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

Cheong-gu Office

The defendant's rejection disposition of correction of KRW 363,547,980 against the plaintiff on June 3, 2015 is revoked.

A. On October 5, 2011, the Plaintiff was donated 43,300 shares from Kima, a major shareholder of 0000, a corporation, to whom 43,300 shares were donated.

B. The company 0000 was listed on the KOSDAQ on November 5, 2014, and the Plaintiff transferred 33,300 shares of the above company on November 7, 2014, and 5,000 shares of the same company on November 11, 2014 (hereinafter collectively referred to as “the instant shares” in the aggregate of the said shares transferred by the Plaintiff).

C. The Plaintiff calculated KRW 1-3(2) and the main sentence of Article 63(1)1(a) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 1357, Dec. 15, 2015; hereinafter referred to as the “former Inheritance Tax and Gift Tax Act”) and Article 31-6(3) and (4) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 26960, Feb. 5, 2016; hereinafter referred to as the “former Enforcement Decree of the Inheritance Tax and Gift Tax Act”) on the profits that the instant shares acquired in excess of the original taxable value as a result of the listing on the KOSDAQ within five years from the date of donation or acquisition by a major shareholder having a special relationship, on the premise that the pertinent shares were listed and paid as the average value of shares for 26 months before and after the date of settlement on November 11, 2014; and based on the premise that the pertinent shares were listed and paid as 2608.15

D. In the event that shares are transferred within three months from the date of listing, the Plaintiff asserts that the value per share as of the date of settlement on the basis of the proviso to Article 63(1)1 (a) of the former Inheritance Tax and Gift Tax Act should be the average amount of the final market value for the two months prior to the date of transfer, and that the amount of the gift tax should be corrected from 650,727,860 to 287,179,880, and the Plaintiff demanded the Defendant to refund KRW 363,547,980, which is the difference, to the refund of KRW 363,547,980, June 3, 2015 (hereinafter “instant disposition”). The Defendant rejected the Plaintiff’s request for correction on the ground that the Plaintiff’s initial return of gift tax was proper (hereinafter “instant disposition

E. The Plaintiff dissatisfied with the instant disposition and filed a request for an adjudication on June 3, 2015. However, on September 17, 2015, the Tax Tribunal rendered a decision to dismiss the Plaintiff’s request.

Facts without any dispute, Gap evidence 1, Eul evidence 1, the purport of the whole pleadings, and the purport of the whole pleadings.

2. Determination on the legitimacy of the instant disposition

A. Summary of the plaintiff's assertion

In assessing the market price of listed stocks under Article 63 of the former Inheritance Tax and Gift Tax Act, in cases where stocks are transferred within three months after the listing, the imposition of gift tax on the profits that the Plaintiff did not actually enjoy as a result of the transfer would result in the imposition of gift tax on the profits that the Plaintiff did not enjoy as a result of the instant disposition. Therefore, in such a case, it is reasonable to reasonably interpret the basic principles of gift tax and Articles 41-3(2) and 63 of the former Inheritance Tax and Gift Tax Act, and to calculate the gains of donation on the basis of the average amount of the closing price during the two months prior to the transfer date. Accordingly, the instant disposition rejecting the Plaintiff’s request for correction on a different premise is unlawful.

B. Relevant statutes

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

C. Determination

1) Article 41-3 of the former Inheritance Tax and Gift Tax Act provides that where stocks of a domestic corporation are donated to the largest shareholder, etc. who holds 25/100 or more of the total number of issued and outstanding stocks of the domestic corporation and the stocks are listed in the Exchange within five years from the date of donation, the amount equivalent to such profits shall be deemed the value of the donated stocks of the person who has acquired such profits (paragraph (1)), and the profits under paragraph (1) shall be calculated on the basis of the date three months have elapsed from the date of listing (where the person who holds the stocks transfers the stocks within three months from the date of listing, referring to the date of transfer; hereinafter referred to as the "base date of settlement") and the matters concerning the method of calculating profits under paragraph (1) shall be prescribed by the Presidential Decree. Accordingly, Article 31-6 (3) and (4) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that "the method of calculating the value of stocks donated to the Exchange" per share as of the base date of settlement "the number of stocks so increased" shall be calculated".

2) Article 41-3(1) of the former Inheritance Tax and Gift Tax Act imposes a taxation on the act by the largest shareholder, etc., who is able to know information on the listing of stocks, etc., to make large profits from the listing of stocks, etc. to his/her specially related persons, such as his/her relatives, etc., block modified donations to the specially related persons. It is a provision that realizes tax justice by regulating the management of affiliate companies with no tax burden while holding the donee or acquisitor continuously without transferring the same. This is, regardless of the possibility of disposal or disposal of stocks, etc. after listing the relevant stocks, etc., the largest shareholder, etc., at the time of donation or sale, imposes a taxation on the listed profits inherent in the special relationship. Gift tax is only calculated according to the value of donated assets at the time of donation, and the increase or decrease in the value of donated assets after the donation cannot be the criteria or factors for calculating gift taxes, and it is not necessary to consider the actual point of time of disposal of stocks of the taxpayer at least 20 days prior to the date of listing determined 14 days before the date of transfer.

3) In addition, Article 63(1)1 (a) of the former Inheritance Tax and Gift Tax Act provides that the value of listed stocks shall be assessed on the average of the last daily market values of the Exchange before and after two months prior to and after the evaluation base date. It is recognized that a listed company’s stocks for a long period of two months prior to and after the evaluation base date cannot be reasonably assessed on the inherent value of stocks solely based on the market price at a specific point where a trade with a very large width has been entered into depending on the trends in securities markets. In particular, when a listed company’s stocks are assessed on the basis of only the evaluation base date, there is a need to expand the timely scope of assessment. In addition, there is a possibility that confusion in taxation administration may be repeatedly caused by the act of re-donation based on the price decline after the donation, and that a person who can easily access the company’s internal information might be abused as a means to avoid the burden of gift tax, such as transfer of stocks at the time when the share price increase, and thus, the evaluation period for each period of two months prior to and after the evaluation base date is considerably 26.

4) In light of the legislative purport and contents of the above provisions, there is no reason for the intrinsic difference in the calculation method of listing profits between the case where the person who received or acquired the shares disposes of them three months prior to the listing date and the case where the person disposes of them or continues to hold them after the listing date. Therefore, in the case of both cases, the assessment value per share as of the settlement date shall be calculated on the basis of the average daily closing price of the exchange prices published for two months prior to and after the listing date. However, in the case where shares are transferred within three months from the listing date, it shall be deemed that the “transfer date” rather than the date on which the date on which the settlement date comes three months from the listing date, or Article 31-6(3)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act does not result in the imposition of gift tax on the profits that have not been actually donated, or in excess of the limits delegated by the mother law.

Therefore, even if the Plaintiff transferred the instant shares on November 7, 2014 and November 11, 2014, within three months from November 5, 2014, the date of listing, it is reasonable to calculate the profits earned by the Plaintiff from the listing based on the “average amount of the daily exchange prices published for two months before and after the date of transfer” under the main sentence of Article 63(1)1(a) of the former Inheritance Tax and Gift Tax Act, and the Plaintiff’s assertion against this is without merit.

3. Conclusion

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