Cho Jae-2016-Seoul Government-2527 (2016.30)

In cases where a deposit in the name of a person recognized as a donor by a tax authority is deposited in a bank account in the taxpayer's name, presumption of donation

As long as the bank account in the name of a person who is recognized as a donor by the tax authority is withdrawn and deposited in the account in the name of a taxpayer, such deposit shall be presumed to have been donated to the taxpayer, and the special circumstance that the purpose other than the donation is to be proved by the taxpayer, the disposition in this case is legitimate since the lack of evidence by the plaintiff

Article 45 of the Inheritance Tax and Gift Tax Act (Presumption of Donation of Funds, etc. for Acquisition of Property)

2016Guhap85798 Revocation of Disposition of Imposition of Gift Tax

AA and 1

BB Director of the Tax Office

July 6, 2017

July 20, 2017

1. All of the plaintiffs' claims are dismissed.

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

Cheong-gu Office

Gift tax of KRW 117,921,820 (including additional tax; hereinafter the same shall apply) granted to Plaintiff A on April 1, 2016 by the Defendant against Plaintiff A.

The same shall apply to the imposition of gift tax of KRW 114,756,700 on Plaintiff CCC, respectively.

The cancellation shall be revoked.

1. Details of the disposition;

A. On November 26, 2014, the Plaintiffs paid KRW 500 million each as share capital on the same day when exercising the preemptive rights of DD Co., Ltd. (hereinafter “D”).

B. On November 26, 2014, Plaintiff AA received the transfer of KRW 380 million out of the said shares to the EE Bank account under the name of the said Plaintiff (hereinafter “Plaintiff ACC”) from FF, a gathering of FF, to the said Plaintiff’s account. On the same day, Plaintiff CCC received KRW 372 million out of the shares from FF, a gathering of the said shares, from the said Plaintiff’s EE Bank account (hereinafter “the Plaintiff’s new account in the name of the Plaintiff,” and “each of the said shares transferred by the Plaintiffs together with the said shares transferred from FF,” and “the issues of the instant case”).

C. The Commissioner of the National Tax Service confirmed the above facts in the course of conducting a corporate integration investigation into a corporation III, a conciliation division of the Plaintiffs, and notified the Defendant of the taxation data by deeming that the Plaintiffs received the instant amount from FF as a donation from the FF. On April 1, 2016, the Defendant respectively decided and notified the Plaintiff AA of KRW 117,921,820, and the Plaintiff CCC of KRW 114,756,700, respectively (hereinafter “instant disposition”).

D. The Plaintiffs were dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on June 24, 2016, but was dismissed on September 30, 2016.

[Ground of recognition] Unsatisfy, Gap evidence 1 to 4, Eul evidence 1 to 6

each entry, the whole purport of the pleading, including each number; hereinafter the same shall apply)

2. Whether the instant disposition is lawful

A. The plaintiffs' assertion

While studying abroad, the Plaintiffs entrusted FF with the management of the passbook in which the funds of the Plaintiffs were kept by the Plaintiffs. From 2006 to 2014, FF voluntarily invested the Plaintiffs’ funds in the fund, etc., thereby causing damages to Plaintiff AA to KRW 215,009,727, and Plaintiff CCC 216,631,288. In addition, FF borrowed KRW 110,000,000 out of the funds of Plaintiff AA and KRW 100,000,000 from the funds of Plaintiff CCC.

FF is not a donation to the plaintiffs for compensating for damages caused by investment in the fund and for repayment of loans. Thus, the FF does not contribute to the transfer of the funds of this case to the plaintiffs. Thus, the prior disposition of this case on a different premise must be revoked in an unlawful manner.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) On November 22, 2005, the Plaintiffs received donations from FF from F to EE Bank Account in the name of the Plaintiffs, each of which was opened on the same day, in the form of transfer from F to EE Bank Account in the names of the Plaintiffs (hereinafter “Plaintiffs”).

2) The Plaintiffs were jointly owned by the FF and the JJ, i.e., 00 00-0 00 - 00 - 00 - 074 m2,000 - and 3,674 m2. On February 24, 2006, KRW 309,626,350, and 309,626, and 350 m26, and 309,626, and 350 m2 were paid to Plaintiff A to each of the Plaintiffs (the sum of each of the above acceptance compensation and the money donated by the Plaintiffs from FF).

3) Using the instant funds deposited in the account in the name of the Plaintiffs, the fund investment and redemption have been repeated several times, and the said old account was terminated on April 15, 201, and on January 21, 2011, when the new account in the name of the Plaintiffs was opened, the fund termination deposit was deposited in the said new account (Plaintiff AA 141,489,069, Plaintiff CCC141,490,274, and on April 15, 2011, the remainder of KRW 1,460,656, respectively, following the termination of the former account in the name of the Plaintiffs was deposited.

4) From among the new accounts under the Plaintiffs’ name, KRW 10,000,000 from the Plaintiff’s account in the name of Plaintiff AA on April 25, 201 and KRW 100,000,000 from the Plaintiff CCC’s account in the name of Plaintiff CCC on April 26, 2011 to each FF account (hereinafter “the instant transfer amount” in total).

5) Since 2005, the Plaintiffs were studying in the United Kingdom and the United States and returned to Korea after completing study in the year 201, and currently worked in DD.

[Ground of recognition] Facts without dispute, entry of Gap evidence 1, 5, 10, and the purport of the whole pleadings

D. Determination

1) In a lawsuit seeking the revocation of disposition imposing gift tax, as long as the deposit in the name of the person who is recognized as a donor by the tax authority is revealed to have been withdrawn and deposited in the account in the name of the taxpayer, such deposit shall be presumed to have been donated to the taxpayer. Thus, barring special circumstances such as withdrawal of such deposit and deposit in the name of the taxpayer, etc., it is necessary to prove such fact to the taxpayer (see Supreme Court Decision 99Du4082, Nov. 13, 2001). Thus, the issue amount of this case, which was used for the payment of share capital following the exercise of the plaintiffs' preemptive rights, is presumed to have been donated from the FF to the plaintiffs, and the fact that the amount of this case was transferred to the plaintiffs for other purpose than donation, shall be proved by the plaintiffs.

2) The facts that the instant transfer money was transferred from the new account under the Plaintiffs’ name to the FF account are as seen earlier, and according to the statements in Gap evidence Nos. 1, 5, and 9, and witness KK’s witness’s testimony, the fact that the instant transfer money was kept by FF during the Plaintiffs’ studying abroad, and that FF invested the instant funds in the Fund, and that some of the funds incurred losses.

However, comprehensively taking account of the above evidence and the whole purport of the pleading, it is difficult to view that the transfer of the FF’s key money to the Plaintiffs was made in order to compensate the Plaintiffs for damages incurred by investing the funds in the fund and to repay the loans to the Plaintiffs, and there is no other evidence to acknowledge otherwise.

① During the study period, the Plaintiffs asserted that the FF entrusted the custody of the instant funds to the FF, and that the FF incurred loss from investing the said funds in the Fund at will. However, there is no objective data to acknowledge the delegation relationship between the Plaintiffs on the storage of the instant funds and the FF. Even if there was a delegation relationship between the Plaintiffs and the FF, it is difficult to conclude that the FF is liable to return the instant funds to the Plaintiffs on the ground that the content and scope of the delegation relationship could not be known, or that it is difficult to conclude that the FF is liable to compensate the Plaintiffs for losses incurred by investing the instant funds in the Fund.

② In addition, it is difficult to view that the FFF incurred damages as claimed by the Plaintiffs in the course of investing in and repurchaseing the instant funds from the data submitted by the Plaintiffs (the Plaintiff is merely asserting that the instant funds less the amount claimed by the Plaintiff, which was the balance of the account immediately before the instant funds were transferred from the funds to the new account in the name of the Plaintiffs, and the amount claimed by FF, from the fund investment, as the amount of damages caused by the fund investment. Furthermore, even though the Plaintiffs returned to the Fund in 2011, it is difficult to view that the FF is liable to compensate the Plaintiffs for damages arising from the fund investment until 2014).

③ Although the Plaintiffs asserted that FF borrowed the instant transfer money from the Plaintiffs, there is no objective evidence to deem FF to have borrowed the instant transfer money from the Plaintiffs, such as the certificate of loan and the statement of payment of interest, and there is no material about the details of the instant transfer money and its use. Therefore, it is difficult to deem FF to have borrowed the instant transfer money from the Plaintiffs or to have the obligation to repay it to the Plaintiffs.

④ From 200 to 200, KK, as D’s director, knew the plaintiffs and FF, stated to the effect that, in this Court, it was the plaintiffs’ delegation of this case’s funds as to whether the plaintiffs’ passbooks and seal impressions were actually delegated or not, and that it was not aware of whether the funds were actually delegated or not, the existence of the lending contract for the funds, the amount of damages incurred by the funds investment and the relation between the funds transfer and the funds transfer of this case’s key money and the funds transfer of this case’s key money. After hearing from FF or confirming the transfer of the funds in this case’s name after the disposition and confirming the transaction details of the accounts in this case, it was stated to the effect that the funds investment losses using the funds in this case were KRW 200,000 for each account and that the funds transfer of this case’s funds were known to exist.

3) Therefore, the instant disposition on the ground that the instant monetary amount was donated to the Plaintiffs is lawful, and the Plaintiffs’ assertion on a different premise is without merit.

3. Conclusion

Therefore, the plaintiffs' claims are dismissed in entirety as it is without merit. It is so decided as per Disposition.