Cho High Court Decision 2010Du3443 (Law No. 1106,07)

only another corporation which invests more than 30% of the total number of stocks issued by a stockholder of a taxpayer corporation shall be

30% or more of the total number of outstanding shares of the Plaintiff Company is owned by the representative director of the Plaintiff Company, who is the taxpayer, as the shareholder of the Plaintiff constitutes a specially related person. Thus, even if the representative director of the Plaintiff Company, who is the taxpayer, owns more than 30% of the total number of outstanding shares of the Plaintiff Company, it does not constitute a specially related person.

2011Guhap24439. Revocation of imposition of corporate tax, etc.

XX Stock Company and one other

Samsung Head of Samsung Tax Office and one other

March 27, 2012

April 12, 2012

1. On June 1, 2010, the head of Samsung Tax Office’s corporate tax of KRW 000 for the business year 2007 against Plaintiff XX stock company, corporate tax of KRW 000 for the business year 2008, and corporate tax of KRW 000 for the business year 2009 shall be revoked.

2. The plaintiff's claim is dismissed.

3. Of the costs of lawsuit, the part arising between the Plaintiff XX and the Defendant Samsung Head of the tax office is assessed against the Plaintiff Samsung Head of the tax office, and the part arising between the Plaintiff Yellow Head of the tax office and the Defendant Gangnam Head of the tax office, respectively.

Paragraph 1 of this Article and the head of Gangnam District Tax Office's Office's imposition of gift tax amount of KRW 000 shall be revoked on June 4, 2010.

1. Details of the proposal;

A. Plaintiff XX Co., Ltd (hereinafter “Plaintiff Co., Ltd”) was an unlisted corporation that was established on February 14, 2006 and runs a housing construction business, and owned 47.09% of the issued stocks as of December 31, 2007 of Non-Party OO Co., Ltd. (hereinafter “Non-Party Co., Ltd”) established on May 14, 2007.

B. As of December 31, 2007, Plaintiff Yellowa owned 100% of the shares issued by Plaintiff Company and 18.28% of the shares generated by Nonparty Company as each representative director of Plaintiff Company and Nonparty Company.

C. On August 9, 2007, the Plaintiff Yellow A transferred 00,000 shares of the non-party company to the non-party company to the non-party company to the non-party company to KRW 000 per share, and on the same day, the non-party company to the non-party company to the non-party company to the non-party company to the non-party company to KRW 00,000 per share. Meanwhile, on August 28, 2007, the non-party company paid KRW 00,000 per share of new shares by issuing capital increase under the third party allocation method (hereinafter referred to as the "the capital increase of this case"). The non-party company acquired all the above new shares on the same day, and paid KRW 00 per share of KRW 30 on the 30th of the same month.

D. The director of the Seoul Regional Tax Office: between March 8, 2010 and April 16, 2010, the non-party company was 2007.

Article 87(1)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 2061, Feb. 22, 2008; Presidential Decree No. 2000; Presidential Decree No. 200, Oct. 20, 2008; Presidential Decree No. 2000; Presidential Decree No. 200, Nov. 1, 2008; Presidential Decree No. 2065; Presidential Decree No. 200, Nov. 1, 2006; Presidential Decree No. 20650; Presidential Decree No. 200, Nov. 2, 2006; Presidential Decree No. 20650; Presidential Decree No. 200, Nov. 1, 2006; Presidential Decree No. 2010; Presidential Decree No. 20650, Nov. 1, 201; Presidential Decree No. 2010.

E. On August 26, 2010, the Plaintiff Company filed a request for review with the Commissioner of the National Tax Service for the portion of the instant corporate tax assessment system, but was dismissed on April 29, 201, and Plaintiff YellowA filed a request with the Tax Tribunal for a trial on August 27, 2010, against the portion of the instant gift tax assessment system, but was dismissed on June 7, 2011.

[Ground of recognition] Facts without dispute, Gap evidence 1 to 4, Gap evidence 2, 3, Eul evidence 1 to 4, the purport of the whole pleadings

2. Whether each of the instant parts is lawful

A. The plaintiffs' assertion

1) Parts of specially related persons

A) Plaintiff Company and △△

According to Article 87(1)4 of the former Enforcement Decree of the Corporate Tax Act, it is reasonable to view that only the other corporations which invested more than 30% of the total number of issued and outstanding shares by a person who is liable for tax payment and falls under subparagraphs 1 through 3 of Article 87(1) of the former Enforcement Decree of the Corporate Tax Act fall under the related party of the Plaintiff Company. Thus, even if the Plaintiff is a person who actually exercises influence over the management of the Plaintiff Company at the time of the capital increase in this case, insofar as the Plaintiff is not holding more than 30% of the total number of issued and outstanding shares, it cannot

B) Plaintiff Yellow A and △△

In light of the fact that on August 9, 2007, KimB, the largest shareholder of △△, and four other parties, entered into a contract to take over the management right of △△△△△, and on September 20, 2007, Plaintiff Yellow A paid the balance of 0 billion won to △, and thus, on August 9, 2007, he was not in the position to exercise the right to the shares of the non-party company at the time of August 30, 2007, which was part of the non-party company’s capital increase, by acquiring the shares of the non-party company from the non-party company from the non-party company from the non-party company, and participating in the capital increase on August 9, 2007, the non-party company capital increase was decided and executed by the non-party 2,000 and the non-party 3, which was decided and executed by the non-party △△△, the non-party 2,008.7.

2) Market value portion

D D A corporation assessed the investment value of the ▽△△△ development project (hereinafter referred to as the “development project in this case”) being promoted by the non-party company as approximately 4,13.7 billion won, and if the project in this case is converted to the number of shares issued by the non-party company, the price per share shall be 000 won. In the case of △△ Securities, the transfer value per share shall be determined at a price below 000 won per share, which is below the transfer value per share, taking into account the increase of the plaintiffs’ external credit rating due to participating in the financial advice of the development project in this case and the business partnership supporting the business funds in this case, and the important strategic roles of future business in the future, such as financial financing affairs, etc., and thus, the transfer value per share, which is below 00 won per share, which is the transfer value of the non-party company’s shares transferred to △△, constitutes the market price by a third party negotiation. Accordingly, the Defendant’s portion in this case’s market price at the time is unlawful.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

(c) Fact of recognition;

1) On February 14, 2006, the Plaintiff Company acquired 100% of the shares in △△△△ Co., Ltd., an unlisted corporation, as an unlisted corporation, on May 10, 2007, and changed the name of the corporation to Y Co., Ltd., and transferred part of the business rights of the instant development project that the Plaintiff Company promoted to the Nonparty Company.

2) On Aug. 9, 2007, Plaintiff Yellow-A entered into a contract for acquisition of shares and management rights (hereinafter “instant contract”) with 37.870/00 of the total number of outstanding shares of △△ (as of March 31, 2007) (as of March 31, 2007) and with 4 other than KimB, the largest shareholder, the largest shareholder of △△, to acquire shares and management rights in △ KRW 2,00,000 in total (as of March 31, 2007). The main contents of the instant contract are as follows.

3) Pursuant to Article 11(1) of the instant contract, △△ concluded a sales contract which takes over 00,000 shares of the non-party company owned by the Plaintiff Yellow A to KRW 000 billion per share (hereinafter “instant sales contract”). Meanwhile, on the same day, Plaintiff Yellow A entered into a sales contract which transfers 00,000 shares of the non-party company to KRW 00,000 per share to the non-party company (00 won per share) between △△ Securities and the non-party company’s securities on the same day.

4) On August 9, 2007, in order to raise funds to participate in the capital increase of the instant case, which is scheduled to be implemented by the non-party company pursuant to Article 11(2) and (3) of the instant contract, the △△△ (00,000,000 won per share) issued a board of directors and passed a resolution to allocate new shares to a third party for the purpose of raising a total of KRW 000 won per share. The remaining new shares were allocated to the 4 persons designated by the Plaintiff Yellowa (0,000,000 won). The Plaintiff Yellowa paid the above new shares purchase price to the 28th of the same month and owned KRW 9.38% of the equity of △△ (9.38% on the same day) on the same day.

5) Changes in the major shareholders and equity shares of 2007 business year in △△△ is as listed below (unit: State, KRW 50 million).

6) On August 28, 2007, the non-party company held a board of directors and passed a resolution on the issuance of 000,000 won per share and allocating all of the shares to △△△ (the instant capital increase). On the same day, △△ decided to hold a board of directors to accept all of the shares issued by the non-party company pursuant to Article 11(3) of the instant contract, and paid 00 billion won as of the same day when it subscribed for the above new shares to the non-party company on August 30, 2007.

7) The changes in shareholders and shares of the non-party company in the 2007 business year are as follows (unit: State, source).

8) On August 9, 2007, △△ resolved to hold a board of directors meeting under Article 9 of the instant contract to convene a temporary general meeting for the appointment and dismissal of executive officers. On September 20, 2007, △△, upon holding a temporary general meeting of shareholders, appointed Plaintiff YellowA as a director, Plaintiff YellowA as an outside director, and State Do Do Do Do as an auditor, respectively. On the same day, Plaintiff YellowA paid KRW 000 for the remainder of the contract of this case to △△ pursuant to Article 4(1) of the instant contract, and came to hold KRW 26.36% of the equity interest in △△ as of the same day.

9) On August 9, 2007, before transferring the shares of the non-party company to △△ Securities, Plaintiff Yellow A requested DD corporations, an outside appraisal organization, to assess the development project of this case, which was planned to be promoted by the non-party company. The result of the appraisal on the investment value of the development project of this case conducted by DD corporations, the net value of the project of this case was calculated as 00 won.

10) Meanwhile, on May 30, 2007, Plaintiff YellowA transferred 00,000 shares of the non-party company to MM Co., Ltd. per share and 000 won per share to JJ on the same day. In case of calculating the shares of the non-party company according to the supplementary assessment method under Article 89(2)2 of the former Enforcement Decree of the Corporate Tax Act, the value per share at the time of the capital increase is 00 won.

[Ground of recognition] Facts without dispute, Gap 4, 5 evidence, Eul 6 to 16 evidence (including each number), the purport of the whole pleadings

D. Determination

1) Determination on the Plaintiff Company’s assertion

A) The Defendant deemed that the Plaintiff is “a person who is deemed to exercise de facto influence over the management of the pertinent corporation” under Article 52(1) of the former Corporate Tax Act (amended by Act No. 10423, Dec. 31, 2010; hereinafter the same) and Article 87(1)1 of the former Enforcement Decree of the Corporate Tax Act with respect to △△, and deemed that the Plaintiff Company held 100% of the total number of issued and outstanding shares was between △ and its related party at the time of the instant capital increase, and deemed that the portion of the instant corporate tax was imposed upon the Plaintiff Company. Accordingly, it first examines whether △△ is a person with a special relationship under Article 87(1)4 of the Enforcement Decree of the said Act with the Plaintiff Company at the time of the instant capital increase.

B) Article 52(1) of the former Corporate Tax Act provides for the calculation of the amount of income arising from a transaction with a specially related person or a transaction with a specially related person as an object of wrongful calculation, and delegates the scope of the specially related person to the Presidential Decree. According to delegation, Article 87(1) of the former Enforcement Decree of the Corporate Tax Act provides that a person who is liable for tax payment and a related person falling under any of the subparagraphs of the same paragraph is a specially related person. Thus, the person who is liable for tax payment should be deemed to fall under a specially related person only based on the person who is the specially related person. On the other hand, deeming that the person liable for tax payment falls under a specially related person in any of the following cases based on the other party who made a transaction with a company as a taxpayer is not permissible against the language and text of the above Enforcement Decree. In addition, since the legislative policy method to determine the scope of a specially related person is the issue of how to expand the scope of the specially related person, there is no reason to expand the scope of the specially related person by interpretation or analogical interpretation (see, e.

As seen earlier, at the time he participated in the capital increase in this case and took over the shares of the non-party company (as seen earlier, August 30, 2007), the non-party company was holding 100% of the shares issued by the non-party company and 9.38% of the shares issued by the non-party company, the counter-party to the transaction. It is examined whether the non-party company's acquisition of 168,000 shares issued by the non-party company by participating in the capital increase in this case, constitutes a related party under Article 87 (1) 4 of the former Enforcement Decree of the Corporate Tax Act. In light of the above legal principles, Article 87 (1) 4 of the above Enforcement Decree of the non-party company constitutes only another corporation whose shareholder, the taxpayer, invests less than 30% of the total shares issued by the non-party company, and even if the non-party company, the shareholder of the non-party company, held less than 30% of the total shares issued by the non-party company, the non-party company.

Therefore, the corporate tax imposition scheme based on the premise that △△ and the Plaintiff Company constitutes a specially related person prescribed in the above provision is unlawful without further examining the remaining arguments of the Plaintiff Company.

2) Determination on the Plaintiff’s assertion

A) Whether it constitutes a person with a special relationship with △△

Article 26 (4) 3 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that "a person who is in a special relationship" shall be a transferor or transferee and a person who is deemed to exercise de facto influence over the management of the relevant corporation by exercising the right to appoint or dismiss executives or by determining business policies, etc." Article 29 (1) and Article 19 (2) 3 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that "a person who is in a special relationship" shall be a person who acquires new shares and a person who is deemed to exercise de facto influence over the management by exercising the right to appoint or dismiss executives of the relevant corporation or by determining business policies."

We examine whether the plaintiff YA is a person with a special relationship under Articles 26(4)3, 29(1), and 19(2)3 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act with △△ and the former Enforcement Decree of the Inheritance Tax and Gift Tax Act.

The following circumstances acknowledged through the purport of the above facts and oral argument, i.e., (i) the Plaintiff’s 20 billion won or more by executing the procedure for issuing new shares through the third party allotment method, even before the outstanding payment date, while entering into the contract of this case with KimB and 4 other parties, and (ii) the Plaintiff’s 200 billion won or more by taking over the shares of the Plaintiff’s company with the above funds, and the Nonparty’s 8 billion won or more by taking over the shares of this case’s 00 won or more by taking over the shares of the Plaintiff’s 10 billion won or more from the 100 billion won, and without the Plaintiff’s written consent, the Plaintiff’s 200 billion won or more by taking over the shares of this case’s 7 billion won or more under the contract of this case’s 00 billion won or more by taking over the shares of the Plaintiff’s 100 billion won or more (the Plaintiff’s 200 billion won or more).

Therefore, this part of the Plaintiff’s assertion is without merit.

B) Whether 000 won per share can be seen as the market price

According to Article 35 (1) 2 of the former Inheritance Tax and Gift Tax Act, where stocks are transferred to a person with a special relationship at a price higher than the market price, an amount equivalent to the difference between the price and the market price shall be deemed to have been donated to the transferor. According to Article 39 (1) 2 (c) of the same Act, where a corporation receives profits from a person with a special relationship as a shareholder of the relevant corporation received allocation of stocks in excess of the number of shares that can be allocated in issuing new stocks, the person with a special relationship shall be deemed to have received. Here, the market price refers to the objective exchange value formed through a normal transaction in principle at a price that is recognized to be normal where a transaction takes place freely between many and unspecified persons (Article 60 (2) of the former Inheritance Tax and Gift Tax Act). In cases of unlisted stocks with a low market price, if there is a normal transaction example that reflects the objective exchange value at an appropriate level, it shall be deemed the market price (see, e.g., Supreme Court Decisions 97Nu8502, Sept. 26, 26, 2004).

On August 9, 2007, the Defendant deemed 00 won, which is the market price per share of the shares of the non-party company that was transferred to ○○○ Securities, as the market price, and the portion on the gift tax imposition scheme in this case was deemed to have been donated by the Plaintiff Yellow City. We examine whether the Defendant’s assessment of 00 won per share of the shares of the non-party company between the Plaintiff Yellow City and ○○○ Securities is appropriate in view of the market price per share of the shares of the non-party company.

In light of the aforementioned legal principles, since the fact that △△ Securities was transferred to KRW 00,000 per share of the non-party company to the non-party company to the non-party company on the same day on which the transaction of this case on the stocks of the non-party company was made between △△ and the non-party company (per share, KRW 000,000 per share), the above △△ Securities and the transaction of △△△ Securities seems to be a normal transaction that reflects an adequate objective exchange value, and therefore, it is reasonable to view the above transaction value per share to be the market value of the non-party company's stocks at the time.

As to this, Plaintiff Yellow A asserts to the effect that, based on the results of the DD corporation’s assessment on the investment value of the instant development project, the price per share of the non-party company is calculated at KRW 000 per share, and that, in the future, the participation of the non-party company to support the financial advisory and business funds of the instant development project is determined at KRW 00 per share, which is below KRW 00 per share, taking into account the following strategic roles, such as the increase in the level of external credit of the plaintiffs, and the growth in financial financing services, etc., of the following strategic roles in the future, the transfer value is determined at KRW 00 per share, which is below KRW 00 per share, which is below the market value.

However, there is no objective evidence that the transaction price with △△ Securities (00 won per share) has been determined at a lower price than the market price in consideration of the circumstances alleged by the above Plaintiff. ② As seen earlier, the appraisal of △D Corporation is related to the investment value of the instant development project scheduled to be promoted by the non-party company, and cannot be viewed as the appraisal of the shares of the non-party company at the time. ③ When entering into the instant contract by which the non-party company takes over the shares and the management right of △△ from KimB and four others, the contract of this case was concluded by the non-party company and the amount equivalent to 3 billion won of the shares of the non-party company owned by the non-party company and the new shares to be issued due to the capital increase in this case was decided to have △△ acquired the shares of the non-party company by the above method, and thereafter, the plaintiff's assertion that it is difficult to view it as the result of the price negotiations with an equal trading position with 0 billion won per share, based on the objective appraisal method and trading price per 10 billion won per share.

C) Sub-decision

Therefore, the imposition of the gift tax of this case against the plaintiff YA is legitimate.

3. Conclusion

Since the company's claim is well-grounded, it shall be accepted, and the claim of the Yellow City is dismissed as it is without merit.