2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The Defendant’s imposition of gift tax of KRW 0,000,000 against the Plaintiff on April 22, 2014 is revoked.

A. In establishing the CCC on March 6, 2004 (hereinafter “instant company”), the Plaintiff trusted 0,000 shares of the instant company owned by the Plaintiff (hereinafter “instant shares”) to DDR (hereinafter “instant title trust”).

B. On October 30, 2008, the Plaintiff returned the name of the instant shares from DD, and DD reported and paid capital gains tax on August 1, 2013.

C. On April 22, 2014, the Defendant imposed and notified the gift tax of KRW 0,00,00 on the trustee DD pursuant to Article 45-2 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter referred to as the “Inheritance Tax and Gift Tax Act”) and designated the Plaintiff as a joint and several taxpayer and imposed and notified the gift tax of the said amount on the Plaintiff on the same day (hereinafter referred to as the “instant disposition”).

D. DDR filed an appeal with the Tax Tribunal on November 5, 2014, but December 30, 2014

Each decision was received.

E. The Plaintiff did not file an appeal, and filed the instant lawsuit on March 30, 2015.

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, Eul evidence 1, the purport of the whole pleadings

2. Related statutes;

It is as shown in the attached Table related statutes.

3. Determination on the defense prior to the merits

A. The Defendant asserts that the instant lawsuit is unlawful on the ground that the Plaintiff did not undergo the pre-trial procedure, and that it did not meet the requirements for the pre-trial procedure.

B. In a tax lawsuit, the provisions of Articles 18(2) and (3) and 20 of the Administrative Litigation Act do not apply (Article 56(2) and (3) of the Framework Act on National Taxes; however, in a case where several persons are identical to the same by the same administrative disposition, one of those who are liable to pay the same duty may file an administrative lawsuit seeking revocation of the taxation disposition even if the taxpayer and the Tax Tribunal are not obliged to re-determine the basic facts and legal issues by going through legitimate pre-trial proceedings (see, e.g., Supreme Court Decision 2005Du10170, Apr. 14, 2006).

C. In light of the aforementioned evidence and the following circumstances known under the relevant statutes, the Plaintiff appears to be able to institute an administrative litigation seeking the revocation of the instant disposition even without going through the pre-trial procedure. The Defendant’s prior defense on the merits is rejected.

① As seen earlier, the Defendant imposed the same amount of gift tax on the Plaintiff and DD on the same day on the grounds of the instant title trust. In relation to the instant title trust, the obligation to pay DD’s gift tax and the Plaintiff’s obligation to pay gift tax are identical by an administrative disposition that can be evaluated as substantially identical, and thus, are related to each other in terms of its contents, and the grounds for illegality are common.

② The Plaintiff asserted that DD only entrusted the name of the instant shares to satisfy the quorum of promoters under the Commercial Act and did not evade taxes. DD was determined by the Tax Tribunal by asserting that DD had the same purport in the proceeding of the Tax Tribunal. It can be said that DD had given the Tax Tribunal an opportunity to re-determine the basic facts and legal issues by undergoing legitimate tax proceeding, and the factual relations and legal issues that were disputed in the tax judgment raised by DD are the same as those in the instant lawsuit brought by the Plaintiff, but it is too harsh to have the Plaintiff go through another trial proceeding.

③ Under Article 4(4) of the Inheritance Tax and Gift Tax Act, a donor is jointly and severally liable for payment of the gift tax payable by the donee in cases where the donee falls under any of the following subparagraphs. 1. Where his/her address or domicile is unclear and it is difficult to secure a tax claim; 2. Where it is deemed that there is no ability to pay gift tax and where it is difficult to secure a tax claim even if a disposition on default is made due to default, and where the donee falls under the provisions of Article 45-2, the donor is jointly and severally liable for payment with the donee in cases where the donee does not fall under any of the subparagraphs of paragraph (4).

4. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff, while establishing the instant company, was aware of the fact that the provisions on the number of promoters under the Commercial Act were deleted, and did not have the purpose of evading taxes in order to satisfy the requirements of promoters.

B. Determination

1) The legislative intent of Article 41-2(1) of the former Inheritance Tax and Gift Tax Act is to effectively prevent the act of tax avoidance using the title trust system and realize the tax justice. As such, the proviso of the same Article is applicable only where the purpose of tax avoidance is not included in the purpose of title trust. In such a case, the burden of proving that there was no purpose of tax avoidance in the name of the claimant (see, e.g., Supreme Court Decisions 9Du2192, Jul. 23, 1999; 2003Du13649, Dec. 23, 2004). Therefore, it can be proven by the method of proving that there was no purpose of tax avoidance, other than the purpose of tax avoidance (see, e.g., Supreme Court Decision 2004Du7733, May 12, 2006). In addition, if it is acknowledged that there was no objective or objective purpose of tax avoidance in the name of the title trust, the title holder who bears the burden of proof has no objective or objective of tax avoidance.

2) We examine whether the instant title trust had an objective of tax avoidance in light of the foregoing legal doctrine. As long as the title trust of shares was made, it is presumed that the instant title trust had an objective of tax avoidance. In light of the following circumstances, which can be seen by comprehensively taking account of the overall purport of the arguments and the facts and evidence as seen earlier, the evidence submitted by the Plaintiff alone is insufficient to deem that the instant title trust did not have an objective of tax avoidance except for the purpose of meeting the pertinent provisions of the Commercial Act (hereinafter “purposes related to the Commercial Act”), and there is no evidence to acknowledge otherwise.

① Article 288 of the former Commercial Act (amended by Act No. 6488, Jul. 24, 2001) provides that “not less than three promoters must establish a stock company.” However, the amendment of the above provision that “in establishing a stock company on July 24, 2001, the promoters must prepare its articles of incorporation,” thereby setting the lower limit of the number of promoters under the Commercial Act. Since more than two years passed thereafter, it is difficult to understand that the Plaintiff, while establishing the instant company, made the instant title trust in order to satisfy the above provisions of the former Commercial Act.

② The Plaintiff acquired the entire shares issued at the time of the establishment of the instant company, and held title trust with 00% of the said shares to DD and EE that did not have any special relationship with the Plaintiff. The Plaintiff, which was a de facto oligopolistic shareholder of the instant company, was exempt from the secondary tax liability for the said company’s default tax due to the title trust.

③ As between 2004 and 2011, the instant company did not pay taxes of KRW 0 million in total.

④ Even if the Plaintiff was returned to the name of the instant shares from DD, such circumstance alone is difficult to deem that there was no tax avoidance purpose from the beginning, and the Plaintiff reported and paid the transfer income tax to the end of 2013, which was more than five years after the date of returning the actual name.

3) Therefore, the instant disposition cannot be deemed unlawful.

5. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.