[1] In case where a taxpayer concludes a mutual aid contract under his own name and pays a mutual aid fee after receiving a donation from his spouse under the Inheritance Tax and Gift Tax Act, the method of calculating the value of property subject to the gift tax

[2] The case holding that the imposition of gift tax under the amended tax law on the donation of the original donation made before the amendment by the tax authority after the reduction of the credit of donated property between the spouse by the amendment of the Inheritance Tax and Gift Tax Act constitutes a retroactive taxation under the new tax law in fact

[1] It is difficult to readily conclude that a taxpayer has paid the deduction amount by receiving money from his/her spouse, and rather, his/her spouse has donated an amount within the deduction amount of donated property to the taxpayer. However, inasmuch as a taxpayer receives a donation from his/her spouse within the deduction period of an insurance due to its nature and has paid it as the deduction amount of the deduction amount, the tax authority may regard the “value obtained by subtracting the deduction amount from the amount equivalent to the deduction amount” as the donated property of his/her spouse pursuant to the latter part of Article 34(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828 of Dec. 31, 2007) and impose gift tax thereon.

[2] The case holding that, after the limit of deduction of donated property between the spouse was reduced by the amendment of the Inheritance Tax and Gift Tax Act, the imposition of gift tax under the amended tax law on the donation of the original gift made before the amendment by the tax authority constitutes retroactive taxation under the new tax law

[1] Article 53(1)1 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002); Article 34(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828 of Dec. 31, 2007) / [2] Article 53(1)1 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002); Article 53(1)1 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828 of Dec. 31, 2007); Articles 18(2) and 21(1)3 of the Framework Act on National Taxes

Plaintiff

The Director of the Pacific District Office

November 14, 2008

1. The Defendant’s disposition of imposition of KRW 80,981,080 against the Plaintiff on November 14, 2007 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. On December 20, 200, the Plaintiff subscribed to the Newcheon Savings Life Deductions (hereinafter “the instant mutual aid”) of the National Agricultural Cooperative Federation (the period of mutual aid in its own name from December 20, 2000 to December 19, 2005), which is five years (from December 20, 2000 to December 20, 200).

B. On December 20, 200, the Plaintiff received from the Nonparty, who is the husband, KRW 250 million on December 20, 200, KRW 237 million on May 18, 2001, and KRW 13 million on December 11, 2001, respectively, and paid KRW 500 million on the deduction amount of the instant mutual aid.

C. On December 26, 2005, according to the mutual aid agreement of this case, the Plaintiff was paid 643,684,917 won for a congratulatory money with maturity (hereinafter “mutual aid money”) from the National Agricultural Cooperative Federation under the mutual aid agreement of this case.

D. On November 14, 2007, the Defendant considered the amount equivalent to the mutual aid money of this case as the value of donated property to the Plaintiff by the Nonparty, and imposed KRW 80,981,080,080 on the tax base of the tax base of the Plaintiff (hereinafter “instant disposition”). However, on November 14, 2007, the Defendant assessed KRW 80,981,080 (including additional tax) on the tax base of the Plaintiff’s gift tax (hereinafter “instant disposition”).

E. On February 15, 2008, the Plaintiff filed a request for examination with the Commissioner of the National Tax Service regarding the instant disposition. The Commissioner of the National Tax Service dismissed the Plaintiff’s request for examination on June 26, 2008.

[Reasons for Recognition] Facts without dispute, Gap evidence 1 through 7, Eul evidence 1-1, 2, Eul evidence 2-4, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. Summary of the parties' assertion

(1) The Plaintiff asserts that the instant disposition is unlawful since the Plaintiff’s gift tax was imposed on the receipt of the instant mutual aid money, not on the original donation, since the instant mutual aid agreement was concluded in the Plaintiff’s name, the mutual aid fee was paid by the Plaintiff, and the donation of KRW 500 million from the Nonparty was separate act.

(2) As to this, the Defendant asserts that, although the contractor and the beneficiary of the mutual aid agreement of this case are the Plaintiff, the actual payer of the mutual aid premium of this case shall be deemed the Nonparty, and the actual payer of the mutual aid premium of this case shall be deemed the value of donated property pursuant to the main sentence of Article 34(1) of the New Inheritance and Gift Tax Act, and that even if the value of donated property is calculated pursuant to the latter part of Article 34(1) of the New Inheritance and Gift Tax Act, if the value of donated property is calculated, the value of donated property would not be changed, and thus, the instant

B. Relevant statutes

[Framework Act on National Taxes]

Article 18 (Standard for Tax-Related Acts Interpretation and Prohibition of Retroactive Taxation)

(2) With respect to any income, profit, property, act or transaction for which a liability to pay national taxes is constituted, no tax shall be levied retroactively under the new tax-related Acts after such establishment.

Article 21 (Establishment Date of Liability for Tax Payment)

(1) A liability to pay national taxes shall accrue at the following time:

3. For a gift tax, when property is acquired by the gift;

[Inheritance Tax and Gift Tax Act (amended by Act No. 8828 of Dec. 31, 2007)]

Article 34 (Donation of Insurance Money)

(1) In life insurance or non-life insurance, where the beneficiary of insurance money and the payer of insurance money are different, the amount of insurance money shall be deemed the value of donated property of the beneficiary of insurance money, and where the beneficiary of insurance money has paid the insurance money by receiving the donated property from another person within the period of insurance contract, the amount obtained by deducting the relevant amount of insurance money from the amount of

Article 53 (Gift Property Deductions)

(1) Where a resident receives a donation from any of the following persons, the amount classified as follows shall be deducted from the taxable amount of gift taxes. In such cases, where the sum of the amount deducted within ten years before the relevant donation and the amount deducted from the value of the relevant donation exceeds the amount prescribed in the following subparagraphs, the excess portion shall not be deducted:

1. Three hundred million won, where a donation is received from the spouse;

1. 50 million won (amended by Act No. 6780 of Dec. 18, 2002) where a donation was received from the spouse;

(c) Markets:

In light of the above facts, as seen earlier, the Plaintiff entered into the instant mutual aid agreement in its own name, paid the mutual aid fee, and the number of times the Plaintiff paid the mutual aid fee for the instant mutual aid by receiving money from the Nonparty is only three times, and the Plaintiff paid the mutual aid fee within the limit of donated property at the time of donation between the spouse within a short period of not more than one year, it is difficult to readily conclude that the Nonparty immediately paid the mutual aid fee for the instant mutual aid. Rather, it is reasonable to deem that the Nonparty separately donated the Plaintiff the amount within the limit of donated property deduction.

However, inasmuch as the Plaintiff received KRW 500 million from the Nonparty within the deduction period of the instant mutual aid corresponding to insurance due to its nature and paid as the deduction amount of the instant mutual aid, the Defendant shall be deemed as the value obtained by subtracting KRW 500 million from the amount equivalent to the mutual aid amount of the instant mutual aid pursuant to the latter part of Article 34(1) of the New Inheritance and Gift Tax Act, and the gift tax may be imposed thereon.

However, the Defendant’s assertion that there is no change in the value of donated property even if it is calculated in accordance with the latter part of Article 34(1) of the previous Inheritance and Gift Tax Act is interpreted to the purport that “the taxation office may impose gift tax pursuant to the previous Inheritance and Gift Tax Act on the donation of KRW 500 million which was originally made.” However, at the time when the Plaintiff received from the Nonparty the donation of KRW 500 million which was initially made from the Nonparty, at the time when the liability for tax payment was established, the total amount of the original donation was deducted from the taxable amount of gift tax pursuant to Article 53(1)1 of the previous Inheritance and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002). Therefore, the Plaintiff appears to have not been liable for the payment of gift tax on the donation amount originally made at the time. Accordingly, the tax office’s subsequent implementation of the new Inheritance and Gift Tax Act reduces the credit amount of donated property between spouse and thus, it is not allowed to impose gift tax retroactively pursuant to the new gift tax Act.

Ultimately, the defendant's assertion is without merit, and the disposition of this case, which was made on a different premise, is unlawful in relation to "the portion which included KRW 500 million originally donated to the value of donated property," but it is also unlawful in relation to the defendant's calculation of the tax base more than 300,000 won due to mistake as seen earlier). Since it is difficult for this court to lawfully reissue calculate the amount of the gift tax on the plaintiff, the disposition of this case should be revoked in its entirety.

3. Conclusion

Therefore, the plaintiff's claim seeking the cancellation of the disposition of this case is reasonable, and it is so decided as per Disposition with the assent of all Justices.

Judges Lee Dong-gu (Presiding Judge)