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

Cheong-gu Office

The Defendant’s disposition imposing gift tax on the Plaintiff on February 1, 2018 is revoked.

1) The claims of the warden are written as " February 14, 2018." According to the tax notice (Evidence A 1), it is obvious that " February 14, 2018."

1. Details of the disposition;

A. On February 6, 1986, 1986, ○○ milk pressure Co., Ltd. (hereinafter referred to as “○○ oil pressure”) is a corporation established for the purpose of manufacturing and selling machinery, and the Plaintiff and Kim○ (referring to the Plaintiff) are serving as the joint representative director of the ○○ oil pressure.

B. On December 1, 2011, the Plaintiff donated 398,200 shares of the ○ milk pressure (hereinafter “instant shares”) from ○○○○○○○ on a gift of 398,200 shares (hereinafter “instant shares”) and came to hold 402,80 shares of the total number of shares issued by ○○ pressure (40.28% of the shares).

C. On December 30, 2011, the Plaintiff’s Restriction of Special Taxation Act (Law No. 111133, Dec. 31, 201) to the Defendant on December 31, 2011

Gift tax on the succession of family business as stipulated in Article 30-6(1) of the Act;

According to the precedent, from 2,135,546,60 won to 50,00,000 won, the taxable value of the gift tax on the shares of this case was deducted, and 163,554,660 won was reported and paid as gift tax calculated by applying the tax rate of 10%.

D. After that, the ○○ pressure had gone through the procedures for the change of shares as listed below, and accordingly, the number of ○○ pressure owned by the Plaintiff was reduced to 241,680 shares (1.65%).

E. As above, the Defendant confirmed that the number of shares and shares of the ○○ Pumotension donated by the Plaintiff have decreased, and on February 6, 2018, the former Restriction of Special Taxation Act (No. 14390, Dec. 20, 2016) (No. 14390, Dec.

Pursuant to Article 30-6(2)2 of the former Act (amended by the Act, hereinafter referred to as the "former Act"), gift tax of KRW 786,138,90 (including additional tax) arising from the donation of the shares of this case was imposed and notified (hereinafter referred to as the "disposition of this case").

F. On April 30, 2018, the Plaintiff was dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on April 30, 2018.

However, the above appeal was dismissed on February 11, 2019.

[Ground of recognition] Facts without dispute, Gap 1, 3 evidence, Eul 1, 2, 6, 7, 8, 12 evidence, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The disposition of this case shall be revoked on the grounds of illegality as follows.

1) In order to expand the business through the construction of a new factory in ○○○○ City, ○○○○○○○○○ City, investment in large facilities was made, and the financial difficulties ensuing therefrom were put in crisis due to the financial difficulties. As such, the existence of the company was first considered, and it inevitably led to the decline in the Plaintiff’s share ratio by offering new shares in accordance with the corporate rehabilitation procedure set forth in the bond group on December 16, 2016.

Although the Plaintiff’s shares alone cannot be seen as the largest shareholder, shares of the Plaintiff and Kim○○.

The Plaintiff’s shares are substantially 8,541,680 shares (58.23% of shares) and the Plaintiff holds shares, etc. to the extent that it can control ○○ pressure. Therefore, as the obligations of the relevant corporation are converted into equity, Article 27-6(6)2 proviso (b) of the Enforcement Decree of the Restriction of Special Taxation Act constitutes a case where the donee’s shares are lower, and the donee’s shares fall under the largest shareholder, etc., the application of Article 30-6(2)2 of the former Act should be excluded.

2) According to Article 27-6(3)3 of the Enforcement Decree of the Restriction of Special Taxation Act, “a case falling under an inevitable cause prescribed by Ordinance of the Ministry of Strategy and Finance” is excluded from the application of Article 30-6(2) of the former Act as justifiable cause is recognized. Since the Ordinance of the Ministry of Strategy and Finance did not enact a law in accordance with the above delegation, it should be interpreted that it includes all cases

However, the change in the Plaintiff’s share is aimed at normalizing the management of ○○ voltage, and accords with the purport of the Restriction of Special Taxation Act to maintain the continuity of small and medium enterprises and promote economic vitality. Therefore, the Plaintiff’s decrease constitutes “justifiable cause” under Article 27-6(3)3 of the Enforcement Decree of the Restriction of Special Taxation Act and “justifiable cause” under Article 30-6(2)2 of the former Act, and thus, the application of Article 30-6(2)2 of the former Act ought to be excluded.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Determination on the first argument

A) Under the principle of no taxation without law, the interpretation of tax laws and regulations shall be interpreted in accordance with the text of the law, barring special circumstances, and shall not be extensively interpreted or analogically interpreted without reasonable grounds. In particular, it accords with the principle of equity in taxation to strictly interpret that the provision of tax reduction and exemption is clearly preferential (see, e.g., Supreme Court Decision 2008Du11372, Aug. 20, 2009).

B) Notwithstanding Articles 53 and 56 of the Inheritance Tax and Gift Tax Act, where a resident aged 18 or older takes gift of stocks or equity shares of the relevant family business for the purpose of succeeding to the family business under Article 18(2)1 of the Inheritance Tax and Gift Tax Act, and succeeds to the family business, gift tax shall be imposed at the tax rate of 10/100 after deducting 500 million won from the taxable value of donated assets equivalent to the family business from the value of such stocks, etc., among the value of the relevant stocks, etc. (Article 30-6(1) of the former Act): Provided, That where a person who received the above stocks, etc. fails to succeed to the family business or reduces equity shares of donated stocks, etc. within 7 years from the date of donation after he/she succeeded to the family business without justifiable grounds, gift tax shall be imposed on the value of such stocks, etc. pursuant to Article 30-6(2)2 of the former Enforcement Decree of the Restriction of Special Taxation Act (Article 26-6(2) of the former Enforcement Decree of the Act).

C) As seen earlier, the Plaintiff was subject to the special taxation of gift tax on the succession to the family business under Article 30-6(1) of the former Act for the instant shares donated by Kim○○. However, since the Plaintiff’s share of shares donated within 7 years from the date of donation of the instant shares has decreased to 1.65%, the Defendant should impose gift tax on the Plaintiff pursuant to Article 30-6(2)2 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act on the instant shares. Meanwhile, according to the purport of evidence No. 2, No. 8 and No. 9 as well as the entire statement and arguments, the ○○ pressure is due to the aggravation of management status and shortage of funds, and thus, it cannot be deemed that the Plaintiff’s share of KRW 200,000,000,000,000,000,000,000,000,000 won, which were newly issued to 60,000,000 won.

In addition, according to the statement in Eul evidence No. 8, since the plaintiff only holds 241,680 shares of the total number of shares issued by the same credit pressure as of December 31, 2016 (1.65% of the equity ratio) and as of December 31, 2016, the plaintiff cannot be deemed to be the largest shareholder of the ○○ pressure (as to this, the plaintiff's shares held by the ○○ Kim○ as the plaintiff's shares are deemed to be the plaintiff's shares, the largest shareholder, etc., but there are no sufficient legal grounds or circumstances to regard it as the above).

D) Therefore, the Plaintiff’s assertion on this part cannot be accepted, since the proviso of Article 27-6(6)2 of the former Enforcement Decree of the Act cannot be applied to such a case.

2) Determination on the second argument

A) According to Article 30-6 (2) of the former Act, where a person who received a donation of stocks, etc. pursuant to Article 30-6 (1) of the Act does not succeed to the family business, does not engage in the family business without justifiable grounds prescribed by Presidential Decree within seven years from the date he/she received a donation of stocks, etc. after he/she succeeded to the family business, or suspends or closes the family business, or where the shares of the donated stocks, etc. are reduced, gift tax shall be imposed on the value of such stocks, etc. in accordance with the inheritance tax and gift tax. According to Article 27-6 (3) of the former Enforcement Decree of the Act, “justifiable grounds prescribed by Presidential Decree” refers to cases where a donee died and his/her heir engages in the family business by succeeding to the status of a donee by the deadline for filing a tax base of inheritance tax under Article 67 of the Inheritance Tax and Gift Tax Act (subparagraph 1); (2) where a donee donates stocks, etc. donated to the State

Meanwhile, Article 14-4 of the former Enforcement Rule of the Restriction of Special Taxation Act (amended by Ordinance of the Ministry of Strategy and Finance No. 606, Mar. 10, 2017; hereinafter referred to as the "former Enforcement Rule of the Act") provides that "any inevitable reason prescribed by Ordinance of the Ministry of Strategy and Finance" under Article 27-6 (3) 3 of the former Enforcement Decree of the Act refers to a reason that a donee cannot engage directly in family business due to the performance of military duty under the Act, medical treatment of a disease

B) On the other hand, the reason for a decrease in the Plaintiff’s share does not constitute grounds for a donee under Article 14-4 of the former Enforcement Rule of the Act to not directly engage in a family business due to the performance of the duty of military service, medical treatment of diseases, school attendance conditions, etc. Therefore, it cannot be said that the Plaintiff’s decrease in the Plaintiff’s share of ○○ voltage by converting the liability of ○○ voltage into stocks constitutes “justifiable grounds” under Article 30-6(2) of the former Act, “Article 27-6(3)3 of the former Enforcement Decree of the Act, and other inevitable reasons prescribed by Ordinance of the Ministry of Strategy

C) Therefore, the Plaintiff’s assertion on this part cannot be accepted.

3. Conclusion

Therefore, the instant disposition is lawful, and thus, the Plaintiff’s claim is dismissed as it is without merit.

It is so decided as per Disposition.