Cho Jae-2012-Gu-218 (No. 29, 2014)

The beneficial owner is a corporation of the United States and does not violate the principle of prohibition of duplicate investigation.

In full view of the arguments, since the beneficial owner of dividend income is a corporation of the United States and is erroneous in relation to more than two business years, it constitutes an exception to the principle of prohibition of duplicate investigation.

Article 12 of the Korea-U.S. Tax Treaty; Article 81-4 of the former Framework Act on National Taxes

Daegu District Court-2014-Gu Partnership-22139

AAA Corporation

○ Head of tax office

oly 201.10

oly, 2017.02

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of KRW 4,80,00,050 on September 2, 201 against the Plaintiff, as well as imposition of KRW 8,69,674,920 on October 12, 201, and imposition of KRW 12,269,674,920 on the aggregate of KRW 12,69,674,920 on the part of the corporations (source) belonging to the year 2006, and imposition of KRW 8,968,519,610 on the Plaintiff, and imposition of KRW 17,264,83,80 on the part of the corporations (source) belonging to the year 2008, and imposition of KRW 164,63,80 on the aggregate of KRW 190 on the part of the corporations (source) belonging to the year 2009, and imposition of KRW 2,159,614,604.

1. Details of the disposition;

(a)BB, a corporation of the United States of America (hereinafter referred to as the "U.S.") is the final parent company of the CCC Group engaged in L CD-making business, etc. global, and DD, a corporation of the United States, is a subsidiary established by BB by investing 100% of its capital.

B. On April 20, 1995, the EEECCC Detailed glass Co., Ltd. (hereinafter collectively, the Plaintiff changed their respective names to the Plaintiff on May 11, 2010, and April 30, 2014; hereinafter collectively, the same shall apply) was established by each of the investment of BBC in 50%, EEE electronic Co., Ltd., with its business purposes such as manufacturing and selling glass for video display and flat information display.

C. On December 22, 2005, BBC established AA as a Hungary People's Republic (hereinafter referred to as "Hungary"), by investing in kind all the Plaintiff's shares held by it, and on February 22, 2006, AA acquired 50% of new shares issued by participating in the Plaintiff's share offering allocation to the Plaintiff's shareholders.

D. Thereafter, on May 19, 2006, BBC established FF by investing 100% in Domando. CFC established by investing 100% of GG on June 21, 2006, and CFL was established by investing 100% of HH on July 5, 2007. The relationship between the Plaintiff and each company including AAB and BB is as follows:

The dividend payment time (unit: Won) shall be omitted.

E. From March 2006 to March 2009, the Plaintiff paid dividends to AA as indicated in the following table (hereinafter collectively referred to as “instant dividend income”), and withheld corporate tax by applying the limited tax rate of 5% under Article 10(2)(a) of the Convention between the Government of the Republic of Korea and the Government of the Lao People’s Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income between the Government of the Republic of Korea and the Government of the Lao People’s Republic (hereinafter referred to as “Korea-Hungary Tax Treaty”).

F. The director of ○○ Regional Tax Office, from November 8, 2010 to April 26, 201, conducted an integrated tax investigation into corporate entrepreneurs with the period subject to the investigation against the Plaintiff from January 1, 2005 to December 31, 2009, determined that the beneficial owner of the instant dividend income is BB, and notified the Defendant of the taxation data.

G. Accordingly, the defendant has income between the Republic of Korea and the United States of America on the dividend income of this case.

By applying the limited tax rate of 15% under Article 12(2)(a) of the Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes and the Encouragement of International Trade and Investment (hereinafter referred to as the “Korea-U.S. Tax Treaty”), the Plaintiff was notified of the total amount of corporate tax withheld in the business year 2006, and the total amount of corporate tax withheld in the business year 2007 through 2009, Oct. 12, 2011 (hereinafter referred to as “the initial disposition”), and the detailed details are as follows.

H. Accordingly, on November 30, 2011, the Plaintiff filed an appeal with the Tax Tribunal. On May 29, 201, the Tax Tribunal rendered a decision that the initial disposition on May 29, 2014 was corrected by applying the limited tax rate of 10% under Article 12(2)(b) of the Korea-U.S. Tax Treaty and dismissed the remainder of the appeal.

(i) The remainder after reduction or correction is made according to the decisions of the Tax Tribunal during the initial disposition (hereinafter referred to as “instant case”);

The following shall be recorded as the "amount of the disposition" of this case:

Facts that there is no dispute over recognition, Gap evidence 1, 2, 28, Eul evidence 2 and 3 (including paper numbers, hereinafter the same shall apply), the purport of the whole pleadings.

2. The plaintiff's assertion and relevant statutes

A. The plaintiff's assertion

1) Violation of the principle prohibiting double audit

○○ Commissioner of the National Tax Service conducted a tax investigation with the Plaintiff from May 29, 2008 to August 7, 2008, and judged that the beneficial owner of the dividend income of this case received from September 20, 2006 to March 31, 2008 as AAA. However, he/she conducted a tax investigation with the Plaintiff from November 8, 2010 to April 26, 201, determined that the beneficial owner of the dividend income of this case was BBB who is a U.S. corporation. Accordingly, the portion of the dividend income received from September 20, 206 to March 31, 2008 during the subsequent tax investigation constitutes duplicate investigation, and thus, the part of the disposition of this case, which was received from September 20, 2006 to March 31, 2008, is unlawful as it is based on the double tax investigation.

2) A beneficial owner of the instant dividend income

A) Burden of proof

As a matter of principle, the tax authority bears the burden of proof as to the existence of the tax requirement and the tax base. As long as the defendant took the disposition of this case based on the taxation basis that the third party BB, not the nominal owner of the dividend income of this case, is the beneficial owner of the dividend income of this case, the defendant shall specifically assert and prove, on any ground, whether BB, not AA, is the beneficial owner of the dividend income of this case.

B) A beneficial owner of the instant dividend income

In light of the following circumstances, AA is the beneficial owner of the instant dividend income paid by the Plaintiff, and the Defendant’s disposition against the Plaintiff on a different premise is unlawful.

① AAA was established as one of the CCC Group’s joint service centers with clear business objectives, such as saving general administration expenses, and for efficient re-investment of dividend income generated outside the United States, as well as restructuring utilizing the CCC Group’s joint service center, the Plaintiff’s shares, a subsidiary of the CCC Group, held by BB, are transferred to AA, a holding company outside the United States, along with the shares of other subsidiaries.

② AA rents and uses an office of 760 square meters after May 19, 2006, and has sufficient human and material substance, including 7-52 executives and employees, to provide joint services and manage subsidiaries for affiliated companies of the CCC Group. Accordingly, AA has substantial authority and ability to control and manage its assets and profits, including the instant dividend income.

3. AA, as a shareholder of the Plaintiff, has a representative director, either directly or through the power of attorney, exercised his/her voting right by allowing his/her proxy to attend the general meeting of shareholders of the Plaintiff.

4. AA did not have distributed dividends to BB, and the instant dividend income was used as a self-operating fund of AA, a capital increase to the Plaintiff, a loan or fund investment fund to an affiliate of the CCC Group outside the United States through the internal bank of the CCC Group, and eventually did not belong to BB in any form.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

3. Determination as to whether the prohibition of double investigation violates the principle

(a) Principles on prohibition of double investigation;

The term "tax investigation" means an act of asking questions to taxpayers, etc. according to their official needs and investigating related documents, books, and other things or ordering them to submit them by exercising the right of questioning and questioning and questioning as prescribed by tax-related Acts (see, e.g., Article 122 of the Corporate Tax Act and Article 170 of the Income Tax Act). Meanwhile, Article 81-3(2) of the former Framework Act on National Taxes (amended by Act No. 8139, Dec. 30, 2006) prohibits duplicate investigation unless there are special circumstances. This is to prevent a double investigation from infringing on taxpayers' rights and interests, such as freedom of business, etc. by repeated tax investigation, and to prevent arbitrary abuse of authority by the tax authorities. Therefore, a tax disposition based on double investigation prohibited under the above provision is unlawful (see, e.g., Supreme Court Decision 2004Du120

(b) Fact of recognition;

1) The ○○ regional tax office shall conduct a regular tax investigation on Plaintiff with the period subject to an investigation from May 29, 2008 to August 5, 2008 (hereinafter referred to as “regular tax investigation on Plaintiff”) for two business years from January 1, 2003 to December 31, 2004.

'The first tax investigation' was conducted.

2) On June 2, 2008, the first tax investigation period of ○○ Regional Tax Office requested the Plaintiff to submit data on international trade with the content of “AA and other foreign related parties’ annual reports and audit reports” to the Plaintiff.

3) From June 25, 2008 to July 21, 2008, the ○○ Regional Tax Office sent by facsimile the Plaintiff’s official text requesting the submission of the following materials six times from June 25, 2008 to July 21, 2008. The 1 to 3 (including additional cases) official text states that the title of the 1 to 3 (including the request for the 1 to 2) official text is as follows; the 1 to 3 (including the case) official text is as follows; the 1 to 3) official text is as follows; the 1 to 3 (including the request for the 3) official text is as follows; the 4 to 5 official text is as follows:

June 25, 2008

Title: Data on Request for Spotdozers (III)

- The details and purport of the AA establishment, roles, organizational limits and members, duties in charge of each member, corporate register, business registration copy, financial statements and audit report;

- Details of the use of dividends received by AA from March 2006 to March 2008 (hereinafter referred to as "the instant dividends") by date, and related financial data (where dividends are used as loans to affiliated companies, the date of lending, contracts, and data related to interest)

- AA’s 2006 to 2007 business years, and related data;

- Evidence of capital increase of KRW 75 billion on February 2, 2006

- The payer of the securities transaction tax paid in 2005 and the evidence of the source of funds

- Other financial transaction costs recorded on the income statement of 2006, 6,036,970 HUF, and supporting documents

- Copy, etc. of the AA representative passport

- On July 3, 2008, such as the list of members of the board of directors, nationality, minutes of board of directors, minutes of the general meeting of shareholders, etc.

Title : First Request for Data on Round (III)

- The AA Financial Statements and Audit Reports of 2007

- AA uses the dividends on the issues of this case (including related accounting slips and financial data)

- Details and relevant data used by AA as a loan related company the instant dividends of this case

- AA’s 2006 to 2007 business years, and related data;

- Evidence of capital increase of KRW 75 billion on February 2, 2006

- The payer of the securities transaction tax paid in 2005 and the evidence of the source of funds

- Other financial transaction costs recorded on the income statement of 2006, 6,036,970 HUF, and supporting documents

- Copy, etc. of the AA representative passport

- Minutes of the AA’s general meeting

Title: Second Request for Switzerland (III)

- Detailed photographs to verify the specifications and substance of the AA’s tangible and intangible assets;

- AA’s notice of convening a general meeting of shareholders

- AA AA’s application for incorporation, corporate tax returns submitted to Hungary’s tax authorities (2006;

207 Parts reverting to 207

-Representative Director Benefit Payment Agency

- If the representative director is a member of the BBC or BB, the position and duties of the original member;

July 4, 2008

Title : Third Request for Spot Round (III)

- Documents delivered from the court at the time of its incorporation

- Matters concerning the register of directors of the AAA General Meeting

- AA 2006 monthly sales, etc.

- Trade name, etc. of a corporation which has paid interest income to Hungary corporations

July 15, 2008

Title : Additional Questions (fourths)

- AAA’s copy of a request for remittance to CCC Bank (KK) that deposited the instant dividends as deposits.

- A copy of the CCC bank account (KK) account (Account Number 0000000) from March 27, 2006 to December 31, 2007 (Entry Statement)

- The date of establishment, shareholders and financial statements of the CCC Bank (KK);

July 21, 2008

Title : Question (Fifth)

The United States CCC or the United States CCC unless the dividend received by AA is in-house reserve.

in order to determine whether it has been moved to another subsidiary;

- Details of the transfer of dividends from K to PFPC

- Statement of the deposit and withdrawal of the PFPC account (from March 29, 2006 to April 29, 2007)

- Terms and Conditions or Contracts for the Fund "4692"

4) Daegu regional tax office: AA and the Plaintiff over two days from July 8, 2008 to July 9, 2008

Each officer or employee of the CCC Group and a third ton and interview, who is a person in charge of Asian tax affairs, have been conducted, and the main contents are as follows:

Table of the contents shall be omitted.

5) A tax official belonging to the defendant does not withhold dividend income tax through the plaintiff's Doing company around July 2010.

The comprehensive psychological analysis report on suspicion was prepared, and the main contents of the report were as a result of the analysis of the plaintiff's overseas remittance data, and the fact that the 24 billion won interim dividend paid to AA on June 2006 seems to have been remitted to BB around that time. In full view of the circumstances, it is determined that BBC, a U.S. corporation, to which 10% of the dividend income rate is applied, is the Hungary corporation, to which 5% of the dividend income rate is applied, is the Hungary corporation with the dividend income rate of 1/2 of the dividend income tax by transferring the plaintiff's share to AA, a Hungary corporation, to which Hungary corporation with the dividend income rate of 5% applies.

6) On September 2010, a tax official belonging to the National Tax Service prepared an analysis report on the title "AAA's income statement, Plaintiff's status of executives and employees, and BB's annual annual report, etc." as a result of analyzing AA's income statement, Plaintiff's annual report, etc., which led to the rapid increase of Plaintiff's interest, the U.S. BB could have transferred its shares by creating a subsidiary company in Hungary to avoid taxes on dividend income.

7) Based on this, the Daegu Regional Tax Office determined that the Plaintiff’s dividends to AA in the business year 2008 was introduced into BB, and determined that the period of investigation against the Plaintiff was from November 8, 201 to January 28, 201, and selected the period of investigation as one business year from January 1, 2008 to December 31, 2008 as a business entity’s consolidated tax investigation subject to a corporate tax investigation. On October 25, 2010, the Daegu Regional Tax Office notified the Plaintiff of the tax investigation (hereinafter referred to as “the second tax investigation”).

8) Since the Daegu regional tax office, as data submitted at the time of the first tax investigation, from March 2006 to September 2007 by the Plaintiff (hereinafter “2006, 2007 dividend income”), analyzed the Hungary’s account statement (Account Number 00000) and the “BenefiBary” No. 206, 2007 as data, which were 206, 2007, cCC services (hereinafter “Iland”), which were 200, 300, 2006, 200, cCC services (hereinafter “Cnish”) were 200, 205, cCC services (hereinafter “K”) were 200, 305, 206, 207, hereinafter “KK account No. 201, 206, 306, 2006, hereinafter “NK’s 201, 207, 2006, 2006, 207.

9) On December 27, 2010, Daegu regional tax office found evident data proving the tax evasion on the dividend income in the business year 2006, 2007, and extended the scope of the secondary tax investigation until 2005 or 2009 business years on the ground that “to verify whether there exist the same reasons in other taxable periods by discovering specific and apparent data on the dividend income in the business year 2008,” and thereafter, the period of investigation was extended to April 26, 201.

10) Daegu regional tax office has the period of its secondary tax investigation from January 14, 201 to April 13, 201.

Up to six times, the Plaintiff requested the Plaintiff to submit the following materials:

January 14, 2011

- The AA annual report, the audit report and the report of the corporate tax of 2008, the year 209

- Data relating to investment flows of related companies, such as BB

- Financial data on the flow of dividends on December 29, 2005, September 29, 2008, and March 30, 2009

February 1, 2011

- CV, CFL, CFC, and BBC’s purpose of establishment, whether personal and physical facilities have been installed, a certified transcript of the corporate register, annual report (2006, 2007), corporate tax payment records, board of directors, minutes of the shareholders’ meeting, etc.

-K corporate register, annual report (2006~2008), account description, etc.

- Minutes, etc. of AA 2008 between 200 to 209

- CHAM Copy, 2008 to 2009 annual reports, minutes of the board of directors, purpose of establishment, etc.

March 14, 2011

- The capital increase of the Plaintiff of February 3, 2006 KRW 75 billion from the capital increase of February 3, 2006

- AA list of tangible (untyped) assets (based on December 31, 2006)

- Originals, etc. of financial data remitted from the AA account to the KK account

The schedule of the orderer for withdrawal transfer to the bank account of AA related to the dividend from March 7, 2006 to September 2008

On April 8, 2011

April 13, 2011

- A description of the details of dividends from March 2006 to March 2009 that were invested in the Fund via KK.

- Of the profits and losses of AA from 2006 to 2009, the dividend proceeds of related companies, interest and capital gains on financial investment, other expenses on financial transactions, and other operating expenses, etc.

- Financial data, etc. raised from K on February 3, 2006 from AA to increase its capital;

Facts that there is no dispute for recognition, Gap Nos. 4, 5, 7 through 9, and Eul No. 1, 5 through 9, respectively.

Statement, the purport of the whole pleading

(c) Whether the case constitutes duplicate investigations;

1) As seen earlier, the Daegu regional tax office has set forth approximately two months in 2008 the primary tax provision.

After requesting the plaintiff to submit the overall data of the AA, the third tons of the CCC group, through the plaintiff, submitted and investigated the data on the establishment process and purpose of the AAAA, the details of its regional national tax activities, the composition of human and material resources, the exercise of rights to the plaintiff's share acquisition and decision-making, and the control, management and use details of the dividend income in 2006, 2007. In addition, while conducting the second tax investigation, the Daegu regional tax office failed to review the data on the overall data of the AAA, investment flow and asset list, and the control, management and use details of the dividend income in this case, and requested the plaintiff to conduct an additional tax investigation and conducted an on-site confirmation, such as mere confirmation of the fact that the data already been secured on the dividend income in 206 and 207.

In full view of the above subjects, scope and methods of investigation, etc., even if the Daegu Regional Tax Office notified the period subject to the first tax investigation from January 1, 2003 to December 31, 2004, and even if most data were submitted by the CCC Group Asian tax officials, not the Plaintiff or AAA, at the time of the first tax investigation, the Daegu Regional Tax Office should be deemed to have conducted the tax investigation on the beneficial owner of dividend income in 2006 and 2007, and even if the Daegu Regional Tax Office has reserved the final decision on the beneficial owner of dividend income in 206 and 207 upon completion of the first tax investigation, it is reasonable to deem that the second tax investigation falls under the case where the second tax investigation substantially overlaps with the business year 206 and 207.

D. Whether the case constitutes an exception to the prohibition of double investigation

In other words, it is individually examined whether the exception of each subparagraph of Article 81-4(2) of the former Framework Act on National Taxes (amended by Act No. 11124, Dec. 31, 201; hereinafter referred to as the "Framework Act on National Taxes") falls under the exception of each subparagraph.

1) Whether there is obvious evidence that prove the suspicion of tax evasion (No. 1)

In Article 81-4(2) of the Framework Act on National Taxes, "where there is clear evidence to acknowledge a suspicion of tax evasion" which provides for a case where reinvestigations are exceptionally permitted shall be limited to cases where the probability of tax evasions is recognized to a considerable extent based on objectivity and rationality data. Such data should be interpreted not to include data already investigated in the previous tax investigation (see Supreme Court Decision 2010Du6083, Jan. 27, 201).

As seen earlier, the Health Board and the ○○ regional tax office, at the time of the first tax investigation with respect to the instant case, received a detailed statement of transaction in the Hungary bank account from III on the dividend income in 2006 and 2007, and conducted a tax investigation with respect to the said case. Therefore, the account transaction statement of AA does not constitute “clear material to acknowledge a suspicion of tax evasion” at the time of the second tax investigation.

The defendant asserts that "the 20th anniversary of the CCC Group's tax evasion report and data confirming the financial institution's tax evasion report constitutes "any apparent evidence supporting the 20th anniversary of tax evasion." However, the analysis report prepared by the 20th 3rd 2nd 6th 2nd 6th 6th 6th 6th 6th 6th 6th 7th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 2012 2nd 206th 6th 6th 201st 6th 6th 6th 6th 6th 6th 6th 201.

Therefore, this part of the defendant's argument is without merit.

2) Re-audit to process various taxation data or Articles 81-5 and 81-12 of the Framework Act on National Taxes

Whether re-revision is made without recourse to on-site investigation for tax disposition under subparagraph 5 (Article 63-2 subparagraph 2 and 3 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 24366, Feb. 15, 2013; hereinafter referred to as "Enforcement Decree of the Framework Act on National Taxes")

"Various taxation data" under the former part of Article 63-2 subparagraph 2 of the Enforcement Decree of the Framework Act on National Taxes means data that a tax authority prepares or acquires and provides to a tax authority for an official purpose for which it is not likely to abuse or arbitrarily exercise its authority to conduct a tax investigation, which is necessary for the imposition and collection of national taxes and the management of tax payment. Such data does not include taxation data that the tax authority has prepared or acquired in the previous tax investigation (see Supreme Court Decision 2014Du43257, May 28, 2015).

As to the instant case, the Defendant did not clearly mention which data constitutes "Various taxation data". First, if the account transaction statement of AA submitted in the first tax investigation argues that it constitutes this, it is not included in "Various taxation data" under the former part of Article 63-2 subparagraph 2 of the Enforcement Decree of the Framework Act on National Taxes, which is the taxation data acquired in the previous tax investigation by the tax authority, and then claims that the analysis report prepared by the tax official constitutes this constitutes this, it does not constitute "Various taxation data" under the above provision. Further, as seen above, the Daegu regional tax office conducted a substantial investigation as to the beneficial owner of the instant dividend income at the time of the second tax investigation, and thereby, conducted the instant disposition, and thus, it does not constitute "cases where the instant disposition was conducted without "the actual investigation" under Article 63-3 subparagraph 3 of the Enforcement Decree of the Framework Act on National Taxes, and it is not appropriate for the Defendant to make a correction of the entire input tax exemption amount for the reason that it does not change the tax exemption amount to 2017.

3) Where errors relating to two or more business years exist (No. 3)

As seen earlier, the ○○ regional tax office, while conducting the secondary tax investigation, took 208 business years which were not originally included in the period subject to the first tax investigation. However, as a result of the investigation, the beneficial owner of the dividend income of this case that the Plaintiff paid to AB was not AA but BB. In order to verify whether such reason exists in the business year prior to the period subject to the tax investigation and 2009 business years after the period subject to the tax investigation, 2005 through 207, and 2009 business years after the period subject to the tax investigation, it extended the period of investigation, such as requesting the submission of data for 206 and 207 business years. Ultimately, it is reasonable to deem that the Defendant participated in the second tax investigation and notify the Defendant of the fact that there were the same reasons for 2006 and 207 business years prior to the establishment of the Plaintiff’s dividend income, and thus, it is reasonable to deem that the Plaintiff’s share, which was the ground of the dividend income of this case, was 2006A.

Therefore, the second tax investigation on the business year 2006, 2007 by the plaintiff constitutes an exception to the principle of prohibition of duplicate investigation.

D. Sub-committee

The Plaintiff’s assertion that the portion of the disposition of withholding corporate tax on the dividend income on March 2006, 2007 and March 2008 among the disposition of this case violates the principle of prohibition of duplicate investigation is unlawful is without merit.

4. Determination on beneficial owners of dividend income of this case

A. Criteria for judgment

The substance over form principle under Article 14(1) of the Framework Act on National Taxes (amended by Act No. 2679 of Dec. 21, 1974, amended by Act No. 8830 of Dec. 31, 2007, and amended by Act No. 9911 of Jan. 1, 2010) refers to a person to whom the property belongs, if there is another person to whom the property belongs, unlike the nominal owner, in relation to the subject of taxation, such as income, profit, property, transaction, etc., belongs, not the nominal owner, on the ground of form or appearance, but the person to whom the property belongs is the actual owner. Thus, where the nominal owner is not capable of controlling and managing the property, and where the disparity between the nominal owner and the real owner arises from the purpose of evading taxes, the income from the property belongs to the person to whom the property substantially controls and manages the property (hereinafter referred to as "actual owner") and the person to whom it is liable for tax payment (see, e.g., Supreme Court Decision 20029Du19484.

Article 3 (2) of the Korea-Hungary Tax Treaty provides that " unless the context otherwise requires, the term not defined by a Contracting State in the application of this Convention shall have the meaning in the laws of that Contracting State related to taxes to which this Convention applies". Thus, the meaning of "the beneficial owner" under Article 10 (2) that is not directly defined in the Korea-Hungary Tax Treaty should be determined in accordance with the laws of the Republic of Korea. In addition, the meaning of "the owner" under Article 10 (2) of the Korea-Hungary Tax Treaty, which is the basis for interpretation of the international tax treaty, should be determined in accordance with the laws of the Republic of Korea. The meaning of "the owner" under Article 12 of the OECD Model Tax Treaty (hereinafter referred to as "the OECD") is not a narrow mechanical meaning, but rather within the context, purpose and intention of the Convention, and shall be understood as "the owner" under Article 10 (2) of the Korean-Hungary Tax Treaty. Therefore, the meaning of "the substantial interest income and the prevention of tax evasion."

As in the case of a “person to whom the relevant dividends accrue”, the following should be comprehensively taken into account: (a) the process and purpose of acquiring the relevant shares or equity shares; (b) the source and process of management and disposal of the acquisition fund; (c) the ability of the person to whom the relevant dividends accrue; and (d) the control relationship with the person to whom the relevant dividends accrue (see, e.g., Supreme Court en banc Decision 2008Du2008, Jan. 19, 2012). In such a case, the person to whom the relevant dividends accrue should not have the ability to independently operate the business; and even if there is such ability, if the person to whom the relevant dividends accrue has no intention or ability to control and manage the shares or equity shares; and (b)

(b) Fact of recognition;

(1) The details of the establishment and transfer of shares of AA

A) BB as a complete subsidiary of BB and the Plaintiff’s initial shareholder, had been exempted from withholding taxes due to foreign investment tax reduction and exemption until 2005. However, since 2006, tax reduction and exemption has expired, 11% of withholding taxes on dividends were planned to be applied.

B) BB adopted the BB’s proposed transfer of shares in the number of tax directors at Hungary to the effect that the BB promoted a tax plan to reduce the amount of dividend income withheld, and around November 2005, in order to use the 5% limited tax rate of dividend income as stipulated in the Korea-Hungary Tax Treaty, the BB should establish a corporation with the substance of the Common Service Center in Hungary to use the limited tax rate of 5% of dividend income as stipulated in the Korea-Hungary Tax Treaty. This includes a future plan for the use of dividends that AA’s dividends may be used to support the reverse cash other than the calendar, or may be leased to the United States.

C) Accordingly, on December 22, 2015, BB established AA as a Hungary-based corporation by investing in kind all the Plaintiff’s share held by it.

D) Meanwhile, BB promoted so-called “project character” in the early 2000s, which is a plan to change the global governance structure of BB BB and BB’s subsidiaries outside the U.S., aiming at inserting the EU-established holding companies in order to create surplus cash through the design of the global tax optimal structure. The establishment of AAA is part of project character.

(E) On November 15, 2005, Mx, the vice-chairperson of LL, declared that the actual shareholder of the U.S. CCC would be immediately changed as a means of saving at the Plaintiff’s Management Committee (hereinafter “ECM”) on November 15, 2005. (F) The number of e-mail sent by us an e-mail stating that the transfer of shares to LL to LL, the vice-chairperson of LL finance-related division of LL to LL to LL, the vice-chairperson of 5% withholding tax rate, requires us to have a sufficient substance, and in order to use such tax benefits, us is the reason why Hungary should establish a joint service center in Hungary.

사) BBB 최고경영자인 웬XX는 2006. 2. 5. EEE전자 주식회사 상무 이○○과의 회동에서 'CCC은 최근 한국과 헝가리의 유리한 원천징수의 지위를 이용하기 위해 주주사를 헝가리 회사인 AAA로 옮겼다. 이것은 2006년에만 약 10MM 정도 현금효과가 있을 것이다.'라고 발언하였다.

(ii) the composition of the AA and its business activities;

A) The scope of AA’s business is to provide CCC-related companies outside the U.S. with functions such as settlement of accounts and general accounts, sales claims, purchase obligations, Group Dphishing, investment management, loan, etc. among those functions, other than Group Dphishing and investment management, and loan management, which are unique functions of the holding company. There is no relation to the production and sales of PPS, the main business of the Plaintiff.

B) The size of the assets and sales of AA and the Plaintiff is as listed in the following table. Among them, the net assets of AA are net assets necessary to operate the Joint Service Center, and most core types of assets are computer equipment and related software to provide integrated services to European CCC-related companies.

C) After its establishment on December 22, 2015, AA leased a workplace as of Hungary ○○○ 000 located on May 19, 2006, and employed 7-52 employees from the time of its establishment to the date of its establishment, which is all human resources performing the duties of call centers.

D) The number of the primary representative director of AA is the tax director of BB, and the latter is the latter from April 2006 to March 2008, DB has been in charge of accounting, finance, joint service center planning, etc. in BB before being in charge of the former from around April 2006 to around March 2008. They have not been engaged in the Plaintiff’s business activities, investment of dividends, and management of subsidiaries.

3) Exercise of shareholder's rights against the plaintiff

A) At the time of the establishment of the Plaintiff, a joint venture agreement between the joint venture parties that stipulates matters concerning the entire company, such as the organization, shareholders, management, and control of the company, and the agreement on the back of the higher level thereof, which stipulates only specific matters such as royalties and dividends, as a master agreement. Of Article 9 (Plaintiff Management) of the Master Agreement, 9.03 provides that EC shall be comprised of at least four persons nominated by the joint venture parties in accordance with the common share ratio, and Article 8 (Ordinary Shares Distribution) provides that EC shall make best efforts to pay 40% of the minimum net income to the common shareholders as dividends. The dividends paid every year are determined by EC.”

B) On the other hand, on November 2005, EC adopted the ECB’s 'the 'the 'the 'the 'the 'the 'the 'the 'the 'The 'the 'the 'the 'The 'the 'the 'the 'the 'PPP''. The main contents should be to make the key decisions related to the plaintiff's strategy, financial structure and financial policy, to approve the 'the 'the 'the 'the 'the 'the ' the 'the ' the 'the 'the 'the 'the ''''', to approve the 'the 'the 'the 'the 'the 'the 'the 'the 'the 'the '

C) Major contents approved by EC held three times from March 2008 to November 2008

The list shall be omitted:

D) From June 12, 2006 to September 16, 2009, AA delegated the Plaintiff’s voting right on the agenda of the Plaintiff’s general meeting of shareholders to 2006, and the Plaintiff’s representative attended the Plaintiff’s general meeting of shareholders as the Plaintiff’s agent. The notice of convening the general meeting of shareholders was served to 2 XX, and the copy was served to some directors belonging to the BB legal team, but the Plaintiff’s officers and employees did not have any contact with AA regarding the notice of convening the general meeting of shareholders. Moreover, the notice of convening the general meeting of shareholders was received from 2B most of the proxy of the AA general meeting of shareholders.

4) Control and management of the dividend income of this case

A) KK is a subsidiary established by BB under the laws of Ireland with 100% investment of 100% by 100% and performs the overall fund management and internal bank role of the CCC Group.

(B) Of the instant dividend income, 2006, 2007 and 2008, the dividend income was deposited by the Plaintiff in the Korean Bank Account (Account Number 000000) of AAB, and was transferred from the Plaintiff to the Hungary bank account (Account Number 000000) on the same day or following the date, and again transferred from the Hungary bank account (Account Number 000000) to the Hungary bank account. However, in interpreting the code stated in the Hungary Bank Account List, each dividend income was released from Hungary to 00 U.S. (U.S.) or all of the bank account numbers were transferred from 00 to 00, 208, 300, 200, 200, 200, 200, 300,000,000, 20,000,000).

E) On February 2, 2006, the Plaintiff offered capital increase with capital increase, and AA acquired 50% of new shares (ordinary share 15,000,000,000 won per share, and 10,000 won per share) to KRW 75 billion by participating in capital increase with capital increase. This is one of the tax plans discussed to reduce the Plaintiff’s amount of withholding tax on July 2005, that “BB must participate in additional capital increase to reduce the Plaintiff’s amount of withholding tax.” The LL Financial Director’s Switzerland increase proposal was implemented by AA as a shareholder of the Plaintiff on December 22, 2005.

F) Moreover, among the entire dividend income received on September 2008 and the dividend income received on March 2009, part of the dividend income was invested in the Y fund located in the Ireland via KK, and the remainder of the dividend income received on March 2009 was used as the capital increase amount of Hungary, a complete subsidiary of AAA, as a Hungary’s wholly owned subsidiary.

Facts having no dispute over recognition, Gap's entries in Gap's 2, 6, 11, 18 through 20, 22, 24, Eul's 2, 6 through 8, 10 through 18, 20, 22, and 23, and the purport of the whole pleadings.

C. A beneficial owner of the dividend income of this case

1) In light of the following circumstances revealed by comprehensively taking account of the purport of the entire pleadings in the above facts, the Plaintiff’s share payment cause of the instant dividend income and the Plaintiff’s management and management, only the role of the transaction party or agent was performed without having shown his intent or ability to control and manage the Plaintiff’s share, and it can be recognized that BB, the actual agent of the behind act, has been performing the role of the transfer of shares and the shareholder. Furthermore, as BB actually owns 100% of the shares of AA, the benefits of AA are attributed to BB as a result, even if the Plaintiff’s share belongs to both Hungary, it is also recognized that BB was able to evade taxes in a considerable amount through the application of the limited tax rate under the Korea-Hungary Tax Treaty by holding the Plaintiff’s shares formally a Hungary-based corporation. Unlike this, the acquisition and management of shares in the name of an intermediary holding company without a direct holding of the Plaintiff’s shares and is not recognized as any other purpose or necessity for acquiring and managing shares in the name of an intermediary holding company.

① BB applied the limited tax rate of 5% under the Korea-Hungary Tax Treaty, thereby establishing AAA as a Hungary, a Hungary, by investing in kind all of the Plaintiff’s shares in order to save the withholding tax on the Plaintiff’s dividends. AA was established and the decision-making process related to the establishment of BB and the transfer of Plaintiff’s shares was practically led by BB, the parent company of BB, and ultimately, BB paid for the acquisition of Plaintiff’s shares.

② There is no evidence to prove that the AA had a place of business and other physical facilities for about five (5) months from the date of the establishment of a corporation, and even thereafter, the AA was equipped with computerized equipment to provide joint services to related companies and related software and call center functions, and did not have human resources and physical facilities to perform investment management, fund management functions, and these functions are practically performed by JJ and LL, and dividend management.

③ The JJ members set the dividend rate, dividend amount, and dividend time, and manage AAB’s account. The instant dividend income was introduced into KK immediately after the receipt thereof, and used as the Plaintiff’s capital increase, the fund investment, and the capital increase of AAA subsidiaries. This seems to have been carried out by BB for the reduction of dividend income withholding or by the plan for the use of dividends for which Hungary’s plan was planned.

4. AA is a shareholder of the Plaintiff’s investment and business activities and management activities for managing dividends received from the Plaintiff, and the Plaintiff’s general meeting of shareholders is to be conducted directly by BB.

AA's exercise of shareholder's rights was delegated through BB.

2) If so, AAA, a Hungary, is a so-called Do government company or type of transaction, and the beneficial owner of the instant dividend income shall be BB, a U.S. corporation. Ultimately, the instant disposition denying the application of the limited tax rate provisions under the Korea-Hungary Tax Treaty is justifiable, and the Plaintiff’s assertion on this part is without merit.

3. Conclusion

Therefore, the claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.