Seoul High Court Decision 471 471 decided November 05, 2014

an individual who has a domicile in Korea under the Income Tax Act

Even if the plaintiff is a resident under the Korea-Japan Tax Treaty, the plaintiff is considered as a resident of the Republic of Korea more closely related to the plaintiff, human and economic relationship between both countries.

Article 2 of the Enforcement Decree of the Income Tax Act and Determination of Residence

2015Guhap52586 global income and revocation of such disposition

LAA

Head of Sungbuk Tax Office

on July 24, 2015

on January 28, 2015

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

On February 3, 2014, the Defendant revoked the imposition of the global income tax OOO for the Plaintiff on February 3, 2014.

1. Details of the disposition;

A. In 2009, the Plaintiff paid the Plaintiff the remainder after deducting the amount of withholding tax calculated on the premise that the Plaintiff is a non-resident (resident of this country) at the time when the Plaintiff was at the time. The Plaintiff paid the remainder to the Plaintiff, which was paid to the Plaintiff, under the name of interest from the OO, the KO, the KOO, the KOO, and the KOO and the KO and the KO and the KO and the KO and the KO and the KO and the KO and the KO and the KO were paid from the KO and the KO and the KO and the KO and the KO were paid from the KO and the KO and the KO and the KO were paid from

B. The Defendant determined that the Plaintiff, as a resident of the Republic of Korea, omitted the global income tax return on the instant financial income, and determined and notified the Plaintiff on February 3, 2014, reflecting the omitted amount in the return with respect to the income amount for the taxable year 2009, the Plaintiff determined and notified the Plaintiff of the global income tax OO (including the general non-declaration tax and the additional tax for unfaithful payment) for the taxable year (hereinafter “instant disposition”).

C. On February 19, 2014, the Plaintiff filed a request for review with the Board of Audit and Inspection on the ground that the Plaintiff himself/herself constitutes a non-resident (resident of a single country), but was dismissed on October 30, 2014.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 3, Eul evidence Nos. 1 and 5 (including those with more than one number; hereinafter the same shall apply) and the purport of the whole pleadings

2. Whether the instant disposition is lawful

(a) Related Acts and subordinate statutes;

It is as shown in the attached Form.

B. Determination on the assertion that a resident is not a resident under the former Income Tax Act

1) The plaintiff's assertion

The Plaintiff did not have a domicile in the Republic of Korea at the time of receiving the instant financial income, and did not have a domicile for more than one year, and thus does not constitute a resident prescribed by the former Income Tax Act (amended by Act No. 9897, Dec. 31, 2009; hereinafter the same shall apply). Therefore, the instant disposition is imposed on a person who is not a taxpayer.

2) Determination

A) An individual who has a domicile in Korea or has a domicile in Korea for not less than one year shall be a resident under the former Income Tax Act (Article 1(1)1 of the former Income Tax Act); a domicile shall be determined based on objective facts of his/her living relationship, such as the existence of a family member living together in Korea and of assets located in Korea (Article 2(1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 21934, Jan. 1, 2010; hereinafter the same). Determination of which individual has a domicile or a domicile in Korea shall be made in light of his/her living relationship, such as his/her family relationship or assets in Korea; rather, it shall not be made by taking into account his/her living relationship, such as his/her activities and asset holding abroad (see, e.g., Supreme Court Decisions 92Nu1695, May 27, 1993; 201Du28946, Apr. 14, 20

B) In full view of the purport of the entire pleadings in the statements in Gap evidence Nos. 3, 4, 8, 11, 33, and Eul evidence Nos. 2 through 15, the following facts can be acknowledged:

The nationality of the Plaintiff(EE) was the Republic of Korea, and is also registered as foreigners (Korean nationals) in Japan.

On May 25, 1994, the Plaintiff completed the declaration of marriage with KimD on the Republic of Korea on May 25, 1994, and maintained the marital life until receiving the financial income of this case. KimD is both the Republic of Korea and its nationality. Since the moving-in report was completed on January 16, 199, 'OOO-dong 25-39', there is no change in its domicile until now, and according to the computerized data of the National Health Insurance Corporation, it is confirmed that since the Plaintiff became a national health insurance policyholder on May 1, 1996, the insurance premium has been paid from 2006 to the present.

The plaintiff and KimD were residing in the above Sung-dong housing owned by the plaintiff during the period from 2003 to 2009, as shown below (the number of days of stay is calculated based on the date from the date of entry into Korea to the date of departure) and the period of stay in Korea.

Name

Relation

The number of domestic stay days

203

204

205

206

2007

208

209

LAA

Principal

288

235

183

181

181

183

267

D Kim D Kim

Spouse

288

244

191

192

185

233

328

㉣ 원고는 2009. 1. 1. 현재 아래 표와 같이 공시지가 OO억 O천만 원 상당의 위 OO동 토지, 주택 외에도 국내골프회원권 O구좌, 자신이 이사로 재직 중인 법인의 비상장주식을 보유하고 있다[2009. 12. 31. 기준으로 원고 소유의 BB에셋대부㈜ 주식은 OO,OOO주(OO%)로, BB상역㈜ 주식은 OO,OOO주(OO%)로 각 변동되었다].

Types

Location

Quantity

Market price (unit: million won)

Consolidateds

O,OO

Real estate

FOdong 25-39

OOO㎡ and OOMMOOO

O,OO

Golf membership

F

1 Gu Unit

June 2006 the standard market price OO

Golf membership

GG

1 Gu Unit

June 2006 the standard market price OO

Unlisted Stocks

BBBARRS

O orOOO shares (O% of shares)

Total par value O

Unlisted Stocks

BB AFFFC Bank

O orOO(hereafter O%)

Total par value O

* AB ABS Bank Co., Ltd. closed on January 20, 2014, but the BBS Bank was not closed until the date of closing argument in this case.

In the taxable year of 2009, the plaintiff is a social welfare foundation BB welfare foundation with its principal office in Korea, a representative director of HH welfare foundation and a corporation with no sales revenue, but is a domestic profit-making corporation that employs its employees and pays a payment fee. The plaintiff was in office as a director of the BB repayment plan, and KimD was in office as the representative director of the above two profit-making corporations.

Details of the plaintiff's domestic activities.

Trade Name

Type of Business

position (date of commencement)

Jinay

Social welfare corporations

H Welfare Foundation

Welfare Activities

Representative Director (No. 29, 2008)

II. Having 8 points in total, such as the Community Welfare Center for the Aged.

Social welfare corporations

BB Welfare Foundation

Welfare Activities

Representative Director (Law No. 6.20, 2000)

J Child Care Centers, the Gu

Operation of K K Child Care Centers, etc.

BB AFFFC Bank

Wholesale/products chaining

Directors

'no report on sales after 96

BBBARRS

Services/ warehouses

Directors

'no report on sales after 96

On September 21, 2004, the applicant agreed to make an investment of O00 million won in the KUB L Construction Co., Ltd., a domestic corporation. The above amount was prepared on September 22, 2004 by the Plaintiff with the payment of O00 million won in the BB L Co., Ltd., and BB L Co., Ltd. made an investment by lending O00 billion won to the LU Construction Co., Ltd. on the same day, and the interest income therefrom was also generated to the Plaintiff.

The Plaintiff loaned the amount of KRW 00 million to Epia, who is the Republic of Korea, around November 2006, and additionally lent the amount of KRW 00 million on January 3, 2007.

On October 25, 2007, the plaintiff in the South of Korea, as the OOOOOOOOOOOOOOOOOOOOOOOOOOOOO2, and 160, and the KOOOOOOOOOOOOOOOOOOOOOOO in Seoul Seoul District Court, and the KOOOOOOOOOOOOOOOOOOOOOO in the PP asset trust owned by the KOOOOOOOOOOOOO in the KOOOOOOOOOOO in the above auction procedure, and on December 24, 2010, acquired the purchase price for the PP assets in the above auction procedure by offsetting the investment credit return to KOOOOOOOOOO.

㉨ 원고는 2006. 1. 19.부터 2006. 2. 14.까지 국내 상장법인인 QQ금융증권㈜(현재 'RR증권㈜'로 상호변경되었음) 주식 OOO만 주(취득가액 OOO원, 발행주식의 0.96%, 이하 '이 사건 주식'이라고 한다)를 양수했다가 2006. 7. 4.부터 2006. 7. 26.까지 총 8차례에 걸쳐 양도가액 OOO원에 양도하여 총 OOO원의 양도차익을 얻었다.

On October 6, 2011, the director of the Korea-Japan Tax Office issued a disposition to determine and notify the Plaintiff of the capital gains tax on the instant stocks. The Plaintiff appealed and filed a lawsuit seeking the cancellation of the said disposition by the OOOOOOOOOOOO in this court. On July 17, 2013, the court rendered a decision to dismiss the Plaintiff’s claim on the grounds that “the Plaintiff was a resident of the Republic of Korea at the time of the transfer of the instant shares, and the Plaintiff’s permanent residence was both located in Korea and Japan, but the Plaintiff is a resident under the Income Tax Act, and the principal place of interest is the Republic of Korea, and even according to the Convention between the Republic of Korea and Japan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (hereinafter referred to as the “Korea-Japan Tax Treaty”). However, the judgment of the lower court became final and conclusive on July 17, 2013 (O20OOO24) and the above judgment of the first instance court (O200).

C) The following circumstances revealed from the above recognition: ① at the time of the receipt of the financial income of this case, the Plaintiff continued to reside in the above house with Kim D at the time of his stay in Korea; ② the Plaintiff owns golf membership and non-listed shares in addition to the above OOB house; the Plaintiff’s claim for return of investment amount equivalent to O0 million won to the KOB KIB bank; the claim for return of deposit amount equivalent to O00 million won to the KOB bank; the claim for return of loan amount equivalent to O00 million won to the KOB bank; the domestic corporation’s nationality interest income of 100 billion won to the 2007 KOB bank; ③ the Plaintiff and Kim D's domestic address was owned by the 206 KOB bank at the time of the issuance of the loan amount of 2007 KOB; and ③ its domestic residency days were received by the representative director at the time of the above 207 KOB trust Foundation at the time of the above decision, 2008.

Therefore, this part of the plaintiff's assertion is without merit (as long as it is deemed that the plaintiff is an individual with a domicile in Korea, it is not examined whether the plaintiff is an individual with a domicile in Korea for at least one year

C. Determination as to the assertion that Japan should be deemed a Japanese resident pursuant to the Korea-Japan Tax Treaty

1) The plaintiff's assertion

Even if the Plaintiff is a resident of the Republic of Korea under the former Income Tax Act, the Plaintiff is also a resident of Japan, and at least has a permanent residence in Japan, or is more closely related to Japan than the Republic of Korea, and thus, the Plaintiff is deemed a resident of Japan pursuant to Article 4(2)(a) of the Korea-Japan Tax Treaty, which provides for the allocation of taxing

2) Determination

A) In a case where the tax treaty to prevent double taxation is to be applied to a taxpayer who is a domestic resident at the same time as a foreign resident, the taxpayer bears the burden of proof (see Supreme Court Decision 2006Du3964, Dec. 11, 2008).

B) Meanwhile, the main text of Article 4(1) of the Korea-Japan Tax Treaty provides that "a resident of a Contracting State for the purposes of this Convention" means a person liable to pay taxes in that Contracting State in accordance with the laws of that Contracting State, the address, residence, location of the head office or principal office, or any other criteria of a similar nature." Article 4(2) provides that "if a person becomes a resident of both Contracting States under the provisions of paragraph (1) of this Article, his status shall be determined as follows." In subparagraph (a) of Article 4 provides that "if he has a permanent residence available to him in each Contracting State, his personal and economic relationship shall be deemed a resident of the Contracting State with which he can use it. Where he has a permanent residence available in each Contracting State, that person's personal and economic relationship shall be deemed a resident of the Contracting State with which it is more closely related, and further, that person shall establish the standards under the Tax Treaty unless he can determine it in order under subparagraphs (b), (c) and (d)(a).

C) The Plaintiff’s assertion that the Plaintiff is a resident of the Republic of Korea under the former Income Tax Act is deemed to be a resident of Japan in accordance with the Korea-Japan Tax Treaty is accepted, and all of the facts that the Plaintiff constitutes a resident of Japan under the Japanese Tax Act, and that the Plaintiff has permanent residence in Japan only or is more closely related to Japan’s human resources and economic relations than Korea should be proven.

라) 먼저 원고가 일본국 거주자에 해당하는지 여부에 관하여 보건대, 갑 제5 내지 10, 12 내지 31호증의 각 기재에 변론 전체의 취지를 종합하면, ㉠ 원고는 1943. 10. 29. 일본에서 출생한 재일교포로서 1978. 3. 11. 이SS와 결혼하여 1남 1녀의 자녀를 두었다가 1992. 4. 2. 이혼하였는데, 원고의 자녀들은 일본에서 거주하고 있는 사실, ㉡ 원고는 일본 OO도 OOOO구 OOOO 2OO 25-16에 주소를 두고, 특별구민세, 도민세 등 주민세를 일본에 납부하고 있는 사실, ㉢ 원고는 2005. 10. 24.부터 일본 OO도 OOOO구 OOOO 2OO 680-22 대지 면적 329.61㎡의 토지와 그 지상 2층의 건물을 소유하면서 일본에 있을 때에는 위 건물에서 생활하는 사실(위 부동산 소재지와 위 주민등록상 주소지는 동일한 곳이다), ㉣ 원고는 이 사건 금융소득 수령일 현재 일본국 법인인 TT주식회사의 대표이사로 재직하며 위 회사로부터 원화 기준 월 OOO만 원 내지 OOO만 원의 보수를 받고 있는 사실, ㉤ 그 밖에 원고는 이 사건 금융소득 수령일 현재 일본 기업의 주식을 소유하고, 일본 은행과 거래하고, 일본 통신회사에 전화요금을 납부하고 있으며, 일본에 있는 기독교회 UU교회의 교인으로 활동하고, 일본 정부에 국민건강보험료를 납부하며, 일본 금융기관이 발행한 신용카드를 사용하고 있으며, 일본에서 운전면허증을 교부받고, 자동차를 소유하며 자동차종합보험에도 가입하였으며, 골프회원권도 3구좌{상호(보증금) : ㈜VV컨츄리클럽(OO만 엔), ㈜ WW컨츄리 클럽(OOO만 엔), ㈜XX컨츄리클럽(OOO만 엔)}를 보유하고 있으며, 관할 지방자치단체에 원고의 인감을 등록한 사실을 인정할 수 있고, 원고가 2006 과세기간 중 일본국 거주자에도 해당하였다는 내용의 관련 사건 판결이 확정된 사실은 앞서 본 바와 같으며, 일본국 소득세법이 '거주자는 이 법률에 의하여 소득세를 납부할 의무가 있다.'라고 규정하면서(제5조 제1항), '거주자란 국내에 주소를 가지거나 현재까지 계속하여 1년 이상 거소를 가지는 개인'을 의미한다(제2조 제1항 제3호)고 규정하고 있는 사실은 이 법원에 현저한바, 위 인정사실에 의하면, 원고는 이 사건 금융소득 수령일 현재 일본국 소득세법 제2조 제1항 제3호가 정한 일본국 거주자에도 해당하였다고 봄이 타당하다.

E) Next, as to whether the Plaintiff had a permanent residence in Japan at the time of receiving the instant financial income, the following circumstances can be comprehensively taken into account: (i) whether the Plaintiff had a permanent residence in Japan at the time of receiving the instant financial income; (ii) whether the Plaintiff owned the site and buildings of 25-39 OO-Gu 2OO 2O 680-2 as well as the building site and buildings; (iii) the Plaintiff was staying in Japan for 181 days in 207, 2008, 183 days in 2008, 209, and 267 days in 209; and (iv) the Plaintiff had a long-term residence in Japan and Seoul; and (iv) the Plaintiff’s assertion that all of the above two real estate were located in Japan at the time of receiving the instant housing income during the taxable period is reasonable to view that all of the Plaintiff’s housing facilities in Japan and Japan during the remaining period (which became final and conclusive).

F) Therefore, it is reasonable to view that the Plaintiff is a Japan resident pursuant to Article 4(2)(a) of the Korea-Japan Tax Treaty and its personal and economic relationship with Japan at the time of the receipt of the instant financial income. As seen earlier, the Plaintiff established two social welfare corporations (H Welfare Foundation and BB welfare foundation) in Korea at that time and worked as the representative director of the two profit-making corporations (BB). On May 25, 1994, the Plaintiff’s remaining directors of Korea-based 700,000,000,000,000,0000,000,000,000,000,000,000,000,000,000,000,000,000,000,00,000,000,000,00,000,000,000,00,000,00,000,00,00.

G) Therefore, even under the Korea-Japan Tax Treaty, the Plaintiff is deemed to be a resident of the Republic of Korea more closely related to the Plaintiff, human, and economic relationship between the two countries, and the Plaintiff’s assertion on this part is without merit.

3. Conclusion

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