2014west0466(28 April 2014)

In case of changing a contractor of an inheritance immediate pension before the commencement date of the pension, it is reasonable to evaluate the value of the donated property as the termination refund as of the date of changing the contractor.

According to the change of a policyholder of an inheritance-type immediate pension, the Plaintiffs acquired the right to refund insurance premiums due to termination and the right to receive a installment fund, and the right to the insurance contract of this case is reasonable to evaluate the value of donated property

Article 31 (Scope of Donated Property)

Article 60 of the Inheritance Tax and Gift Tax Act: Principles of Appraisal

2014Guhap63275

Category AA and one other

Head of Seocho Tax Office and one other

October 31, 2014

November 14, 2014

1. A. On October 1, 2013, the portion exceeding ○○○○ (including additional tax) out of the disposition imposing gift tax on Plaintiff A on October 1, 2013:

B. On October 1, 2013, the head of Samsung Tax Office’s imposition of gift tax ○○○○○ (including additional tax) imposed on Plaintiff AB on October 1, 2013, each disposition exceeding KRW 00 won shall be revoked.

2. Each of the plaintiffs' remaining claims is dismissed.

3. Of the costs of lawsuit, the part arising between Plaintiff A and the Head of Seocho Tax Office shall be borne by Plaintiff CA, and the remainder by Defendant CB, respectively, by the Head of Seocho Tax Office, and the part arising between Plaintiff CB and the Head of Samsung Tax Office shall be borne by Plaintiff CB, and the remainder by Defendant SamsungB, respectively.

Cheong-gu Office

On October 1, 2013, the head of Seocho Tax Office revoked each disposition of gift tax ○○○○○ (including additional tax) (including additional tax) imposed on Plaintiff A A on October 1, 2013 by the head of the relevant tax office, and the head of the relevant tax office of Samsung C&B on October 1, 2013.

1. Details of the disposition;

A. On September 25, 2012, the father of the Plaintiffs: (a) △△△△△△△△△△△△△△△△△△△, the insured, pension beneficiaries, and maturity beneficiaries as follows: Ten (10) years; (b) the starting date of the pension payment: (c) four immediate pension insurance; (d) four (5) years; and (e) the total amount of the insurance premium was paid in KRW 20 billion.

B. On October 17, 2012, the Chapter △△△△△△ donated insurance 1, 2, and 3, 4 insurance 3, and 4 to the Plaintiff A and the Plaintiff AB, respectively, and drafted the following gift contract:

C. Accordingly, on October 19, 2012, the instant △△△△△△ changed the policyholders, pension beneficiaries, and maturity beneficiaries of the insurance No. 1 and 2 from October 19, 2012 to Plaintiff AA, the policyholders of the insurance No. 3 and 4, the pension beneficiaries, and the maturity beneficiaries to Plaintiff BB.

D. On January 29, 2013, Plaintiff Chapter B, Plaintiff Chapter B, on January 30, 2013, falls under the Defendant’s right to receive a regular payment under Article 65(1) of the Inheritance Tax and Gift Tax Act (hereinafter “Inheritance Tax and Gift Tax Act”) and Article 62 of the Enforcement Decree of the said Act (hereinafter “right to receive a regular payment”), Plaintiff Chapter A evaluated the value of donated property as KRW 00,00, and reported and paid gift tax.

E. From July 1, 2013 to August 9, 2013, the head of Seoul Regional Tax Office: (a) conducted a gift tax investigation on the Plaintiffs; and (b) notified the Defendants of the tax data to determine and notify gift tax by deeming the date of change of the insurance contract as the donation date to be the donation date, on the ground that “the sum of KRW ○○○○○○ (○○○) equivalent to the amount equivalent to the interest accrued until the change of the insurance premium and its contractor by changing the contractor of the insurance contract prior to the commencement of payment.”

F. Accordingly, on October 1, 2013, the director of the Seocho Tax Office decided and notified the Plaintiff’s Chapter A on October 1, 2013, and the director of the Defendant Samsung Tax Office decided and notified the Plaintiff’s Chapter BB of each gift tax (including additional tax) (hereinafter “instant disposition”).

G. The Plaintiffs were dissatisfied with the request for adjudication on December 19, 2013. However, Plaintiff A was dismissed by the Tax Tribunal on April 28, 2014, and Plaintiff AB on May 27, 2014.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 6 (including paper numbers), Eul evidence Nos. 1, 2 and 3, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiffs' assertion

In light of the fact that the Plaintiffs donated the right to receive ○○○○○○○ upon maturity of the insurance contract, and that the right to receive a regular payment during a certain period constitutes the “organic Fund” under Article 62 Subparag. 1 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, the value of donated property resulting from the donation of the insurance contract of this case should be assessed and calculated on the aggregate of the amounts calculated on the basis of the regular amount to be received in each year during the remaining period, and thus, the instant disposition that was made by evaluating the total amount of the paid-in premiums and the interest accrued thereon is unlawful.

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact of recognition;

(1) The terms and conditions of the instant insurance are as follows.

Payment causes of pension benefits

If the beneficiary of an inheritance pension (beneficiary) is living on the corresponding day of each contract each year during the insurance period (10 years, 15 years, 20 years, and 30 years).

The monthly amount of a pension calculated on the basis of the accumulated amount of a pension contract at the time of commencement of pension from the date of commencement of the payment of pension after one month from the date of commencement of the payment of pension

When an insured worker subject to payment dies during the insurance period;

10% of the premiums already paid = Amount accumulated in pension contracts at the time of death

When the insured (person subject to insurance) is living until the expiration of the insurance period;

Amount to be accumulated in pension contracts (amount equivalent to insurance premiums already paid)

Article 32 (Insurance Contract Loans)

1. In the case of inheritance pension type, the contractor may receive the loan according to the method determined by the company within the scope of the termination refund (excluding the principal and interest of the insurance contract loan) of this contract. However, the insurance contract loan may be restricted according to the type of insurance products, such as pure security insurance.

[Attachment 1]

Table of Insurance Payment Standards

(1) A survival pension (Article 13(1) of the Terms and Conditions)

Pension shall be paid according to the form of pension chosen by the contractor as follows:

(2) Death insurance money (Article 13 subparag. 2 of the Terms and Conditions) / [2]

(3) Maturity Insurance Money (Article 13 subparagraph 3 of the Terms and Conditions) / [Payment only of Inheritance Pension Benefits]

(2) On October 19, 2012, the base cancellation refund of the instant insurance contract is 00 won per insurance contract.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 8 and 9, the purport of the whole pleadings

D. Determination

(1) Appraisal of rights under an insurance contract

(A) Article 31(1) of the Inheritance Tax and Gift Tax Act provides that “The donated property includes all the things having economic value that can be converted into the property that belongs to the donee in money (Article 1), all the legal or de facto rights having property value (Article 2(1)2), and all the economic benefits that can be converted into money (Article 30).” Article 60 provides that “The value of the property on which gift tax is levied under this Act shall be the market value as of the date of donation (Article 1(1)). Where it is difficult to calculate the market value, the market value means the value that is generally recognized as having been ordinarily traded between many and unspecified persons (Article 31(2). Where it is difficult to calculate the market value, the value assessed by the method prescribed in Articles 61 through 65 shall be deemed as the market value (Article

In addition, Article 65 (1) provides that "The value of a conditional right, the term of existence of which is uncertain, a right to benefit from the trust or a right to receive a periodical amount determined by Presidential Decree shall be appraised according to the method prescribed by Presidential Decree based on the nature, content, and duration of the right in question," and Article 60 (1) 1 of the Enforcement Decree of the same Act provides that "The conditional right shall be appraised based on the value of the original right according to the reasonable value taking into account facts constituting the contents of conditions as of the evaluation base date based on the value of the original right, the certainty of the fulfillment of conditions, and all other circumstances."

Meanwhile, Article 14 (2) of the Framework Act on National Taxes provides that "the provisions on the calculation of tax base in tax-related Acts shall apply according to the substance regardless of the name or form of income, profit, property, act or transaction."

(B) It is reasonable to view the instant insurance contract’s market price as a refund for cancellation in light of the health stand and the following circumstances.

① In full view of the fact that Article 60(2) of the Inheritance Tax and Gift Tax Act provides for a definition of the market price under the Inheritance Tax and Gift Tax Act, and there is no other provision on the definition of the market price under the Inheritance Tax and Gift Tax Act, Article 60(3) of the Inheritance Tax and Gift Tax Act provides for an alternative where it is difficult to compute the market price under Article 61 through 65 of the Inheritance Tax and Gift Tax Act, and Articles 61 through 65 of the Inheritance Tax and Gift Tax Act provides for the method of reasonably estimating the market price, the value assessed by the method under Articles 61 through 65 of the Inheritance Tax and Gift Tax Act pursuant to Article 60(3) constitutes the market price that serves as the basis for calculating the value of the property on which the gift tax is levied (see Supreme Court Decision 2012Du3

(2) Since an insurance contract takes effect by conclusion, it may be terminated, rights under the insurance contract shall be acquired even if it can be terminated.

③ Following the change of △△△△ to a policyholder, the Plaintiffs acquired the rights and obligations under the insurance contract, such as termination of the contract and revocation right, the right to claim for termination of the contract, the right to designate and change the beneficiary, the right to claim for the loan of insurance contract, and the obligation to notify the payment of insurance premium upon occurrence of an insured event. The Plaintiffs acquired the right to refund the insurance premium and the right to receive the installment fund upon termination under the terms and conditions of the insurance contract in the instant case. Such status of the policyholder constitutes donated property

④ Under Article 65(1) of the Inheritance Tax and Gift Tax Act and Article 60(1) of the Enforcement Decree of the same Act, the right to refund insurance premiums may be assessed as “reasonable value taking into account the facts constituting the contents of conditions as of the evaluation base date based on the value of future rights, the certainty of conditions, and all other circumstances,” and the fact that the market price of the right to refund insurance premiums can receive refund upon the termination of an insurance contract according to the terms and conditions of the insurance contract in this case.

On the other hand, the entitlement to the periodical fund is assessed according to Article 65 of the Inheritance Tax and Gift Tax Act and Article 62 of the Enforcement Decree of the same Act, and the market price is lower than the market price of the right to refund premiums as seen earlier

(5) Of the market price of the right to refund insurance premiums or the market price of entitlement to receive a periodic fund, the right to insurance contracts in this case shall be evaluated.

Even if an insurance contract is established and the contract becomes effective, the insurance claim is not only abstract right before the occurrence of the insurance accident, but also can exercise its right from that time after the occurrence of the insurance accident (see Supreme Court Decision 2007Da19624, Nov. 13, 2008). Thus, the right of the policyholder arising under the insurance contract is an abstract insurance claim (in the case of a pension insurance, 'the maturity of the payment date of the insurance premium' shall be deemed to be an insurance accident for which specific insurance claims occur) within the scope of the right to refund the insurance premium of the Do governor and the scope of the right to receive the insurance premium of the Do governor. Since the supplementary method is applied when it is impossible to calculate the price traded by many and unspecified persons, it is reasonable to select the party whose market price is equal to the market price. However, the market price of the right to receive the insurance premium has not been determined by the standard contract at the time of termination of the insurance contract, such as the remaining period or amount calculated as prescribed by Ordinance of the Ministry of Strategy and Finance and Finance.

(2) The due amount of tax

(A) In a lawsuit seeking the revocation of a taxation disposition, the subject matter of adjudication is whether the tax base and the amount of tax imposed and notified by the tax authority are objectively existing. In a case where the tax base and the amount of tax recognized by the disposition of taxation are excessive compared to the legitimate tax base and the amount of tax, the disposition of imposition is unlawful to the extent that they exceed the legitimate tax base and the amount of tax (see Supreme Court Decision 88Nu6504, Mar.

(B) The instant insurance contract should be deemed as the value of inherited property. The sum of the termination refund for each Plaintiff’s termination refund (=○○○○○○○○○○○○ x 2) is deemed as donated property. If a party’s tax amount is deemed as a justifiable tax amount, as indicated in the attached Form “political tax amount,” the exceeding portion should be revoked in an unlawful manner.

3. Conclusion

Therefore, the plaintiffs' claims are justified within the scope of each of the above recognition, and each of them is dismissed as it is without merit. It is so decided as per Disposition.