All appeals are dismissed.

The costs of appeal are assessed against the plaintiffs.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

A. The principle of substantial taxation under Article 14(1) of the former Framework Act on National Taxes (amended by Act No. 9911, Jan. 1, 2010; hereinafter the same) refers to a person to whom the actual income, profit, property, transaction, etc. belongs, if there is a separate person to whom the actual income, etc., belongs, unlike the nominal owner, is not the nominal owner, but the person to whom the income, etc., reverts, is the taxpayer.

Therefore, in a case where the nominal owner of an asset is unable to control and manage the asset, and there is another person who substantially controls and manages the asset through the control, etc. over the nominal owner, and the disparity between the nominal owner and the real owner arises from the purpose of tax evasion, the income on the property shall be deemed to have accrued to the person who substantially controls and manages the asset,

(See Supreme Court en banc Decision 2008Du8499 Decided January 19, 2012). This principle applies to the interpretation and application of a tax treaty having the same effect as the Act, unless there are special provisions excluding it (see, e.g., Supreme Court Decision 2010Du11948, Apr. 26, 2012).

citing the reasoning of the judgment of the court of first instance, the court below acknowledged the facts as stated in its holding, and, in light of the purpose of the establishment of S (Ireland Limited (hereinafter referred to as "S") and the background leading up to the establishment of the plaintiffs, the status of directors and employees of S and decision-making process, the transaction structure of the securitization bonds of this case and the risk burden of S, it is reasonable to deem that the person who actually controls and manages the interest income of this case as a bank of a corporation that is a Japanese corporation (hereinafter referred to as "O bank") instead of S (i.e., the Do company), and further, the disparity between such form and substance may be deemed to have