Supreme Court Decision 2015Du53398 (Law No. 18, 2016)

Seocho 2013west 091 (2013.09.02)

Retirement pay under the temporary installment payment for the purpose of distributing the corporation's funds is not subject to deductible expenses under the Corporate Tax Act, but is legitimate to impose penalty tax.

Inasmuch as a corporation’s funds derived from gains on transfer of real estate in this case were distributed by leasing retirement benefits in the form of real estate in order to actively avoid the tax payment obligation, rather than having not known its tax liability due to the conflict of opinion due to the significance of tax interpretation, there is no justifiable reason for failure to perform tax liability.

Article 44 of the Enforcement Decree of Corporate Tax Act

2016Nu37401 Revocation of Disposition of Imposing Corporate Tax, etc.

ABO Co., Ltd.

○ Head of tax office

Supreme Court Decision 2015Du53398 Decided December 18, 2016

2016.06.21

2016.08.16

1. The part against the defendant in the judgment of the first instance shall be revoked;

2. The plaintiff's claim is dismissed.

3. The plaintiff is responsible for total costs of litigation between the plaintiff and the defendant.

1. Purport of claim

On October 2, 2012, the Defendant revoked the disposition of imposition of penalty tax by KRW 00 (the Plaintiff’s revocation of the portion exceeding KRW 00 among the above corporate tax ○○○○○○○, and the Seoul Regional Tax Office’s revocation of the notification of change in the amount of income made to the Plaintiff on October 9, 2012, and the Plaintiff was remanded to the Plaintiff on October 2, 2012, and the revocation of the disposition of imposition of corporate tax becomes final and conclusive after remanding, the claim is reduced, and the lawsuit against the Seoul Regional Tax Office was withdrawn).

2. Purport of appeal

The same shall apply to the order.

1. Details of the disposition and related Acts and subordinate statutes;

The court's explanation on this part shall not include "non-deductible expenses" in Section 5 of the judgment of the court of first instance in Section 4(e)(5) of the judgment of the court of first instance.

○○○ Won (the amount of gross pay for one year x 1/10 x 4 years and 3 months in office) was added to deductible expenses only), 5 pages "in addition," 5 pages "in accordance with Article 44 (4) 2 of the Enforcement Decree of the Corporate Tax Act", 5 pages "Additional Tax", and 7 pages "in addition, 00 won" are the same as the reasons for the judgment of the first instance, except for adding "○○○ Won", and thus, it shall be quoted in accordance with Article 8 (2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

2. Whether the imposition of additional tax is lawful.

A. The plaintiff's assertion

If it is unreasonable for a taxpayer to be unaware of his/her duty due to the conflict of opinion due to the doubt, etc. in the interpretation of tax-related Acts, if there is a circumstance to present it properly or if there is a circumstance that it is unreasonable for the person concerned to expect the fulfillment of such duty to do so, an additional tax may not be imposed due to a justifiable reason.

Article 44(5) and (4)1 of the Enforcement Decree of the Corporate Tax Act included the instant retirement benefit in deductible expenses, which is the provision for the payment of retirement benefits delegated by the Plaintiff’s articles of incorporation, in accordance with the Plaintiff’s articles of incorporation. The Defendant’s imposition of additional tax in the instant disposition on the ground that the instant retirement benefit provision was invalid until the reversal and return of the instant case on the ground that there were special circumstances, such as the excessive amount of retirement benefits in the judgment of remand, and thus, there were no legal principles as seen earlier until the instant retirement benefit provision was reversed and returned. Rather, there were many cases where the Plaintiff determined that the instant retirement benefit was valid in cases where retirement benefits were paid to an officer in accordance with the retirement benefit payment provision delegated by the articles of incorporation, such as the instant retirement benefit provision. As such, it was difficult to expect

of this chapter.

B. Determination

1) The retirement benefits paid to an executive officer pursuant to the articles of incorporation or the rules on payment of retirement benefits delegated to him/her pursuant to the articles of incorporation or the rules on calculation (hereinafter collectively referred to as “retirement benefits regulations”) shall, in principle, be included in the calculation of losses. However, an executive officer’s provision on retirement benefits was enacted or amended to the effect that the retirement benefits would be paid more rapidly than the previous retirement benefits. The amount of retirement benefits paid to a person who is in a position likely to affect the enactment or amendment or a person who is in a close relationship with him/her as a retired executive officer was paid rapidly increased as such. Accordingly, the amount of retirement benefits actually paid is extremely difficult to be considered as consideration for labor or contribution during the period of service of the retired executive officer or in light of the content of his/her service or other similar scale. If there are special circumstances, such an excessive amount of retirement benefits cannot be deemed as being paid to the person liable to pay taxes in light of the relevant provisions itself or the financial status or business outlook of the relevant corporation, and thus, the amount of retirement benefits paid cannot be deemed as one of an executive officer under Article 24(1).

2) The following circumstances are that the Plaintiff’s above evidence and evidence No. 1 to No. 3 were admitted by the Plaintiff’s transfer margin, i.e., ① the Plaintiff’s entire shares issued by Ora, KimB, and his children, and there were no other officers except Ora and KimB. ② The instant retirement benefits provision was made in 120,000 won due to the Plaintiff’s transfer of the instant real estate, and there was no separate provision on retirement benefits or retirement allowances until that time. ③ Although the Plaintiff was using the pertinent real estate for redemption of the interest on loans of financial institutions, it would not be adequate for the Plaintiff to pay the Plaintiff the amount of the instant retirement benefits paid out of the amount of the instant retirement benefits paid out of the total amount of KRW 40,000,000,000,000,000,000,0000,000,0000,000,000,000,000 won.

3. Conclusion

Therefore, the plaintiff's claim of this case shall be dismissed as it is without merit. Since the part against the defendant in the judgment of the court of first instance is unfair with different conclusions, the above part of the judgment of the court of first instance is revoked and the plaintiff's claim is dismissed