Definitions of oligopolistic stockholders with secondary tax liability

Article 39 subparagraph 2 of the Framework Act on National Taxes, and Article 20 of the Enforcement Decree of the same Act, in order to impose secondary tax liability on the shareholders of a corporation pursuant to Article 20 of the same Act, the oligopolistic shareholders need to be in a position to substantially control the operation of the corporation, and only on the ground that they are registered or reported as shareholders in the form of a shareholder, the oligopolistic shareholders

Article 39 of the Framework Act on National Taxes

Supreme Court Decision 82Nu359 Decided March 8, 1983, 83Nu272 Decided September 27, 1983, 86Nu105 Decided July 8, 1986

[Judgment of the court below]

Head of Suwon Tax Office

Seoul High Court Decision 85Gu1017 decided August 28, 1986

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal by the defendant litigant are examined.

Article 39 subparag. 2 of the Framework Act on National Taxes requires that oligopolistic shareholders be in a position to substantially control the operation of the corporation, and only the reason that they are registered or reported as stockholders in the form alone is that they cannot be subject to tax liability by becoming an oligopolistic shareholder. (See Supreme Court Decision 82Nu359 delivered on Mar. 8, 1983; Supreme Court Decision 83Nu272 delivered on Sep. 27, 1983, etc.). According to the reasoning of the judgment of the court below, the court below affirmed the above facts based on evidence that the non-party, who is the plaintiff's son, was registered as the non-party 1 corporation's oligopolistic shareholders and the non-party 1 corporation's representative director at will, without permission of the plaintiff 1 corporation's representative director at the time of its incorporation, and it is unlawful for the non-party 2 to arbitrarily acquire the above shares under the name of the non-party 1 corporation or the non-party 1 corporation's representative director at the time of its incorporation.

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 Man-hee (Presiding Justice)