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| People enter the headquarters building of French bank Societe Generale outside Paris in January 2008. AP-Yonhap |
By Anna J. Park
The Supreme Court ruled on Monday in favor of French lender Societe General, which had filed a lawsuit against the National Tax Service (NTS) in 2016 claiming it was slapped with excessive taxes.
From 2013 to 2015, the NTS levied a 2 billion won ($1.7 million) education tax on the French bank. But the bank filed a lawsuit demanding the NTS return 145 million won which had been overpaid in the tax calculation.
The regional tax office refused to return the money on the grounds that a different tax calculation should be applied from what Societe General claimed, prompting the French lender to take legal action.
"The original trial's judgment misconstrued the meanings and calculation methods stated in the Enforcement Decree of the Education Tax Act, which was revised in 2010 and 2011," the Supreme Court's decision read.
Since 2009, financial and insurance companies have been obligated to pay a quarterly education tax, calculated as 0.5 percent of their profits from trading stocks, bonds and foreign exchange derivatives. As the tax is imposed every three months based on a complex set of rules, it has been the source of many legal disputes over its proper calculation.
But some argue that the imposition of an education tax on financial companies violates a principle stipulating that an earmarked tax should be imposed only on related beneficiaries of the tax's purpose.
The top court's ruling in favor of Societe Generale is the latest in a rising number of legal victories by foreign firms against the NTS.
According to data compiled by ruling Democratic Party of Korea lawmaker Chung Il-young, the NTS has lost more than three out of 10 cases over the past five years against foreign nationals or foreign firms.
That means the NTS lost 31.67 percent of its legal cases against foreign nationals or foreign firms during that period.
Last year, the NTS lost 202.3 billion from lawsuits against foreign plaintiffs represented by six local big law companies, which is more than seven times the amount it lost in 2019 through similar such legal disputes.
