Seoul Administrative Court 2017Guhap56643 ( October 12, 2017)

A person who transfers shares to the plaintiffs constitutes a related party to the plaintiffs.

(As stated in the judgment of the court of first instance) The specially related person under Article 26 (4) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act includes a person who had been an officer of the relevant company for whom five years

Article 26 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act: The method, etc. for calculating profits accrued from a provisional transfer.

2017Nu78256 Revocation of Disposition of Imposition of Gift Tax

AA and 3

The head of Yangcheon Tax Office

Seoul Administrative Court Decision 2017Guhap56643 decided October 12, 2017

March 22, 2018

April 5, 2018

1. All appeals filed by the plaintiffs are dismissed.

2. The costs of appeal are assessed against the Plaintiffs.

The judgment of the first instance shall be revoked. On March 2, 2016, the Defendant revoked the imposition of each OO of gift tax on Plaintiff AA (including additional taxes; hereinafter the same shall apply), Plaintiff BB, AB, and ACC.

1. Quotation of the reasons for the judgment of the first instance;

The reasons for this court's decision are as follows: "The Enforcement Decree of the Inheritance Tax Act before the amendment (hereinafter referred to as "Enforcement Decree of the Inheritance Tax Act before the amendment") shall be read as "(hereinafter referred to as "the Enforcement Decree of the Inheritance Tax Act before the amendment")," and the reasons for the court's decision shall be as stated in Article 8 (2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act, except for the addition of the following:

④ With the exception of the provision of this case, Articles 12-2(3)(b) and 38(12)1 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, where an enterprise belonging to an enterprise group specified by Ordinance of the Ministry of Strategy and Finance (hereinafter “enterprise”) receives only the provisions of Article 12-2(3) and Article 38(12)1 of the same Act, all of them are “affiliated enterprise” (including the officers of the said enterprise). However, if an executive’s assertion is limited to an executive of the said enterprise group, the provision of this case shall include “affiliated enterprise” in the following subparagraph of the said enterprise group without the need to include “distincing enterprise” as an executive subsequent to the “affiliated enterprise” (including an executive officer of the said enterprise under Article 20(1)4 of the Enforcement Decree of the Corporate Tax Act and in other provisions, it does not need to include “after the retirement of the said enterprise” (including an executive officer of the said enterprise).

Meanwhile, Article 12-2 (2) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that "employee" shall be "executive, business employee, or any other person in an employment relationship". This should be an example legislation that has the meaning that the general clause itself can cover specific examples. Thus, the "executive" among the "employee" means only the person in an employment relationship at present and does not include the person who has already retired from office. However, if it is interpreted that it includes the person who already retired from office, the above provision argues that it is invalid against the principle of clarity.

As the plaintiffs pointed out, the term "employee" under Article 12-2 (2) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act includes a previous employee or there is no room for confusion in the language and text. However, in full view of the language and text of the aforementioned provision and the systematic interpretation of the relevant provision, the developments leading up to the establishment, and the term in the same law should be equally interpreted and applied unless there are special circumstances, such as where there are other provisions in the law (see, e.g., Supreme Court Decision 2011Du21157, Oct. 24, 2013). Since "officer" under Article 12-2 (2) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act includes an officer for whom five years have not passed after his retirement, this provision cannot be deemed null and void against the principle of clarity. The plaintiffs' aforementioned assertion is without merit.

2. Conclusion

Since the judgment of the first instance is justifiable, the plaintiffs' appeal is dismissed as all of the grounds are groundless.