Inheritance Tax and Gift Tax Act Article 35(1) of the Inheritance Tax and Gift Tax Act: Donations of profits from transfer at low prices

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

Cheong-gu Office

The Defendant’s disposition of imposing gift tax on the Plaintiff on May 1, 2013 is revoked.

A. On March 30, 2007, the Plaintiff prepared a share transfer contract between KimB and KimB on the part of the Plaintiff to purchase ○○○○○○○○○○○ (hereinafter “instant shares”) of △△△△ shares in the name of KimB (hereinafter “instant transfer contract”). (hereinafter “instant transfer contract”).

B. Around that time, KimB made a preliminary return on capital gains tax by using the stock transfer value of this case as ○○○○ to the head of △△ Tax Office.

C. The head of the ○○ Tax Office, around 2010, conducted a simple investigation of the corporate tax for the portion of the corporate tax for which the transfer of the instant shares belongs in 207, notified the Defendant having jurisdiction over the domicile of the Plaintiff and the head of the △△ Tax Office having jurisdiction over the domicile of the Plaintiff respectively, on the ground that the transfer of the instant shares was made between the related parties under Article 35(1) and (2) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter the same shall apply) and Article 101(1) of the former Income Tax Act (amended by Act No. 9270, Dec. 26, 2008; hereinafter the same shall apply) and the type of unfairly reducing the tax burden.

D. On December 1, 2010, in relation to the transfer of the instant shares to KimB, the head of △△ District Tax Office imposed capital gains tax on ○○○○ and ○○○○○ on December 201, 207, but on May 2, 2014, the acquisition value of the instant shares was KRW ○○○○, the transfer value was deemed as KRW ○○○, and the said capital gains tax was revised as KRW ○○○, the local income tax, and the said capital gains tax was revised as KRW ○○○, and the said capital gains tax was revised again on July 25, 2014.

E. On May 1, 2013, the Defendant: (a) deemed that the market price of the instant shares at the time of the transfer of shares was KRW 00,00, and the price paid by the Plaintiff to KimB was the amount indicated in the transfer contract; and (b) deemed that the transfer of shares constitutes a low-price transfer among the related parties under Article 35 of the Inheritance Tax and Gift Tax Act, the Defendant calculated the value of donated property as prescribed by Article 35(1) of the Inheritance Tax and Gift Tax Act; and (c) issued a disposition imposing the gift tax on the Plaintiff (hereinafter “instant disposition”).

F. On November 1, 2013, the Plaintiff, who was dissatisfied with the instant disposition, filed an appeal with the Tax Tribunal on November 1, 2013, but was dismissed on May 21, 2014.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1, 2, 4, 8, 13-1, 2, 14-3, 18-1, 2, Eul evidence Nos. 1, 2, 5, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

In a case where the tax authority imposes capital gains tax on the transferor and the gift tax is imposed on the transferee on the ground that the transfer is low price transfer. Thus, in determining whether the transfer price of the instant shares constitutes a low price transfer under Article 35(1) of the Inheritance Tax and Gift Tax Act, the stock transfer price shall be deemed ○○○○, which is determined as the final basis in imposing capital gains tax on the transferor KimB by the head of △△ Tax Office. However, the said amount is the same amount as the market price at the time of the instant shares, and thus, the instant stock transfer does not constitute a low price transfer.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

In imposing gift tax on the Plaintiff, who is the transferee of the instant shares, the Defendant’s imposition of gift tax on the Plaintiff is legitimate as to whether it is legitimate to calculate the stock transfer value to KRW 00,000, not the ○○○○, which is the basis for imposing transfer income tax on KimB.

As gift tax and capital gains tax vary between the requirements and timing for the establishment of tax liability and taxpayers, each tax authority should independently determine the amount of income in accordance with the substance of each taxation requirement (see, e.g., Supreme Court Decisions 98Du11830, Sept. 21, 1999; 2003Du11575, Dec. 10, 2004); and the provisions on wrongful calculation under the Income Tax Act are valid and lawful in accordance with the objective facts; even if the act or calculation of a resident is legally effective and lawful; and it is a type of transaction where such act or calculation is a transaction between related parties and an objective reduction of tax burden objectively, such as low price transfer, the legislative purpose is to determine the amount of income in accordance with the method prescribed by statutes by the government, which is to realize fair taxation by specifying the substance over form principle, and to impose capital gains tax on a transferee for the reason that the transfer price is no more than the market value of transfer income tax imposed on a lower person than the transfer price.

In addition, in principle, the tax authority bears the burden of proving the existence of facts requiring taxation and the tax base. However, unless the facts alleged in the facts alleged in light of the empirical rule in the specific litigation process are proved to be eligible for application of the empirical rule, the pertinent taxation disposition cannot be readily concluded to be an unlawful disposition that failed to meet the taxation requirements (see, e.g., Supreme Court Decision 2006Du13831, May 29, 2008). As long as the authenticity of a disposition document is recognized as authentic, the court should recognize the existence and content of the declaration of intent as stated unless there is any clear and acceptable counter-proof that denies the contents of the statement (see, e.g., Supreme Court Decision 2006Da67602, 67619, Jul. 9, 2009). The verification document submitted by a taxpayer to the tax authority cannot be readily denied due to forced preparation against the intent of the originator or lack of evidence of the contents thereof (see, e.g., Supreme Court Decision 2006Du1316136.

In the instant case, the Plaintiff also recognized the authenticity of the instant transfer contract, which is a disposal document. However, when calculating the total transfer price on the basis of the purchase price per share stated in the instant contract, it is apparent that it is the KRW ○○○○ (=○○○○○ per share x○○○○○○). In full view of the purport of the entire pleadings in the items of evidence Nos. 2-2 and Nos. 5, the Plaintiff submitted to the tax authority for confirmation of the fact that the Plaintiff determined the transfer price at the time of the instant transfer of shares to ○○○○○ upon the instant preliminary return of KimB on March 30, 207. In imposing capital gains tax on KimB, the head of △△ District Office may recognize the fact that the transfer price was determined as the market price at the time of the transfer of shares by applying the wrongful calculation provisions under Article 167(5) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 23588, Feb. 2, 2012).

In light of the legal principles as seen earlier, it is reasonable to view the transfer value, which serves as the basis for determining whether the transfer price of the instant shares falls under a low-price transfer under Article 35(1) of the Inheritance Tax and Gift Tax Act, as indicated in the above contract and the transaction confirmation center. In imposing capital gains tax on KimB by the transferor, the transfer value calculated on the basis of the market price by applying the provisions of the wrongful calculation panel in imposing capital gains tax on the transferor shall not be deemed the standard for determination

Therefore, the plaintiff's assertion on different premise is without merit.

3. Conclusion

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