TITLE	Supreme Court Decision 2017Du33008 Decided November 15, 2018¡¼Revocation of Disposition Imposing Corporate Tax¡½ [full Text]
Summary
[1] Meaning of and standard for determining what constitutes ¡°beneficial owner¡± as prescribed by Article 12(1) of the Convention between the Government of the Republic of Korea and the Government of the Hungarian People¡¯s Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income Whether a tax treaty may be deemed inapplicable in the event that treaty abuse is acknowledged according to the principle of substantial taxation under the Framework Act on National Taxes even if constituting a beneficial owner of royalty income (affirmative) [2] In a case where: (a) Company A concluded a license agreement with Hungary- based Company B regarding the domestic distribution of foreign exchange currencies, etc., but did not withhold corporate tax for royalties paid to Company B pursuant to Article 12(1) of the Convention between the Government of the Republic of Korea and the Government of the Hungarian People¡¯s Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income; and (b) the competent taxing authority deemed Company C, the parent company of Company B that is based in the Netherlands, to be the de facto beneficial owner of royalty income by applying the Convention between the Government of the Republic of Korea and the Kingdom of the Netherlands for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and, subsequently, held Company A liable for withholding corporate tax, the Court holding that the application of the Convention between the Government of the Republic of Korea and the Government of the Hungarian People¡¯s Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income cannot be denied with respect to royalty income even if based on the principle of substantial taxation under Article 14(1) of the Framework Act on National Taxes

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