Article 45-2 of the Inheritance Tax and Gift Tax Act

2. The costs of appeal are assessed against the Plaintiffs.

Purport of claim and appeal

The judgment of the court of first instance shall be revoked. The defendants shall revoke the disposition of imposition in the attached Form and the statement of details, and the disposition of imposition of gift tax.

The reasoning for this Court’s explanation is that of the first instance judgment except for the following additional parts, and thus, this Court’s reasoning is acceptable in accordance with Article 8(2) of the Administrative Litigation Act and the main text of Article 420 of the Civil Procedure Act.

2. Parts used or added;

(a)be added to the following parts under paragraph 7-11 of this Article:

In addition, the shares transfer certificate (No. 27 No. 27-1-6) with the content that shareholders of ○○○○, Gab○○, and Ma○○○○○○, Ma○○○○, Kim Jong-in, and Maul, etc. transfer of all their shares including the shares of this case was kept at the office of Ulsan, but each of the above certificates of shares transfer had the seal impression affixed on the shareholder’s name and the certificate of personal seal impression was attached, but the transferee and the transfer date of shares were official blank.

(b) by cutting 19 to 23 of the 9th page 8 with '19 to 28 evidence'.

C. On the 10th page 9 and 10th page 10, the certificate of stock transfer is written by 'the certificate of ○○ Development' or 'the certificate of stock transfer', which was kept in the office of ○○ Development and ○○san, and the certificate of stock transfer concerning the shares of this case and the shares of this case.

3. Conclusion

Therefore, the judgment of the court of first instance is justified, and the plaintiffs' appeal is dismissed. It is so decided as per Disposition.

[Seoul Administrative Court 2007Guhap18406, Nov. 14, 2008]

2. The costs of lawsuit are assessed against the plaintiffs.

A. 1) On June 11, 1999, ○○ Development Co., Ltd. (hereinafter “○○ Development”) established for the purpose of the housing construction project, etc., and issued new shares. The Plaintiff’s literature paid KRW 300,000 among them, paid KRW 435,00,000 among them, Plaintiff’s gambling type paid KRW 87,000 among them, and KRW 480,000 among them, 00,000 among them, and KRW 96,00 among them (hereinafter “○○ Development”) acquired KRW 243,000 among them, and KRW 20,000 among them, acquired KRW 10,00 for the above ○ Development Co.,, Ltd. (hereinafter “○○ Development”) and KRW 10,000,000 for the new shares acquired by the Plaintiff ○○ Development Co., Ltd. around 208, 200.

2) Around November 5, 1999, ○ Development offered new shares with a capital increase of KRW 200,000,000, and issued new shares. Plaintiff Park Jong-sung paid KRW 100,000,000 among them, and acquired KRW 20,000 (hereinafter “second shares for ○○ Development”). around June 25, 2002, ○○ Development offered new shares with a capital increase of KRW 50,000, and issued new shares with a capital increase of KRW 480,000,000 among them, and Plaintiff ○○○○ received KRW 96,000 (hereinafter “third shares for ○○ Development”).

B. ○○ Development Co., Ltd. (hereinafter “○○ Development”) was established on March 28, 2001 for the purpose of the housing construction project, etc., and issued 90,000 new shares through capital increase with a consideration around October 25, 2001. Plaintiff Park Jong-chul paid 150,000,000 won among them, and accepted 30,000 shares among them. Plaintiff ○○○ Co., Ltd paid 10,000,000 won among them, and acquired 20,000 shares among them (hereinafter “instant ○ Development shares”).

C. On June 5, 1999, 199, 000 new shares were issued through capital increase with a company established for the purpose of selling ○○○○○ Mart and ○○○○○ Co., Ltd. (hereinafter referred to as “○○○○○○”); around October 29, 199, the company was established for the purpose of selling ○○○ Development and ○○○ Industries; and around October 29, 199, the company issued 90 shares through capital increase with 40,000 shares; Plaintiff Park Jong-sung paid 400,000 shares among them; Plaintiff Na○○ received 50,000 shares with 50,000,000 shares among them (hereinafter collectively referred to as Plaintiff ○○○ Co., Ltd., Ltd., 200,000 shares, 30,000 shares, 200 shares, 30,000 shares (hereinafter referred to as “instant shares”).

D. 1) The Plaintiff’s literature ○○, Park Jong-tae, and ○○ Development’s paid money at the time of acquiring the 1st share of the instant ○○ Development was all funds raised from the sales price of real estate and shares owned by ○○○○○○○○, and damages, etc. Therefore, the Plaintiff’s literature ○○, Park Jong-sung, and ○○ Development was entrusted with the title of the 1 share of the instant ○○ Development from ○○○○○○○○, on the ground that the Plaintiff’s literature 1 on December 1, 2004, imposed KRW 65,000,000 as gift tax for 1999, and KRW 169,825,600 as gift tax for ○○○○ Development on December 11, 2004, respectively, on the ground that the head of the instant tax office imposed KRW 169,800 as gift tax for ○○ Development was transferred to ○○○ Development on the ground that ○○ Development was transferred.

2) “The money paid at the time of acquiring the Plaintiff’s ○○ Development, Na○○○, and Na○○ each of the instant shares was all funds created from the real estate sales price, the borrowed name account, etc., which are owned by the Plaintiff’s ○○○○○○○ and Na○○○○ each of the instant shares. Therefore, the Defendant Seocho District Tax Office imposed KRW 49,927,120, gift tax on the Plaintiff’s Ga○○ on December 1, 2004 on the ground that the Plaintiff’s Ga○○ was held in title trust, respectively, and KRW 780,587,230, gift tax on the Plaintiff’s Na○ on December 1, 2004, respectively. < Amended by Act No. 7999, Dec. 1, 2004>

3) “The money paid at the time of acquiring the instant ○○ Development shares by the Plaintiff Park Jong-sung and Na○○○○○○○○○○○○ was all financed by the Plaintiff’s business chain, which operated the instant ○○○○○○○○○○○○○○, etc. Therefore, the Defendant Seocho District Tax Office imposed KRW 50,382,510, respectively, on December 1, 2004, on the ground that “the instant ○○○○○ was trusted in title.” < Amended by Act No. 717, Dec. 1, 2004; Act No. 816, Oct. 16, 2004; Act No. 7290, Dec. 1, 2004; Act No. 7510, Dec. 5, 2001.

4) The money paid at the time of acquiring the instant ○san stocks by the Plaintiff Park Jong-soo and Na○○○ was all funds created from the real estate sale price, damages, etc., which is owned by Na○○○○○○○○○, and therefore, the Plaintiff’s head of the Seocho District Tax Office imposed KRW 199,134,180, gift tax on the Plaintiff Park Jong-soo in December 1, 2004 on December 1, 2004, KRW 199,134,180, and KRW 177,000,000,000, respectively, of gift tax on the Plaintiff Jeoncheon-ju in December 1, 2004 (hereinafter referred to as “each of the instant dispositions”).

E. On March 8, 2090, the plaintiffs filed a request for a national tax trial with the National Tax Tribunal on each of the dispositions of this case. On February 15, 2007, the National Tax Tribunal rendered a decision to dismiss all the plaintiffs' requests for a national tax trial on each of the dispositions of this case.

[Ground of Recognition] Facts without dispute, Gap evidence 1, 2, 4 and Eul evidence 1 to 3 (including each number)

2. Whether each of the dispositions of this case is legitimate

A. Summary of the plaintiffs' assertion

1) The absence of a title trust relationship

The plaintiffs are merely acquiring or taking over the shares of this case with their own funds, and they do not have title trust the shares of this case from ○○m. Thus, the defendants' imposition of gift tax pursuant to the main sentence of Article 41-2 (1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002; hereinafter referred to as the "Act") is unlawful.

2) Non-existence of tax avoidance purpose

Even if the plaintiffs acquired or acquired the shares of this case under title trust from BOOm, the above title trust did not have a purpose of tax avoidance, and thus, the Defendants’ imposition of gift tax on such purpose violates the proviso of Article 41-2(1)1 of the Act.

B. Relevant statutes

Article 31 of the Inheritance Tax and Gift Tax Act

Article 41-2 of the Inheritance Tax and Gift Tax Act

(c) Fact of recognition;

1) Na○○ is a person who works as the president of the ○○ Group from February 1994 to May 12, 1998 and controls and supervises the business affairs of affiliates of the Group.

2) As of the end of May 12, 2003, the ○○ Group did not pay various taxes, such as corporate tax, value-added tax, securities transaction tax, capital gains tax, etc. imposed on it as of the end of December, 2003 after the ○○ Group was in bankruptcy on May 12, 1998. The amount in arrears reached the total of 3.8 billion won as of November 10, 2004.

3) The Plaintiff’s ○○ Group’s executives are ○○ Group’s affiliate companies; Plaintiff Park Jong-tae is a person who works as vice-chairperson at ○○○ Group’s subsidiaries and ○○○○ Group’s subsidiaries; Plaintiff 2 is a person who operates ○ Construction Company, which is an affiliated company of ○○○ Group’s subsidiaries; ○○ Development is a spouse, children, relatives, affiliated companies of ○○○○ Group, and executives and employees of ○○ Group.

4) On June 11, 1999, ○○ Development was established at KRW 1,50,000,000 as an executive officer of ○○○○○○○, which was an executive officer of ○○○ Group and affiliate company, and 1,020,000,000 won, out of the total amount of 1,00,000,000 won paid out by ○○○○○○○, an individual shareholder, and the Plaintiff’s name, and ○○○○○’s account (hereinafter referred to as “○○○”) among the sales proceeds of 185,00,000,000 won, 418,000,000,000 won out of the sales proceeds of ○○○○ Construction Co., Ltd. (hereinafter referred to as “○○ Construction”), and 400,700,000 won out of the sales proceeds of shares owned by ○○○○○’s account (hereinafter referred to as “○○”).

5) At the office of ○○ Development, a certificate of stock transfer (No. 17 No. 17) prepared on the entire shares of ○○ Development and the entire shares of this case was kept. The above certificate of stock transfer had a seal imprint affixed to the name of each shareholder and a certificate of seal imprint attached to the certificate. The transferee and the transfer date of shares were blanks.

6) The acquisition price of the third stocks of ○○○ Development, which the Plaintiff Company acquired, was withdrawn from the sales agency fee paid to ○○○○○○D Co., Ltd., the sales agency, and the Plaintiff ○○○○, in the course of the investigation conducted by the Seoul Regional Tax Office, claimed that the said money was borrowed from ○○○○○○○D, not from the receipt of rebates based on the sales agency’s name. However, the details of the receipt of interest, etc. were not clearly explained.

7) The source of the price of the instant ○○ Development Shares was KRW 3,200,000,000 loaned from a mutual savings bank in the name of ○○○○○○-dong, Seoul, ○○○○-dong, 7, the actual business owner of which is the site of the business of ○○○○○○ Investment, and KRW 3,20,00,000, a joint representative of ○○○○-dong, and ○○○○○○○-dong, a joint representative under the name of ○○○○○-dong, a joint principal of ○○○○○○-dong, and ○○○○○-dong, a joint principal of ○○○○○○○-dong, and a part of the said funds was ○○○○○-dong’s capital increase account in the name of ○○○-dong’s National Bank’s account through the ○○○○○’s account of ○○○○’s change.

8) The amount of KRW 100,000,000 established capital of ○san was deposited and paid out from the account of 1996,6,5, and ○○ Development, and was returned to the account of ○○ Development on June 10, 199.

9) After ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ Construction filed a lawsuit claiming damages relating to the construction of a building (Seoul District Court 95Gahap7647) and received a favorable judgment on February 26, 1998, the appellate court (Seoul High Court 95Gahap7647) was rendered a favorable judgment on February 26, 1998, and the appellate court (Seoul High Court 98Na14704) was continuing to conduct the appellate trial (Seoul High Court 98Na14704). On May 12, 1998, ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○.

10) The Plaintiff Park Jong-soo paid KRW 400,000,000 for the acquisition price of the instant shares with the funds withdrawn from the account of ○○co Co., Ltd. (hereinafter “○○co”). The ○○○○○’s representative director, in the course of the investigation of the Seoul Regional Tax Office, proved that the process of receipt of the said funds was ○○○○○○○ Co., Ltd.’s sales balance owned by ○○co.

11) The Plaintiffs failed to submit particular data on the source and details of transfer of specific funds relating to each act of the Seoul Regional Tax Office in the course of its investigation.

12) From December 2002 to November 2004, 2004, Na○○○○○ Group had a number of officers and employees of the Seoul detention center and Yeongdeungpo-gu Branch, each day. Through this, ○○ Group’s total number of officers and employees had been operated under the name of ○○ Group’s former officers and employees, including the instant company.

[Reasons for Recognition] Gap's evidence Nos. 2, Eul's evidence Nos. 4, 9 through 17, 19 through 23 (including each number), and the purport of the whole pleadings.

D. Determination

1) As to the plaintiffs' first argument

In general, the burden of proving the facts of taxation requirement in a lawsuit seeking revocation of disposition imposing tax may not be readily concluded that the pertinent tax disposition is an illegal disposition that failed to meet the taxation requirement unless the other party proves that the facts at issue were not eligible for the application of the empirical rule, unless the facts at issue are proved in light of the empirical rule in the specific litigation process (see, e.g., Supreme Court Decision 2006Du6604, Feb. 22, 2007).

In light of the above legal principles, the following circumstances revealed as to the instant case: ① ○○○○○○ Group’s failure to pay a huge amount of debt, including tax liability, was actually operated under the name of its neighboring companies; ② ○○○○ Group’s failure to pay ○○○○ Group’s failure to pay for the instant shares; ② The source of the purchase price of each of the instant shares appears to be the name of ○○ Construction, Deposit, ○○○○○○○ Bank’s purchase price, purchase price, rebates, and ○○○○ Bank’s name; ③ ○○○○○○○○○○ Bank’s purchase price, ○○○○ Bank’s purchase price, rebates, and ○○ Bank’s deposit with the purpose of evading various responsibilities; ③ ○○○○○○○ Bank’s acquisition and transfer of shares was intended to avoid tracking the transfer of shares through cash transactions and frequent account transfer; ④ The Defendants did not present any specific evidence to prove that the Defendants acquired shares under the name of ○○○○ Bank’s offering of the instant shares.

Ultimately, since all of the shares of this case are property trusted in title by Na○m, the actual owner, the Plaintiffs, the nominal owner, are deemed to have received or acquired them pursuant to the main sentence of Article 41-2(1) of the Act, and thus, the value thereof was donated from Na○m on the date when they are transferred in their own name. The Defendants may pay gift tax to them. Accordingly, this part of the Plaintiffs’ assertion is unacceptable

2) As to the second argument by the plaintiffs

The legislative intent of Article 41-2 of the Act is to recognize an exception to the substance over form principle to the purport that the tax justice is realized by effectively preventing the act of tax avoidance using the title trust system. Thus, the burden of proving that the purpose of the title trust is not included in the purpose of the tax avoidance can be applied only in cases where the purpose of the title trust is not included, and in such cases, the person asserting it is the one who asserts it. Therefore, the burden of proving that there was no other purpose than the purpose of the tax avoidance can be proven by means of proving that there was no other purpose of the tax avoidance. However, as the nominal owner who bears the burden of proof, there was an obvious purpose irrelevant to the tax avoidance in the title trust to the extent that it is deemed that there was no objective of the tax avoidance in the title trust, and that there was no tax avoidance in the future at the time of the title trust or in the absence of tax avoidance in the future (see, e.g., Supreme Court Decision 2004

In light of the above legal principles, even if the title trust of the instant shares satisfies the requirements for the establishment of ○○ Development (the number of promoters), such as the Plaintiffs’ assertion, and if the instant shares were to participate in the management by giving the Plaintiffs the status of shareholders of the instant company and inducing additional investments in the said company, it is difficult to readily conclude that “only such circumstance has a clear purpose of tax avoidance to the extent that it is recognized that there was no tax avoidance purpose in the title trust of the instant shares, and that there was no tax to be avoided at the time of the title trust or in the future.”

The plaintiffs denied the purpose of tax avoidance on the grounds that the company of this case was not obligated to pay global income tax on dividend income from the company of this case, because the company of this case did not pay taxes to the company of this case, the company of this case is not obligated to pay secondary tax, and the company of this case is not obligated to pay taxes as oligopolistic shareholders, and the company of this case is not obligated to pay deemed acquisition tax on the acquisition of real estate, etc. from the status of oligopolistic shareholders in the position of oligopolistic shareholders in the company of this case. However, the above facts and arguments can be known from the whole purport of the above recognition, and the following circumstances can be determined at the time of the title trust: (1) whether the purpose of tax avoidance was determined as of the date of the title trust; (2) it is difficult to conclude that the company of this case did not bear the liability to pay global income tax on dividend income in the future at the time of the title trust; (2) if the company of this case did not actually pay taxes after its establishment, it cannot be concluded that there was no possibility that the company of this case of tax evasion under the title trust of 2.

Therefore, it cannot be deemed that there was no tax avoidance purpose in the title trust of the shares of this case. Accordingly, this part of the plaintiffs' assertion cannot be accepted.

3) Sub-decisions

After all, the plaintiffs' arguments are without merit, and each disposition of this case is not erroneous as alleged by the plaintiffs.

3. Conclusion

Therefore, all of the plaintiffs' claims seeking revocation of each of the dispositions of this case are dismissed as it is without merit, and it is so decided as per Disposition.