Scope of oligopolistic stockholders liable for secondary tax liability

The so-called "excess shareholder" who is liable for secondary tax liability pursuant to Article 39 subparagraph 2 of the Framework Act on National Taxes is limited to a shareholder, a partner with limited liability, a relative, or a person in a special relationship, and does not include a person who is in such relationship with a member with limited liability separately prescribed in subparagraph 1 of the same Article.

Article 39 subparagraph 2 of the Framework Act on National Taxes, Article 20 of the Enforcement Decree of the Framework Act on National Taxes

Plaintiff 1 and 2 others, Attorneys Lee Young-young, Counsel for the plaintiff-appellant

Daejeon Head of the tax office

Seoul High Court Decision 85Gu633 delivered on December 27, 1985

The appeal is dismissed.

The costs of appeal shall be borne by the defendant.

The grounds of appeal are examined.

Article 39 of the Framework Act on National Taxes is an investor who has secondary tax liability for national taxes, etc. imposed on or paid by a juristic person, and the partners with unlimited liability in subparagraph 1 and subparagraph 2 separately stipulate oligopolistic shareholders. With respect to the definition of oligopolistic shareholders, the above subparagraph 2 defines “those whose aggregate amount of stocks or investment is not less than 51/100 of the total amount of stocks issued by the juristic person or the total amount of investment in the juristic person concerned and who are relatives or specially related persons as prescribed by the Presidential Decree” and the proviso of Article 20 of the Enforcement Decree of the same Act stipulating the scope of “relatives or those who have special relations as prescribed by the Presidential Decree” and each subparagraph thereof (Article 10 through 13) do not include “relatives or those who have special relations with the non-party or limited liability partner” as stipulated in Article 39 subparag. 2 of the Framework Act on National Taxes, and thus, the court below should interpret the so-called “shareholders or limited liability partner” who bears secondary tax liability for the plaintiff and the non-party 2.

Since the plaintiffs are the non-party who is the general partner of the above limited partnership company and persons with a special relationship under Article 20 of the Enforcement Decree of the above Act, whose total amount of investment is 60/100 of the same company's total amount of investment, the plaintiffs are subject to criticism of the judgment of the court below on the premise that they are oligopolistic shareholders under the above Act.

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 Yoon Yoon-tae (Presiding Justice)