Whether the donation constitutes a person with a special relationship

It is clear under the law that the children without stock ownership and the audit of the corporation concerned are high under the Inheritance Tax and Gift Tax Act, and that they do not fall under a person with a special relationship with whom the transfer is deemed as donation.

Article 35 of the Inheritance Tax and Gift Tax Act as deemed donation at the time of transfer at low price or high price

1. Revocation of the disposition of imposition of gift tax of KRW 257,846,624 against the Plaintiff on February 11, 2005 by the Defendant

2. The costs of lawsuit shall be borne by the defendant.

As set forth in the text.

1. Circumstances of dispositions;

The following facts may be acknowledged if there is no dispute between the parties, or if Gap evidence 1, 2, 3, and 2-1, 2-2 of the evidence Nos. 1, 1, 2-2 of the evidence Nos. 1, 4, 5, 7, and 8 are collected from the whole purport of the pleadings.

A. The ○○○○○○ Co., Ltd. (hereinafter “○○○○○”) was an unlisted corporation established on April 16, 1975. On July 21, 2001, the Plaintiff acquired 20,000 won per share of KRW 73,700,000 (hereinafter “transaction value”).

B. However, at the time of the transfer and acquisition of the stocks subject to deemed donation between the Plaintiff and ○○○○ was the largest shareholder of the non-party corporation and the representative director of the non-party corporation, holding 5.67% of the total shares issued, and the Plaintiff was the managing director of the non-party corporation as the children of Jung○○○, and the ○○○ was the shareholder and the auditor

C. Around September 2004, the Defendant conducted a tax investigation on the Plaintiff’s acquisition of real estate, stocks, etc. between 1997 and 2003, and determined that “the Plaintiff and ○○○ at the time of transfer or acquisition of stocks subject to deemed donation on the basis of the facts set forth in the above paragraph (b) shall be deemed to have acquired the remaining appraised value of stocks subject to deemed donation pursuant to Articles 35(1)1, 35(2) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 7010, Dec. 30, 2003; hereinafter “Gift Tax Act”) and Article 36(4)1, 2, and 5 of the Enforcement Decree thereof (amended by Presidential Decree No. 18177, Dec. 30, 2003; hereinafter “Enforcement Decree”), and that the Plaintiff shall be deemed to have a special relationship with the Plaintiff under Article 26(4)1, 19(2)1 and 2 of the Inheritance Tax Act, and Gift Tax Act (hereinafter “the remaining appraised value of stocks subject to be deemed donated”).

D. However, on February 11, 2005, the Defendant decided to increase the amount of gift tax to KRW 257,846,624 from the original amount of gift tax by applying the premium rate for the largest shareholder’s shares to the shares subject to deemed donation (hereinafter “instant disposition”), and notified the Plaintiff around that time.

2. Determination of legality of disposition

A. The parties' assertion

(1) Defendant’s assertion

Under the premise of the facts acknowledged in the process of the above disposition, the Defendant: “the Plaintiff, at the time of transfer or acquisition of the stocks subject to deemed donation, took over at a low price the stocks subject to deemed donation from ○○○○○○○ in a special relationship under Articles 35(1)1 and 25(2)1, 19(2)1 and 2 of the Enforcement Decree of the Income Tax Act; and if the value of the stocks subject to deemed donation is assessed pursuant to Articles 60(1) and (3), 63(1)1(c), and 63(1)1(c), Article 54(1) and (2) of the Enforcement Decree of the Income Tax Act; and if the Plaintiff assessed the value of the stocks subject to deemed donation pursuant to Article 206,163 per share; and 759,710,655 won per share; thus, the Plaintiff’s disposal of the stocks subject to deemed donation from ○○○ in a special relationship, after deducting KRW 686,650,705 won from the remaining amount of the gift tax.

(2)The plaintiff's assertion

For the following reasons, the Plaintiff asserts that the instant disposition should be revoked in an unlawful manner, namely, (a) the Plaintiff and Lee ○○, first of all, did not have a special relationship under Article 35(1)1, 2, and (2) of the Gift Tax Act, and Article 26(4)1, Article 19(2)1, and 19(2)2 of the Enforcement Decree of the Income Tax Act, the instant disposition against the Plaintiff on the premise that the Defendant had such special relationship with the Plaintiff and Lee○○, was unlawful.

(b)Next, 20,00 won per share of the stocks subject to deemed donation is an objective market price established through transactions freely made between many and unspecified persons at the time of transfer and acquisition of the stocks subject to deemed donation. However, in calculating the value of the stocks subject to deemed donation at the time of the instant disposition, the Defendant assessed the value of the stocks subject to deemed donation at an unreasonably high level of 206,163 won per share. Thus, the Defendant’s disposition of this case based on the above unfair appraised value of the stocks subject to deemed donation is unlawful.

(b) Related statutes;

Article 35 (1) of the Gift Tax Act provides that "in case where a property is acquired by transfer from a person in a special relationship at a price lower than its market price, the transferee of such property (title 1) and in case where a property is transferred to a person in a special relationship at a price higher than its market price, the transferor of such property shall be deemed to have received a donation of the amount equivalent to the difference between the price and the market price and the amount equivalent to the profits as determined by the Presidential Decree" under paragraph (2) of the same Article.

Article 26 (4) 1 of the Enforcement Decree provides that "a person who is in a special relationship" under Article 35 (1) 1 and 2 of the Act means a transferor or transferee (hereinafter referred to as "transferor, etc.") and a person who has a relationship with a person falling under the provisions of Article 19 (2) 1 and 2. of the Enforcement Decree. In this case, "one stockholder, etc." shall be deemed "transferor, etc." and "the largest stockholder or largest investor as prescribed by the Presidential Decree" under Article 22 (2) 1 and 2 of the Act shall be deemed as "the largest stockholder or largest investor" under Article 19 (2) 1 and 2 of the Enforcement Decree shall be deemed as "the largest stockholder or largest investor" (hereinafter referred to as "shareholders, etc."), and a person other than an employee or employee who maintains his livelihood with the assets of the relevant stockholder, etc." shall be deemed as "the largest stockholder, etc. in case where he holds the stocks, etc. of such person."

However, in accordance with Article 26 (4) 1 of the Enforcement Decree, "one shareholder, etc. shall be deemed a transferor, etc." as stipulated in Article 19 (2) 1 and 2 of the Inheritance Tax Act, and Article 26 (4) 1 of the Enforcement Decree of the Inheritance Tax Act as stipulated in Article 35 (1) and (2) of the Enforcement Decree, and Article 26 (4) 1 of the Enforcement Decree, "a person in a special relationship" refers to a transferor, etc. (i.e., a transferee in cases of a provisional transfer, a transferor in cases of a high-priced transfer), a relative (in cases of a high-priced transfer), and a person other than an employee and an employee who maintains his/her livelihood with the property of a transferor, etc. (Article 26 (4)

C. Determination

However, according to the facts found in the process of the disposition, at the time of transfer or acquisition of the shares deemed to be donated between the Plaintiff and the ○○○○○○○○○○○, the largest shareholder and the representative director of the non-party corporation, and this ○○○○○ is not only the shareholder and the auditor of the non-party corporation, and thus, this ○○○○○ cannot be deemed as the Plaintiff’s employee, and on the contrary, cannot be deemed as the Plaintiff’s employee. On the contrary, there is no evidence suggesting that the Plaintiff is a relative between the Plaintiff and the ○○○○○○○○○○○, and on the contrary, the Plaintiff is an employee of the ○○○○○○○ or a person maintaining the livelihood with the ○○○○○○○○’s property. Thus, this ○○○○ at the time of transfer or acquisition of the shares deemed to be deemed to be deemed to be donated does

Therefore, the Defendant’s disposition of this case, based on the premise that at the time of transfer and acquisition of the shares subject to deemed donation between the Plaintiff and Lee ○○○○○, the Plaintiff and Lee ○○○ was “special relationship” under Article 35(1) and (2) of the Gift Tax Act and Article 26(4)1 of the Enforcement Decree of the same Act, is unlawful without further determination

3. Determination as to the defendant's application for resumption of pleading

On June 1, 2007, the defendant filed an application for resumption of pleadings in order to make a preliminary argument that ○○ has transferred the shares deemed donated to ○○○○ upon title trust, and that ○○ had transferred the shares to ○○○○○.

However, according to the Defendant’s primary assertion, since the Plaintiff acquired shares subject to a deemed donation at low price from ○○○○ in a special relationship, only some of the value of the shares subject to a deemed donation pursuant to Article 35(1) of the Inheritance Tax and Gift Tax Act should be deemed to have been donated to the Plaintiff. On the other hand, according to the Defendant’s preliminary assertion, the Plaintiff’s transfer of shares subject to a deemed donation to the Plaintiff, who is a lineal descendant (her lineal descendant) is deemed to have been donated to ○○○○ in accordance with Article

Therefore, the defendant's primary argument and conjunctive argument are different in terms of the legal fiction or presumption of a gift, the scope of legal fiction or presumption of a gift, and the scope of cumulative cumulative taxation under Article 47 (2) of the Gift Tax Act. Thus, the disposition imposing a gift tax on the defendant's primary argument and the disposition imposing a gift tax on the defendant's conjunctive assertion are separate dispositions, which are different in all from the fact of taxation.

As a result, the defendant did not impose a new gift tax on the ground of his preliminary assertion but cannot add his preliminary assertion to the facts of taxation in the lawsuit of this case seeking the revocation of the disposition of this case on the ground of his preliminary assertion. Thus, the defendant's application for resumption of argument cannot be accepted.

4. Conclusion

Therefore, the plaintiff's claim of this case is justified and it is decided as per Disposition by admitting it.