외국의 혼성단체(Hybrid Entity)에 대한 조세조약의 적용 - 독일의 유한합자회사와 한·독 조세조약상 거주자의 의미

Application of Tax Treaties to Foreign Hybrid Entity – When German GmbH & Co. Kommanditgesellschaft (KG) is a German Resident under the Korea-Germany Tax Treaty (Subject case: Supreme Court Decision 2013Du7704 Decided May 28, 2015) Jung, Kwang-jin Hybrid entity means an entity subject to different tax treatments by different contracting states. For instance, one contracting state may classify an entity as a taxable entity such as a company under its domestic tax law, but the other contracting state may categorize that same entity as a fiscally transparent entity which is taxed as a partnership under its own domestic tax law. The following are some of the practical issues often confronted when a domestic company claims for the application of the benefits conferred under a tax treaty when paying dividend income to a foreign hybrid entity: (a) whether the entity is the beneficial owner of the dividend income; (b) whether the entity is a resident of the other contracting state under the tax treaty; and (c) whether the entity is a company instead of a partnership under the tax treaty. The subject case is a rare case in point which includes determinations on all three of the above issues. First, stating the legal principle that a beneficial owner is the entity to which dividend income is substantially attributed pursuant to the economic substance doctrine or substance-over-form principle under the domestic tax law, the subject case deemed the investment fund as an entity to which the dividend income is substantially attributed and treated the intermediary holding company as a conduit company. Such determination on beneficial ownership is a reaffirmation of the Supreme Court’s consistent position thus far. The aspect distinguishing the subject case from precedents is its notion that establishing an intermediary holding company at the state of residence of the entity to which an income is substantially attributed may be another way of evading domestic taxes by abusing the provision on resident and the provision defining company under the tax treaty. Second, the subject case determined that, even when a foreign hybrid entity does not bear a comprehensive tax liability such as corporate tax in its state of residence, the entity may still be treated as a resident to the extent that its interest holders bear a comprehensive tax liability on the income attributed to the entity under the domestic tax law as a resident of a contracting state. This ruling is premised on the notion that it is consistent with the object and purpose of the tax treaty to prevent double taxation, as well as with the intent of the contracting states to limit the source state’s tax jurisdiction to the extent that the state of establishment of the entity to which domestic source income is attributed ultimately exercises a comprehensive tax jurisdiction on the said income, albeit not at the level of the entity. The subject case basically found the entity itself as a resident under the tax treaty, while upholding the interpretation and application of the Korean tax law deeming taxable the entity to which the dividend income is attributed. As such, it is worth noting that the subject case took a different stance from that of the OECD to shift the attribution of dividend income from the level of entity to that of its interest holders according to the tax law of the entity’s state of establishment, and then to apply the tax treaty between Korea and the interest holders’ state of residence. Third, the subject case determined that ‘company,’ as opposed to ‘partnership,’ under the provisions on the limited tax rate on dividend income under the Korea-Germany tax treaty means an entity treated as a company under the tax law of the entity’s country of establishment. The rationale behind the provision applying the low limited tax rate of five percent on dividend income is to minimize any recurrent taxation that may arise when a subsidiary company distributes dividends to its parent company. In light of this rationale, the subject case viewed that, so long as the parent company receiving dividends is treated as a taxable entity under the tax laws of the country of its establishment, the said parent company is eligible for the said benefits of a tax treaty.