2. The costs of appeal shall be borne by the Defendant.

1. Purport of claim

The Defendant’s portion exceeding KRW 22,629,987 out of the amount exceeding KRW 422,987 out of the amount exceeding KRW 245,68,269, the amount exceeding KRW 196,549,351 of the gift tax in 2007 and the amount exceeding KRW 422,629,987 out of the amount exceeding KRW 532,661,225 of the gift tax in 208 shall be revoked on March 3, 2015. The Defendant’s portion exceeding KRW 368,506,180 of the amount exceeding KRW 460,598,190 of the gift tax in 207 and the amount exceeding KRW 1,058,859,854 of the gift tax in 208 and the amount exceeding KRW 840,349 of the gift tax in 208 shall be revoked.

2. Purport of appeal

The judgment of the first instance is revoked. All of the plaintiffs' claims are dismissed.

The reason for this judgment is as follows, except for partial revision or addition of the reason for the judgment of the first instance. Therefore, it shall be cited in accordance with Article 8(2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

○ The relevant Acts and subordinate statutes in the 8th judgment of the first instance court shall be amended as follows.

Article 45-2 (Legal Fiction as Donation of Title Trust Property) of the former Inheritance Tax and Gift Tax Act (Amended by Act No. 9916, Jan. 1, 2010)

(1) Where any property (excluding land and buildings; hereafter the same shall apply in this Article) which requires a registration, etc. for the transfer or exercise of rights, and the actual owner and the nominal owner are different, the value of such property shall be deemed donated by the actual owner on the date when it is registered, etc. as the nominal owner (where such property is subject to a change of ownership, referring to the date following the last day of the year following the year in which the date of acquisition of ownership falls) notwithstanding

Provided, That the foregoing shall not apply to any of the following cases:

1. Where any property is registered in the name of another person or transfer is not made in the name of the actual owner who has acquired the ownership without an intention of tax avoidance;

2. Where conversion is made to the name of the actual owner during the period until December 31, 1998 (hereafter in this Article, referred to as the "period") from among the stocks or equity shares (hereafter in this Article, referred to as the "stocks, etc.") entered in the register of stockholders or equity shares in the name of another person or the transfer of a third person in the register of stockholders or equity shares before January 1, 1997: Provided, That the same shall not apply where the conversion is made to the name of a person having a special relationship with stockholders or investors of the corporation which issued the relevant stocks, etc. (hereafter in this Article, referred to as the "shareholders, etc.") or of a person who is a minor as

(1) The former Framework Act on National Taxes (amended by Act No. 9911, Jan. 1, 2010)

Article 47-2 (Additional Tax on Non-Filing)

(1) Where a taxpayer (excluding any person exempted from liability for tax payment under Article 29 of the Value-Added Tax Act) fails to file a tax base return under the tax-related Acts within the statutory due date of return, the amount of tax calculated (including corporate tax on capital gains from land, etc. under Article 55-2 of the Corporate Tax Act in cases of corporate tax, and the amount to be added under Article 27 or 57 of the Inheritance Tax and Gift Tax Act in cases of inheritance tax and gift tax, respectively, and referring to the amount of tax paid under Articles 17 and 26 (2) of the Value-Added Tax Act in cases of value-added tax; hereafter referred to as "amount of tax payable" in this paragraph) shall be added to the amount of tax payable or deducted from the amount of tax to be refunded: Provided, That when a person subject to double-entry bookkeeping prescribed by Presidential Decree (hereafter referred to as "person subject to double-entry bookkeeping" in this Section) or a corporation fails to file a tax base return or tax base return, the amount to be added or deducted from the amount of tax payable.

(2) Notwithstanding the provisions of paragraph (1), the taxpayer shall be liable to report the tax base or amount of national taxes by improper means (the taxpayer shall be liable to report on the basis of concealing or pretending all or part of the fact forming the basis of calculation of the

Where a tax base (in cases of value-added tax, referring to the amount of tax payable under Articles 17 and 26 (2) of the Value-Added Tax Act in cases of value-added tax; hereafter referred to as "tax base" in this Section) without filing a return in violation of the method prescribed by Presidential Decree; hereafter the same shall apply in this Section), the sum of the following amounts shall be added to the payable tax

1. Penalty tax on a non-reported tax base by improper means: An amount equivalent to 40/100 of an amount calculated by multiplying the ratio of an amount equivalent to the non-reported tax base by improper means (hereafter referred to as "non-reported tax base" in this paragraph) to the amount of tax base by the calculated tax: Provided, That where a person subject to double-entry bookkeeping or a corporation fails to submit a tax base return by improper means, it shall be the larger of an amount calculated by multiplying the amount of penalty tax on a non-reported tax base by 14/10,000 of the amount of income related to the non-reported tax base (hereafter referred to as "amount of non-reported tax" in this Article):

2. The amount of additional tax on the part other than that referred to in subparagraph 1: An amount equivalent to 20/100 of an amount calculated by multiplying the ratio of an amount equivalent to the amount obtained by subtracting the unjustly non-reported tax base from the tax base, to the tax base by the calculated tax amount: Provided, That where a person subject to double-entry bookkeeping or a corporation fails to submit the tax base return or the tax base return for income tax, the amount shall be the larger of an amount calculated by multiplying the ratio of an amount obtained by subtracting the unjustly non-reported tax base from the tax base to the tax base by the calculated tax amount, or an

Article 27 of the former Enforcement Decree of the Framework Act on National Taxes (Amended by Presidential Decree No. 22038, Feb. 18, 2010);

(2) The term "manner prescribed by Presidential Decree" in the main body of Article 47-2 (2) of the Act means any of the following manners:

1. Making a false entry in books, such as double entry;

2. Preparing false evidence or false documents (hereafter in this Article, referred to as "written evidence or other evidence");

3. Receipt of false evidence (limited to receipt knowing that it is false).

4. Destruction of books and records;

5. Concealment of property, or fabrication or concealment of income, profits, acts or transactions;

6. Other unlawful acts such as evading national taxes or obtaining a refund or deduction. The end.

○ Article 27(2)6 of the former Enforcement Decree of the Framework Act on National Taxes refers to one of the unfair methods.

“Fraud or other unlawful act” refers to a deceptive scheme or other active act that makes it impossible or considerably difficult to impose and collect taxes, and it does not constitute a mere failure to file a return under the tax law or filing a false return without any addition to the circumstances showing the intention of active concealment. Furthermore, even if a taxpayer gets income by forging his/her name, barring special circumstances, such as where the nominal name arises from the purpose of tax evasion, and where the nominal name arises from the purpose of tax evasion, and where such active act is added to the preparation of a false contract, false tax return to the tax authority, false registration and registration, preparation and keeping of a false account book, etc., the nominal name alone does not constitute “Fraud or other unlawful act” under Article 27(2)6 of the former Enforcement Decree of the Framework Act on National Taxes (see Supreme Court Decision 2015Du4158, Apr. 13, 2017).

However, in view of the evidence presented by the Defendant to this court, it is difficult to find out that Plaintiff AA made a title trust to Plaintiff CCC and BB on the part of the shares of Plaintiff CCC and BB, and it is insufficient to recognize the circumstance that such title trust resulted from the objective of tax evasion, such as avoidance of progressive tax rates.

2. Conclusion

If so, all of the plaintiffs' claims should be accepted. The judgment of the court of first instance shall be delivered with this decision.

The defendant's appeal is dismissed for the same reason.