Defendant, Appellant

Head of the sericultural Tax Office and 4

2. All appeals costs are borne by the Plaintiffs.

Cheong-gu Office

The judgment of the first instance shall be revoked. The imposition of each relevant gift tax (including additional tax - general non-declaration penalty tax and penalty tax in good faith of payment) listed in the attached Table 1 that the Defendants made against the Plaintiffs shall be revoked.

The reason why the court's explanation concerning this case is as follows. The corresponding part of the judgment of the court of first instance is amended as follows, and the annexed part of the attached part 2's related Acts and subordinate statutes is added to the annexed part of this judgment's "the addition of related Acts and subordinate statutes" as well as the corresponding part of the reasoning of the judgment of the court of first instance (including each of the annexed parts, but excluding '3. conclusion') in addition to the additional determination as to the plaintiffs' allegations in this court as referred to in the following paragraph 2. Thus, it is cited as it is in accordance with

○ Under the main sentence of 3, each "No. 11609" shall be deemed to be "No. 7010", with 5 and 12 pages below.

○ 6 ..... by inserting "including each .........................."

○ 7 pages 12 billion won to "................." to "it may be recognized that the dividends have not been paid until the interim dividends of the total amount of 12.9 billion won in 2016 are paid".

○ 7 and below, on the right side of the 5 line “fact”, the BB adds “the fact that the sum of the corporate tax of KRW 88,515,490 is in arrears as of February 18, 2018, following dissolution.”

○ 7 pages, 4 below, "3 ................................................

○ 7 under the following circumstances: “In light of the circumstances known from these facts,” the phrase “to be considered as follows: “In light of the circumstances known from these facts, evidence Nos. 14, 15, and evidence Nos. 13 and 14, the entire purport of the pleadings can be taken into account.”

○ 8 3 p.m. “Meeting Procedures” shall be followed by “Composition Procedures”.

○ 8 6 parallels from “one alone to seven parallels of conduct on the same side” are as follows:

It is difficult to readily understand that Plaintiff KimA trusted the instant shares to the nominal owner solely for such reason. Rather, in light of all the circumstances, Plaintiff KimA established DD and BB to completely cut off the obligation of the CCC, to be awarded at low prices the CCC’s facilities, etc., the share price of the instant shares was paid out of the corporate funds embezzled from DDD, and the input tax was excessively reported by the method of receiving false tax invoices, thereby inducing BB to evade value-added tax, it is difficult to conclude that Plaintiff KimA, at the time of title trust of the instant shares, did not have any purpose to avoid taxes other than the purpose alleged by the Plaintiffs at the time of the title trust of the instant shares (i.e.,, the Plaintiff’s assertion, even if Plaintiff KimA subsequently filed a revised return and payment of the penalty tax incurred by the evasion of value-added tax of BB, it appears to have been a measure to be mitigated in the relevant criminal case in light of such time).

○ 8 The following shall be added to the right side of the 6 line below:

In addition, as of February 18, 2018, after the closure of business, BB failed to pay corporate tax equivalent to the aggregate amount of KRW 88,515,490 as of February 18, 2018. Even after the conviction was finalized in the relevant criminal case, Plaintiff KimA could actually avoid the secondary tax liability by maintaining title trust with respect to the shares of this case and by dissolution of BB without changing the name of Plaintiff KimA in the name of Plaintiff KimA.

○○ and 8, the following three positions are as follows: “Along with the consideration of the circumstances required by the Plaintiffs, such as the occurrence of the said tax delinquency after a considerable period of time from the title trust of this case, it is difficult to view otherwise.”

○ 8. Not later than 2 to 9.

○ 9 5 parallel (hereinafter referred to as “C”) shall be regarded as “(d)”.

○○ 9 up to 12 parallels, i.e., 14 to 15 parallels, i.e., “.,” are as follows.

In addition, it seems that Plaintiff KimA continued to manage the earned surplus of BB from around 2003 when the title trust was conducted in this case until BB is dissolved. around December 2015, Plaintiff KimA returned and paid the global income tax to the title holder of this case according to the share ownership ratio in the pertinent case during the pertinent business year 2015 and 2016. However, compared to the above reported case by Plaintiff KimA and the case where Plaintiff KimA reported global income tax based on the dividend income reflecting the actual shares in Plaintiff KimA, the difference between KRW 128 billion was generated (this point is without dispute between the parties), and the amount of KRW 128 billion is nothing more than KRW 600,000,000,000,000,000,000 won, which is less than KRW 160,000,000,000,000,000 won, which is nothing more than KRW 28,100,000,00.

2. Additional determination

A. Summary of the plaintiffs' assertion

1) Even if the provision on deemed donation of title trust of this case is applied, the provision on deemed donation of title trust of this case does not apply to the calculation of the gift tax base based on deemed donation of title trust under the interpretation of Article 55(1) of the Inheritance Tax and Gift Tax Act after the amendment, but the previous provision on deemed donation does not apply to the calculation of the gift tax base based on the deemed donation of title trust of this case. However, in calculating the gift tax base based on each of the respective titles of trust of this case as of March 31, 2004; December 29, 2004; and December 30, 2005, the imposition of gift tax

2) Even if the provision on deemed donation of title trust applies to the instant disposition, in light of the constitutional right to refuse to make statement, the principle of presumption of innocence, the freedom of conscience, and the enforcement rules of the Inheritance Tax and Gift Tax Act, there is no separate form in which a taxpayer may use in filing a return of gift tax pursuant to the title trust. Therefore, the exclusion period of imposition of gift tax for 15 years pursuant to the proviso to Article 26-2(1)4 of the Framework Act on National Taxes cannot be applied and the exclusion period of imposition for 10 years pursuant to the principle should be applied. However, each imposition of gift tax on the donation on October 10, 2003 and March 31, 2004 was made after the expiration of the exclusion period of imposition of gift tax, and thus, it is unlawful after the lapse of the 10-year period of imposition. In addition, insofar as the duty to report is not acknowledged as above, since the Plaintiffs’ obligation to report as to the imposition of penalty tax and additional tax in this case does not sufficiently reveal the fact that it is difficult for the Plaintiffs to report obligation.

B. Determination

1) Whether there is illegality in the return on a re-donation

Article 47 (1) of the Inheritance Tax and Gift Tax Act provides that "the taxable amount of gift tax shall be the amount obtained by deducting the amount received by the donee from the total amount of the value of the donated property (excluding the value of the donated property excluded from being added) as of the date of donation, which is secured by the donated property under this Act," and Paragraph (2) of this Article provides that "if the total amount of the value of the donated property received from the same person within 10 years before the date of donation exceeds 10 million won, the value

Article 55 (1) of the same Act provides that "tax base of gift tax is "(1) for a deemed donation of title trust property, the amount of the relevant title trust property (title 1), (2) for a donated property excluding any summing-up, the amount obtained by deducting 30 million won from the value of the relevant property, and (3) for other cases, the amount obtained by deducting the amount under the provisions of Articles 53 and 54 from the taxable amount of gift tax under the provisions of Article 47 (1) of the same Act (title 3)."

As such, the purport of Article 47(2) of the Inheritance Tax and Gift Tax Act, which provides for the comprehensive taxation of the previous donated property within 10 years after the amendment, is to prevent the act of making a donation by dividing the two or more real estates not subject to progressive tax rates by cumulative taxation on the multiple gifts received from the same person, even if the original gift constitutes separate taxation requirements for each individual gift act, and thus, if there exists a multiple different periods, the imposition of the gift tax should be different. However, as to the multiple gifts received from the same person, it is to prevent the act of making a donation by dividing the two or more real estates not subject to progressive tax rates by cumulative taxation. Meanwhile, considering that the provision on constructive gift of title trust under Article 45-2 of the Inheritance Tax and Gift Tax Act has the character as a kind of administrative punishment after the amendment, there is no room to deem that the above provision under Article 47(2) is not applicable. However, in light of the following circumstances, considering the legislative purpose and purpose of the system on deemed gift of title trust, harmony with the overall legal order, etc

(1) Article 47 (1) of the Inheritance Tax and Gift Tax Act (Article 47 (1) of the Inheritance Tax and Gift Tax Act), among the donations of profits accruing from the conversion, etc. of convertible bonds, etc. into stocks with donated property excluding any summing-up, does not explicitly stipulate that the title trust property, which is deemed as donated, constitutes donated property excluding any summing-up, shall be included in the donation of profits accruing from the transfer, etc. of convertible bonds, etc. or from the transfer of convertible bonds, etc. (Article 40 (1) 2), the donation of profits arising from the listing, etc. of stocks or equity shares (Article 41-3), the donation of profits such as listing following the merger (Article 41-5), and other profits donation,

② After the revision, Article 55(1) of the Inheritance Tax and Gift Tax Act provides that the tax base of the gift tax shall be the amount calculated by subtracting the fees for appraisal and assessment of the donated property from the amount falling under any one of the following subparagraphs. The subparagraph 2 provides that "in case of the donated property excluded from adding up, the amount calculated by subtracting 30 million won from the relevant donated property", while subparagraph 1 provides that "in case of the deemed donation of the nominal trust property under the provisions of Article 45-2, the amount of the relevant nominal trust property shall be the amount of the relevant donated

③ The reason for the amendment of Article 55(1) of the Inheritance Tax and Gift Tax Act after the amendment is difficult to distinguish the donor and source of the gift tax, and thus, it is intended to individually taxation and exclude the deduction of donated property in order to prevent the avoidance of tax avoidance using the title trust. In addition, it does not seem to be different from the intent of not re-donationing with respect to the nominal trust property deemed as the donation at the time of the amendment. Furthermore, while the above-mentioned exclusion exclusion exclusion exclusion donation property is difficult to determine the source of donor or receipt, it is difficult to interpret that the above exclusion exclusion exclusion provision is different from the nature of the donated property under the name of Article 45-2(1) as it falls under the case where the donor or receipt source of the donated property is apparent. Rather, in comparison with the provisions of each subparagraph of Article 55(1) above, it is difficult to interpret that the above exclusion exclusion provision is applicable to only the extent of deduction in calculating the tax base for each donated property under Article 47(1)1, and only the remaining amount of deduction under Article 530(1).

④ The legislative purport of imposing gift tax by deeming title trust as a gift is to effectively prevent tax avoidance and to recognize exceptions to the principle of substantial taxation in order to realize tax justice (see, e.g., Supreme Court Decision 2007Du17175, Sept. 8, 2011). Therefore, unlike other donated property when calculating gift tax on title trust property deemed as a gift, the failure to stipulate a deduction system of donated property, etc. differently from other donated property is to give disadvantages to the title trustee compared to the donee in order to achieve the legislative purpose to effectively prevent tax evasion. From this perspective, in the case of title trust deemed as a gift, the legislators cannot be deemed to have excluded the re-donation system, thereby enabling the title trustee to evade the progressive tax rate.

2) Whether there exists a justifiable reason for exempting from the imposition of the duty to report under Article 68(1) of the Inheritance Tax and Gift Tax Act before or after the amendment, even in the case of deemed donation of title trust

According to the main sentence of Article 26-2(1)4(b) of the Framework Act on National Taxes, gift taxes may not be imposed after the expiration date of ten years from the date on which they are assessable, but where a taxpayer fails to file a return under Article 68 of the Inheritance Tax and Gift Tax Act, it may not be imposed after the lapse of fifteen years from the date on which it is assessable. According to the main sentence of Article 12-3(1)1 of the Enforcement Decree of the Framework Act on National Taxes, when a return of tax base and amount of national taxes is filed, the date following the deadline for filing a return or the deadline for filing a return on the relevant tax base and amount of national taxes shall be the initial date for calculating national taxes.

However, comprehensively taking account of the following circumstances, not only the person who received a gift by agreement between the parties but also the person who is deemed to have received a donation under the statutes shall be deemed to have a duty to report as a taxpayer of the gift tax (see Supreme Court Decision 2002Du2826, Oct. 10, 2003). Thus, in this case where the plaintiffs did not submit the taxable value and tax base report of the gift tax, the exclusion period of imposition of each gift tax on the gift as of Oct. 10, 2003, Mar. 31, 2004; and Dec. 29, 2004 should be 15 years in accordance with the provisions of the above statutes. Accordingly, since each of the above parts is found to have been imposed within the exclusion period of 15 years, the imposition disposition cannot be deemed to have been unlawful, even if the plaintiffs did not know that the above part of the gift tax was not a legitimate reason for failing to file a report on title trust with the tax authority (see Supreme Court Decision 2002Du2826, etc.).

① The concept of donation under the Inheritance Tax and Gift Tax Act includes not only a general donation but also a deemed donation or presumption. As such, the title trustee of an asset that requires a transfer or exercise of the right is also treated the same as a donee under the Inheritance Tax and Gift Tax Act. However, pursuant to the main text of Article 68(1) and the main text of Article 4(1) of the Inheritance Tax and Gift Tax Act before or after amendment, a donee who is liable to pay the gift tax must file a report on the taxable value

② There is no provision regarding cases where the obligation to report the gift tax is not imposed prior to or after the amendment. If there is no reporting deadline due to the absence of the obligation to report in the case of deemed donation, in imposing the gift tax, there may arise any inconsistency or unfairness that makes it possible to impose the gift tax at any time on the grounds that the period of exclusion does not begin due to the lack of the starting point of the exclusion period under the relevant

③ In a case where a title trust is used as a means of concealing a gift, even if gift tax is imposed within a limited scope recognized as an object of tax avoidance by imposing sanctions, it is only one of the taxes prescribed by the Act, and it cannot be deemed as a fine under the Criminal Act, and thus, the presumption of innocence cannot be applied to the principle of presumption of innocence under the Constitution (see Constitutional Court Order 2004Hun-Ba40, Jun. 30, 2005; 2005Hun-Ba24, Feb. 24, 200). In addition, requiring a taxpayer to report tax information, etc. to confirm the tax evasion, rather than confirming the tax evasion, it is necessary to determine the already established tax liability, and considering the existence of a title trust without the purpose of tax avoidance, reporting the title trust to a person under title trust cannot be deemed the same as leading to the confession of a crime of tax evasion provided for in Article 3, etc. of the Punishment of Tax Evaders Act. Therefore, it is difficult to deem that

④ Since whether one’s act constitutes the subject of gift tax is clearly stipulated in the law, it cannot be deemed impossible to expect a trustee to report the taxable value and tax base of gift tax on his/her own. Moreover, it cannot be deemed that the sound of strong and genuine mind that a title trustee’s freedom of not reporting the taxable value and tax base of gift falls under the territory of “a strong and genuine conscience” (see, e.g., Supreme Court Decision 2005Do3385, Sept. 9, 2005) that a title trustee’s freedom of not reporting the taxable value and tax base of gift is protected by the freedom of conscience under the Constitution.

⑤ Even though there is no separate form that a taxpayer can use in filing a return on gift tax pursuant to a title trust under the Enforcement Rule of the Inheritance Tax and Gift Tax Act, in light of the fact that not only does the filing of a return by legal relation or act falling under the subject matter of taxation but also the filing of a return by using the attached Form No. 9(1) of the National Tax Collection Act and Article 6 subparag. 10 of the Enforcement Rule of the same Act is not impossible, in the case of a title trust deemed as a donation, such circumstance does not constitute a ground for denying the trustee’s duty to report the taxable value of donated property

3. Conclusion

If so, the plaintiffs' claim is dismissed due to the lack of reason, and the judgment of the court of first instance is delivered with this conclusion.

Therefore, the appeal by the plaintiffs is just, and all of them are dismissed.