(1) Where a nonresident is paid any domestic source income under Article 119 through a foreign investment vehicle, such nonresident shall be deemed the substantive owner of such domestic source income (referring to a person who substantially has ownership of that domestic source income, such as having a right to dispose of that income by bearing legal or economic risk with respect to that domestic source income; hereinafter the same shall apply): Provided, That a foreign investment vehicle falls under any of the following subparagraphs (limited to cases where, in case of a foreign investment vehicle which is a non-juristic entity other than an entity deemed a corporation under Article 2 (3), it falls under subparagraph 2 or of 3 of this paragraph) shall be deemed the substantive owner of the domestic source income: <Amended on Dec. 8, 2021>
1. Where the foreign investment vehicle meets all of the following requirements:(a) It shall bear an obligation to pay taxes in the country of its establishment under a tax treaty;(b) It shall qualify for any non-taxation, tax exemption, or reduced tax rate granted under a tax treaty on domestic source income (referring to the maximum tax rate that may be imposed on a resident or a corporation of the contracting state under the tax treaty; hereinafter the same shall apply);
2. Where a tax treaty provides that a foreign investment vehicle that does not fall under subparagraph 1 shall be treated as a beneficial owner of domestic source income, and the vehicle qualifies for a non-taxation, tax exemption, or reduced tax rate under the tax treaty on domestic source income;
3. Where the foreign investment vehicle not falling under subparagraph 1 or 2 can not confirm investors in it (only limited to the portion with respect to which investors are not confirmed where it only confirms some of two or more investors, if any).
(2) Where a foreign investment vehicle is deemed the substantial owner of domestic source income as per paragraph (1) 3, any non-taxation, tax exemption, or reduced tax rate granted under a tax treaty shall not apply to such foreign investment vehicle. <Amended on Dec. 29, 2020; Dec. 8, 2021>[This Article Newly Inserted by Act No. 16104, Dec. 31, 2018]