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

The cancellation shall be revoked.

A. The plaintiff's status

On January 2006, the plaintiff is a public interest corporation established pursuant to the Act on the Establishment and Operation of Public Interest Corporations, which conducts scholarship projects, academic research support projects, charity projects, etc. for its business purposes.

B. Contribution of shares to the plaintiff

1) On January 5, 2006, the Plaintiff received 31,250 shares, etc. (hereinafter referred to as “the first contribution”) equivalent to 5% of the shares of issuance of BB (hereinafter referred to as “B”) fromCC, the representative director of AA Co., Ltd. (hereinafter referred to as “AA”) and the largest shareholder.

2) In other words, on June 30, 201, the Plaintiff received 31,250 shares equivalent to 5% of the shares issued byCC, D, EE, and F, and 26,415 shares additionally (hereinafter referred to as “the second contribution”) equivalent to 5.28% of the shares issued by GG Co., Ltd. (hereinafter referred to as “GG”).

3) As a result, the Plaintiff owned 26,415 shares equivalent to 62,50 shares issued by BB and 5.28 percent of shares issued by GG. However, the Plaintiff met the requirements of the so-called faithful public-service corporation under Articles 48(1) and 16 of the Inheritance Tax and Gift Tax Act (amended by Act No. 13557, Dec. 15, 2015; hereinafter referred to as “instant Inheritance Tax and Gift Tax Act”), and thus, did not report or pay gift tax thereon.

(c) notification of non-performance of the requirements for good public interest corporations;

1) The representative director ofCC, the contributor of the first and second contributions, is the Plaintiff’s director from January 5, 2006 to November 6, 2014. On the other hand, HH who is a specially related person ofCC appointed as an outside director of the AA on March 29, 2013, worked as the Plaintiff’s director from January 5, 2006 to November 6, 2014.

2) According to Article 13(5) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 26069, Feb. 3, 2015; hereinafter “Enforcement Decree of the Inheritance Tax and Gift Tax Act”), a faithful public interest corporation shall obtain confirmation from the Minister of Strategy and Finance through the competent authority as to whether the relevant requirements of public interest corporation are met

In this regard, the plaintiff requested the Minister of Strategy and Finance to verify whether the requirements of the public interest corporation are met through the ○○○○ ○○○○, a competent authority, 2015.

3) On February 29, 2016, the Minister of Strategy and Finance notified the Plaintiff that “Plaintiff, as described in the foregoing paragraph 1,” the director of H, concurrently held office as a director of AA from March 29, 2013 to November 6, 2014, and the contributor (CC) and its specially related person (H) exceeded 1/5 of the Plaintiff’s current number of directors, thereby failing to meet the requirements of faithful public-service corporations for the business year 2014.”

(d) Imposition of gift tax;

Accordingly, on August 7, 2017, the Defendant imposed a gift tax of KRW 2,604,742,270 (CC donation), 1,407, 178,030 (DD donation), 72, 906, 340 (EE donation), 10,859, 530 (F donation), including penalty tax, on the ground that a faithful public interest corporation received shares, etc. more than 5 percent of the total number of shares issued by a domestic corporation and did not constitute a faithful public interest corporation after having received shares, etc. more than 5 percent of the total number of shares issued by a domestic corporation (hereinafter referred to as "the disposition in this case").

(e) Procedures of the previous trial;

The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on November 2, 2017, but the said appeal was dismissed on September 3, 2018.

Facts that there is no dispute over recognition, Gap's 2 through 4, 7, Eul's 1 (including branch numbers), and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) As to the instant disposition

From March 29, 2013 to November 6, 2014,CC, the second contributor, and HH, who are related to the Plaintiff, hold office as the Plaintiff’s director and exceeded 1/5 of the current number of directors, thereby recognizing that the Plaintiff failed to meet the requirements for faithful public-service corporations. However, H retired the Plaintiff’s director on November 6, 2014, thereby satisfying the requirements for faithful public-service corporations at the time of December 31, 2014, which is the tax base date for the instant disposition.

However, the Enforcement Decree of the Inheritance Tax and Gift Tax Act, different from the current Enforcement Decree of the Inheritance Tax and Gift Tax Act, does not provide for the determination of whether a public-service corporation satisfies the requirements of good faith based on the whole "business year subject to the disposition of this case," and the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 24358, Feb. 15, 2013; hereinafter referred to as "former Enforcement Decree of the Inheritance Tax and Gift Tax Act") which was previously applied, rather, stipulates that the public-service

Therefore, the Plaintiff’s contribution date or the date of the end of the business year 2014 must not meet the pertinent requirements and thus the Defendant rendered the instant disposition by determining whether the Plaintiff constitutes a faithful public-service corporation based on the entire business year 2014. Thus, the instant disposition not only contravenes the principle of retroactive taxation prohibition, the principle of no taxation without law, and the principle of constitutional interpretation, but also is unlawful due to lack of concrete feasibility (hereinafter referred to as “the first proposal”).

2) As to the part of the instant disposition

Even if the imposition of the principal gift tax is lawful, the imposition of the penalty tax should be revoked because it constitutes a case where there is no provision on the grounds under the Inheritance Tax and Gift Tax Act, or where there is a justifiable reason for the plaintiff to neglect to report and pay the penalty tax (hereinafter referred to as the "section 2").

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

1) Contents of the relevant provisions

(a)non-taxation benefits for public service corporations, etc.;

The value of property contributed by a public service corporation, etc. shall not be included in the taxable value of donated property (the main sentence of Article 48 (1) of the Inheritance Tax and Gift Tax Act): Provided, That where the sum of the shares with voting rights or equity shares of a domestic corporation are contributed by a public service corporation and the shares of the same domestic corporation possessed by the relevant public service corporation, etc. at the time of contribution by the contributor exceeds 5/100 of the total number of outstanding voting stocks or total amount of investment (hereinafter referred to as "total number, etc. of outstanding shares, etc.") of the relevant domestic corporation, the excess calculated by the method prescribed by Presidential Decree shall be included in the taxable value of donated property (Article 48 (1) 1 and Article 16 (2) of the Inheritance Tax and Gift Tax Act). However, if the above public service corporation, etc. is an external audit under Article 50 (3), opening and use of exclusive accounts under Article 50-2, public announcement of settlement documents, etc. under Article 50-3, preparation and keeping of books under Article 510 (2).

(B) requirements to constitute a faithful public interest entity;

In addition to the requirements prescribed in Article 16 (2) of the Inheritance Tax and Gift Tax Act in order to be a faithful public-service corporation, at least 80/100 of the operating income of the relevant public service corporation, etc. shall be used directly for public-interest projects. ② The amount of contributors or specially-related persons shall not exceed 1/5 of the current number of directors of the public service corporation, etc. ③ they shall not conduct internal transactions under Article 48 (3) of the Act, ④ they shall not conduct advertisements or public relations under the former part of Article 48 (1) of the Act (Article 13 (3) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act), and the faithful public-service corporation shall be verified by the Minister of Strategy and Finance through the competent authority as to whether they meet all the requirements, and then re-certified every five years (Article 13

C) Follow-up management of faithful non-taxation benefits

(1) Meanwhile, the head of a tax office, etc. shall, where the property contributed under the above provision is not used directly for public interest projects, etc. or directly for public interest projects within three years from the date of receiving the contribution, etc., and where the property contributed is used for acquiring stocks, etc. of a domestic corporation, etc. of the domestic corporation, deeming that the public interest corporation, etc. received a donation, and immediately levy gift tax (Article 48(2)

(2) In particular, in cases where a conscientious public service corporation, etc. receives a contribution of stocks, etc. in excess of 5/100 of the total number of outstanding voting stocks, etc. issued by a domestic corporation, and becomes not a bona fide public service corporation, etc., in connection with the contribution, acquisition, and holding of stocks of a public service corporation, etc., "in accordance with Article 48(1) of the Inheritance Tax and Gift Tax Act, or immediately levy gift tax pursuant to Article 48(2) (Article 48(

2) Determination as to the first proposal

A) According to the facts and the purport of the entire pleadings as seen earlier, at the time when the Plaintiff came to hold 62,500 shares equivalent to 10% of the outstanding shares of BB through the second contribution on June 30, 201 and 26,416 shares equivalent to 5.28% of the outstanding shares of GG, the Plaintiff met all the relevant requirements of the faithful public-service corporation under Article 48 of the Inheritance Tax and Gift Tax Act and Article 13(3) of the Enforcement Decree of the same Act. However, from March 29, 2013 to November 6, 2014, it can be recognized that the Plaintiff’s position as a director of the Plaintiff and his/her specially related party exceeds 1/5 of the current number of shares, thereby failing to meet the requirements under Article 13(3)2 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act for the same period.

Therefore, this constitutes a case where a conscientious public service corporation, etc., as stipulated in Article 48 (11) 1 of the Inheritance Tax and Gift Tax Act, receives shares in excess of 5/100 of the total number of outstanding voting shares of a domestic corporation, and thereby becomes not a bona fide public service corporation, and thus, the defendant should include the excess portion in the taxable value of donated property or

Meanwhile, in cases where gift tax is to be levied immediately, it shall be based on the value of stocks, etc. possessed in excess of the relevant public service corporation, etc. as of the date on which the reason for imposing gift tax arises. In such cases, “the date on which the reason for imposing gift tax arises” refers to the date on which the taxable period or the date on which the business year ends, which is not a conscientious public service corporation, etc., does not fall under the category of public service corporation, etc. pursuant to Article 48(11)1 of the Act (Article 40(1)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act). Therefore, it shall be deemed legitimate for the Defendant to make the instant disposition on December 31, 2014, which

B) Meanwhile, the Plaintiff’s assertion that the instant disposition violated the principle of retroactive taxation prohibition, the principle of no taxation without law, and the principle of constitutional interpretation is difficult to accept for the following reasons.

(1) According to the Plaintiff’s assertion, it should be determined on the basis of the “date of contribution of stocks” under the former Enforcement Decree of the Inheritance Tax and Gift Tax Act on the basis of the principle of prohibition of retroactive taxation. This is against the purport of Article 48(11) of the Inheritance Tax and Gift Tax Act, which purports to prevent a public-service corporation from evading gift tax while using it as a means of control over a domestic corporation by imposing gift tax immediately where a public-service corporation was a bona fide public-service corporation at the time of contribution, which was not a bona fide public-service corporation after contribution (see Supreme Court en banc Decision 2011Du2147, Apr. 20, 201).

(2) In particular, since the requirements to constitute a faithful public-service corporation under Article 13(3) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act are not important, but are of the nature that the requirements need to be met continuously, it shall not be deemed to constitute a faithful public-service corporation in a case where the requirements are not satisfied or violated once. According to the Plaintiff’s assertion, it is unjust that the Plaintiff can enjoy non-taxation benefits as a faithful public-service corporation unless the requirements for the current number of directors are met only at a specific time (e.g., the end of the contribution or business year)

(3) Ultimately, it is reasonable to interpret the former Enforcement Decree of the Inheritance Tax and Gift Tax as at the date of contribution or acquisition of stocks, etc. as at the date of “the date of contribution or acquisition of stocks, etc.” as at the time of determining whether to grant non-taxation benefits when the first obligation to pay gift tax is established, and it shall not be deemed as at the base point of time to determine whether the former Enforcement Decree is a conscientious public service corporation

(4) On the other hand, the current Enforcement Decree of the Inheritance Tax and Gift Tax Act stipulates that the relevant requirements of a faithful public-service corporation shall be determined on the basis of the "total business year subject to contribution" is deemed to be the purpose of granting non-taxation benefits if the relevant requirements of a faithful public-service corporation are met, based on the "total business year subject to contribution", even if the relevant requirements were partially violated.

C) In addition, the Plaintiff asserted that the instant disposition lacks concrete validity, such as the fact that the Plaintiff plays a role as a public-service corporation, the fact that there was no intention to abuse the first and second investments as a means to control a domestic corporation, and that the instant disposition causes frusts with the public-service business. However, in light of the content of the relevant provisions, the instant disposition is a binding act, and thus, the Plaintiff’s assertion on this part is without merit, as it is without merit.

3) Determination on the second proposal

A) In order to facilitate the exercise of taxation rights and the realization of tax claims, additional tax under tax law is an administrative sanction imposed under the conditions as prescribed by individual tax law in cases where a taxpayer violates various duties, such as a tax return and tax payment, without justifiable grounds, and the taxpayer’s intent or negligence is not considered. However, in cases where it is unreasonable for a taxpayer to be unaware of his/her duties, or where there is a circumstance that it is unreasonable for him/her to expect the performance of his/her duties to be fulfilled, etc., and where there is a justifiable reason not to mislead the taxpayer into neglecting his/her duties (see, e.g., Supreme Court Decision 95Nu14602, May 16, 199

Meanwhile, a person liable to pay the gift tax under Article 4 of the Inheritance Tax and Gift Tax Act shall file a return on the taxable value and tax base of the gift tax with the head of the district tax office having jurisdiction over the place of tax payment within three months from the end of the month to which the date of donation belongs, and pay it (Articles 68(1) and 70(1) of the Inheritance Tax and Gift Tax Act), and where the taxpayer fails to file a return on the tax base of the national tax under the tax-related Acts by the statutory due date of return, and where the taxpayer fails to pay national

B) In light of the relevant legal principles and the contents of the relevant provisions, the Inheritance Tax and Gift Tax Act (see Article 22 of the Framework Act on National Taxes) imposes penalty tax on a taxpayer when the taxpayer is liable to return and pay the gift tax (see Article 22 of the Framework Act on National Taxes). Likewise, Article 48(11)1 and (1) of the Inheritance Tax and Gift Tax Act provides that where a faithful public-service corporation does not fall under a faithful public-service corporation after having received shares contributed in excess of 5/100 of the total number of issued stocks of a domestic corporation, the excess portion shall be included in the taxable value of the gift tax or the gift tax shall be imposed immediately on the gift tax. Thus, if a faithful public-service corporation does not fall under a faithful public-service corporation, it is reasonable to deem that the relevant public-service corporation has a duty to report and pay the gift tax on the excess portion pursuant to Articles 68(1) and

C) Also, as seen in the “judgment on Section 1”, the Plaintiff’s tax liability for non-taxable gift tax was established due to the Plaintiff’s failure to meet the requirements of a public-service corporation in the business year 2014. Nevertheless, the determination that the Plaintiff did not have a gift tax liability is merely a mere mistake or misunderstanding of the land, mistake or misunderstanding under the relevant statutes, and thus, the Plaintiff cannot be deemed to have justifiable grounds for neglecting its duty to report and pay the gift tax.

D) Therefore, the Plaintiff’s second proposal is without merit.

3. Conclusion

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