Seoul Administrative Court-2014-Gu Partnership-61200 ( October 29, 2015)

Whether the penalty tax on unfair non-reported return can be applied when the gift tax is levied as the agenda of title trust donation.

Even if the title trust of this case was concealed and added up the facts on which another tax was based, it is reasonable to view that it cannot be the basis for additional tax on the gift tax due to the constructive gift of the title trust of this case, in addition to the fact that it may be considered in the additional tax on the evaded tax.

Article 45-2 of the Inheritance Tax and Gift Tax Act; Article 47 of the Framework Act on National Taxes

Seoul High Court 2015Nu37305 (2015.09)

Han △△△

○ Head of tax office

January 29, 2015

July 22, 2015

September 9, 2015

1. Of the judgment of the first instance court, the part against the plaintiff falling under the order to revoke below shall be revoked.

In imposing gift tax of KRW 1,135,572,770 on title trust on the Plaintiff on January 26, 2007, the Defendant imposed penalty tax of KRW 218,117,219 on the Plaintiff on August 1, 2013, the penalty tax of KRW 218,117,219 on the Plaintiff.

In the imposition of gift tax on the title trust of September 29, 2008, the amount exceeding KRW 109,058,609, and in the imposition of gift tax on the title trust of September 29, 2008, the amount of penalty tax of KRW 148,529,098, the amount of penalty tax not reported;

In imposing gift tax on title trust as of June 8, 2010, the portion exceeding 74,264,549 won, and in imposing gift tax on title trust as of June 8, 2010, the portion exceeding 5,930,09 won out of the amount exceeding 11,860,198 won of penalty tax without filing an unfair return shall be revoked.

2. Of the total litigation cost incurred between the Plaintiff and the Defendant, 70% is borne by the Plaintiff, and 30% is borne by the Defendant, respectively.

1. Purport of claim

Of the disposition of gift tax of KRW 2,257,876,110 imposed on the Plaintiff on August 1, 2013, the part of the disposition of KRW 1,822,017,728 of the disposition of KRW 2,257,876,110 which the Plaintiff imposed on the Plaintiff on the Plaintiff on August 1, 2013 (435,858,382), the part of the disposition of KRW 2007, which exceeds KRW 109,058,609 (109,058,610), the part of the disposition of KRW 148,529,098, which was imposed on the Plaintiff as the penalty tax for the portion of year 2007, exceeds KRW 109,058,610 (109,058,610), and the part of the disposition of KRW 74,264,549) and the portion of which was imposed as the penalty tax for the portion of year 201010

2. Purport of appeal

Paragraph (1) shall apply.

1. Scope of the judgment of this court;

The plaintiff sought revocation against the original defendant as described in the purport of the claim, while △△ tax affairs

The purport of the appeal was modified as stipulated in Paragraph (1) by the head of △△△ Tax Office against the head of the Seo-gu, seeking revocation of the part exceeding KRW 198,747,363 of the disposition of KRW 272,59,370, which was imposed on the Plaintiff on August 1, 2013 (73,843,007), but the first instance court lost the entire amount, and thereafter appealed the appeal, and subsequently, by filing an application for alteration of the purport of the appeal on February 16, 2015, only disputing only the part exceeding the penalty tax of the Defendant’s imposition of penalty tax of non-reported penalty tax, which was imposed on the Plaintiff. Therefore, the scope of the trial of this court is limited to the part of

2. Details of the disposition;

A. DDD Co., Ltd. (hereinafter "CCC") was changed to CCC on July 12, 2005, and hereinafter referred to as "CC") was jointly invested and established on October 13, 1997 by jointly investing KRW 50,000,000,000 in capital through nine times from 1999 to 2012 and the capital increase of KRW 4,550,000,000 (total issued shares, KRW 8,700,000, and KRW 500 per share value).

B. The plaintiff from BB on December 26, 2006 24,000 shares of the CCC and from AA.

12,00 shares total of 30,000 shares were acquired in face value and became the largest shareholder, and on February 26, 2007, it was appointed as the representative director of the CCC.

C. From May 21, 2013 to June 25, 2013, the Central Regional Tax Office: (a) acquired the CCC’s shares by participating in the CCC’s capital increase increase with a consideration from around 1999 to June 8, 2010; (b) confirmed that the CCC shares held in title trust with AA, BB, etc. (hereinafter “AA shares”); (c) notified the head of the relevant tax office of the gift tax and the head of the relevant tax office of △△△△ by applying the provisions on deemed donation under the name of trust property in the name of Article 45-2 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 11130, Dec. 31, 2011; hereinafter “the Inheritance Tax and Gift Tax Act”) and notified the Plaintiff of the gift tax base.

D. According to the above notification, on August 1, 2013, the Defendant is jointly and severally liable to pay the Plaintiff the gift tax of 9,609,050 won on March 29, 199, the gift tax of 15,827,170 won on June 9, 200, and the gift tax of 147,32,380 won on the gift tax of 147, 32,380, 480 won on September 28, 200, 149, 143, 79, 30, 206, 207, 208, 205, 208, 205, 205, 206, 30, 14, 370, 29, 207, 205, 206, 206, 37, 206, 207, 201.

[3]

E. The Plaintiff dissatisfied with each of the instant dispositions and filed an appeal with the Tax Tribunal on November 4, 2013, but was dismissed on March 25, 2014, and filed the instant lawsuit on June 23, 2014.

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, Eul evidence 2 to 8, the purport of the whole pleadings

3. The assertion and judgment

A. The plaintiff's assertion

tax such as dividend, capital gains, etc. has been omitted because the title trust of shares was a means to do so;

Although the tax should be imposed heavy penalty tax because it constitutes an unfair non-reported report, it is illegal to impose an unfair non-reported penalty tax on gift tax only by simply nominal trust of shares. Therefore, the penalty tax on each of the dispositions in this case should be revoked in an unlawful manner.

(b) Related statutes;

Attached Form is as shown in the attached Form.

C. Determination

1) According to Article 47-2(2)1 of the Framework Act on National Taxes, unfair methods (a taxpayer’s national tax division)

Article 27 (2) of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 23592, Feb. 2, 2012; hereinafter referred to as the "Enforcement Decree of the Framework Act on National Taxes") provides that if there is a tax base without filing a return by any unlawful means, the amount equivalent to 40/100 of the amount calculated by multiplying the calculated tax amount by the ratio of the amount of the tax base without filing a return by unjust means to the tax base shall be added to the payable tax amount or deducted from the refundable tax amount. Article 27 (2) of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 23592, Feb. 2, 2012; hereinafter referred to as the "Enforcement Decree of the Framework Act on National Taxes"), such as preparation of double books, such as preparation of false evidence or false documents (No. 2), receipt of false evidence (No. 3), destruction (No. 4), destruction of records (no. 5). 6).

Meanwhile, the legislative intent of Article 45-2(1) of the Inheritance Tax and Gift Tax Act is to avoid tax avoidance using the title trust system.

Inasmuch as an exception to the substance over form principle is recognized to the purport that a tax justice is realized by effectively preventing an act, the proviso of the same Article is applicable only where the purpose of tax avoidance is not included in the purpose of title trust, and the taxes under the proviso are not limited to the gift tax (see, e.g., Supreme Court Decision 2004Du1421, Jun. 11, 2004). In addition, even if a provision on deemed donation is applied and gift tax is imposed, the substance of the relevant transaction is not determined as a gift (see, e.g., Supreme Court Decision 2002Du12137, Sept. 24, 2004)

2) In light of the above legal principles, the Plaintiff, in full view of all the following circumstances revealed in the facts admitted as above, together with the overall purport of the oral argument, was examined as to the instant case.

A. It is difficult to recognize that the tax base was not reported in an unjust manner on the ground that the title trust of this case did not report the gift tax base according to the instant title trust, and thus, it is difficult to apply the unfair non-reported additional tax rate (40%)

(1) Penalty taxes for improper non-declaration shall constitute the basis for filing a tax base, etc. in an unjust manner.

Since punishment is imposed on an act of non-declaration of a specific tax subject to the duty to report on abolition and temporary gift, in the case of a deemed donation, the subject matter of the report is based on the title trust, and thus, the fact constituting the basis of the tax base, etc. is the title trust. Therefore, it is difficult to deem that the subject matter of the concealment and temporary gift is limited to the title trust itself, and it is also difficult to expand the facts that are the basis of the tax avoided by the title trust of this case. In other words, even if the title trust of this case was concealed and promoted, it may be considered as the additional tax of the avoided tax, regardless of the fact that the title trust of this case may be considered as the basis of the additional tax of the evaded

② The Defendant asserts that: (a) the Plaintiff prepared a false stock sales contract, etc.; (b) transferred stocks to a bank account in the name of AA; or (c) concealed and proposed the instant title trust as if AA were a shareholder; and (b) that the Plaintiff, a de facto shareholder, concealed the instant agreement as if the Plaintiff were a shareholder; (c) however, in the case of stock title trust, the agreement itself remains effective; and (d) the ownership in the relationship between the external relationship and the third party is transferred to and reverted to the trustee; and (e) in the internal relationship between the truster and the trustee, ownership is withheld to the truster. Therefore, the Plaintiff’s act was merely accompanied by the title trust agreement in force, and thus, it is difficult to readily conclude that the said act was accompanied by the title of AA, the trustee, under the name of the external right holder, and thus, was an act of concealing and inducing the instant title trust through the preparation, manipulation, and concealment of false documents.

Furthermore, even if the Plaintiff denied the title trust of this case in the course of investigation by the director of the Central District Tax Office, such act is not only after the statutory due date of return expires, but also cannot be deemed as an active act to conceal the title trust of this case.

③ Meanwhile, under the consistent reasoning of the Defendant, where deemed donation due to title trust, 40% of the unfair non-declaration penalty tax should be applied without any exception in cases where deemed donation is recognized. It is difficult to expect the person who held the title trust to report gift tax due to the deemed donation of the title trust for the purpose of tax avoidance. This is because most of the cases where the Plaintiff’s act of performance is conducted at a level similar to the Plaintiff’s act, such as the preparation of false documents, etc. in most cases. In this case, there is a problem that the rate of non-declaration penalty tax is 20% and 40% and the specific fact-finding should be determined by examining the specific fact-finding.

(4) Even if a gift tax is imposed due to a deemed donation, the substance of the relevant transaction is not confirmed as a donation. Ultimately, the gift tax resulting from a deemed donation is a kind of sanction on title trust for the purpose of tax avoidance (see, e.g., Constitutional Court en banc Order 2012Hun-Ba259, Sept. 26, 2013). It can be practically an excessive sanction on title trust for the purpose of tax avoidance.

3) Therefore, in addition to the general non-reported penalty tax in each of the dispositions in the instant case

In the imposition of gift tax on the title trust as of January 26, 2007, the portion exceeding KRW 109,058,609 (the portion exceeding KRW 109,058,610) out of KRW 218,117,219 (the part exceeding KRW 109,058,610), the portion exceeding KRW 74,264,549 out of KRW 74,549 (the part exceeding KRW 74,264,549), the portion exceeding KRW 74,549 out of the amount of penalty tax on the title trust as of September 29, 2008, in the imposition of gift tax on the title trust as of June 8, 2010, the portion exceeding KRW 11,860,198, KRW 5,930,939 (the part exceeding KRW 509,939,99) shall be revoked as all.

4. Conclusion

If so, the plaintiff's claim is reasonable, and the judgment of the court of first instance is justified.

Since it is unreasonable to accept the plaintiff's appeal in some different ways, it is so decided as per Disposition by the first instance court that the part of the imposition disposition of penalty tax on each of the dispositions of this case, which exceeds general non-reported penalty tax, shall be revoked.