclusion, and the plaintiff's appeal is dismissed as it is without merit, and it is so ordered as K.