Early High Court Decision 2008J 3912 (Law No. 903.05)

Whether there has been an agreement on title trust for shares

It is alleged that the stock transaction account was lent for the nominal trust taxation, but there was no agreement on title trust, but it cannot be believed according to the relevant evidence.

The contents of the decision shall be the same as attached.

1. The plaintiff's claim is dismissed.

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

The disposition of imposition of gift tax of KRW 660,616,310 for the year 2002 against the plaintiff on March 3, 2008 (the date of disposition of the complaint seems to be the date of March 5, 2008) is revoked.

1. Details of the disposition;

A. ThisA acquired shares 106,900 shares of BB (hereinafter “instant shares”) in the Plaintiff’s name from August 2002 to December 2002, as major shareholders of BB (the trade name at the time of its establishment wasCC Korea, but the trade name was changed as above on March 2004; hereinafter “BB”) and transferred the shares of BB in the name of the Plaintiff, including seven persons including the Plaintiff, in the name of the Plaintiff, from August 2002 to December 202.

B. The Plaintiff transferred 1,933,304 shares of BB on June 19, 2003, and filed a final return on the tax base of transfer income following the transfer of shares on May 31, 2004.

C. From September 10, 2007 to October 4 of the same year, the director of the Central District Tax Office confirmed that the shares of this case among the shares transferred by the Plaintiff were shares acquired in the Plaintiff’s name and transferred to the Plaintiff between August 2002 and December 2 of the same year, and notified the Defendant of the taxation data. Accordingly, the Defendant deemed the Plaintiff to have donated the shares of this case pursuant to Article 41-2 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 2002; hereinafter referred to as the “Act”), calculated the taxable value of the gift tax of this case by deeming the Plaintiff to have donated the shares of this case from thisA as the gift tax of this case, and imposed on March 3, 2008 KRW 60,616,310 for the Plaintiff.

[Ground of recognition] Facts without dispute, Gap evidence 2, Gap evidence 3-1, Gap evidence 5, Eul evidence 1, 2, 5, and 6, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) The instant disposition was unlawful since it was conducted after the exclusion period or the statute of limitations for collection expired.

(2) Article 41-2(1) of the Act on the deemed donation of title trust goes against the principle of no taxation without law under the Constitution.

(3) The Plaintiff only lent a share transaction account without any comments upon the request of MF’s employees of friendly BBB. Since thisA unilaterally acquired shares by means of acquiring shares through the said account regardless of the Plaintiff’s intent, it cannot be said that there was an agreement between the Plaintiff and thisA on the title trust of the instant shares.

(4) Even if household affairs, thisA made title trust of the instant shares to the Plaintiff, the title trust did not have the purpose of tax avoidance.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) Determination on the first argument

According to Articles 12-3(1)1, 31(3), 41-2(1), and 68(1) of the Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 17830, Dec. 30, 2002; hereinafter “Framework Act on National Taxes”) Article 26-2(1)4 of the Framework Act on National Taxes (amended by Act No. 8139, Dec. 30, 2006; hereinafter “the Framework Act on National Taxes”), where the actual owner of stocks and the nominal owner are different, the following day after three months from the date when the transfer is made, which is the deadline for filing the gift tax base, shall be the starting date of the gift tax exclusion period. If the person fails to submit the gift tax base, the exclusion period shall be 15 years if the transfer was made in the Plaintiff’s name, not the actual owner, from August 2002 to December 30, 2002; and as such, there were no changes in the transfer period from the date after three years elapsed.

In addition, according to Article 27(1) and (3) of the Framework Act on National Taxes and Article 12-4(1)2 of the Enforcement Decree of the Framework Act on National Taxes, the extinctive prescription of the right to grant gift tax expires only when the right to grant gift tax is not exercised for five years from the day following the due date for payment by the duty payment notice. The instant disposition is a disposition imposing gift tax on the instant stocks, and it is not a collection disposition, and thus, it cannot

Therefore, this part of the plaintiff's assertion is without merit.

(2) Judgment on the second argument

Article 41-2(1) of the Act provides that in case where the actual owner and the nominal owner are different with respect to property (excluding land and buildings) requiring a registration, etc. for the transfer or exercise of rights, the value of the relevant property shall be deemed to have been donated to the actual owner on the date when it is registered, etc. as the nominal owner notwithstanding Article 14 of the Framework Act on National Taxes. The above provision recognizes an exception to the substance over form principle to realize tax justice by effectively preventing the title trust system from tax evasion. Thus, the above provision, which forms the basis of the disposition in this case, cannot be deemed to

Therefore, the plaintiff's assertion on this part is without merit.

(3) Judgment on the third argument

The provision on deemed donation under Article 41-2 (1) of the Act shall apply where, in property requiring a registration, etc. for the transfer or exercise of the right, the actual owner and the nominal owner make a registration, etc. in the future of the nominal owner by agreement or communication. Therefore, in cases where a registration, etc. is made unilaterally by using the nominal owner regardless of the intent of the nominal owner, it shall not apply. In such cases, the tax authority must only prove that the actual owner is different from the nominal owner, and the verification that the registration, etc. of the nominal owner was made by

Therefore, as seen earlier, the fact that the shares of this case were acquired under the name of the actual owner of this case even though they were the actual owner of this case, and the entry of transfer of this case was made under the name of the plaintiff. The entry of No. 4-1 and No. 6-2 seems to conform to the plaintiff's above assertion, and there is no evidence to support that this case's shares were acquired under the name of the plaintiff regardless of the plaintiff's intent. Furthermore, according to the purport of the arguments in No. 1, No. 3, No. 4-2, No. 5-2, No. 5, No. 30, No. 300, No. 4000, No. 3000, No. 4000, Dec. 1, 2004, the plaintiff filed a request for the issuance of an account for stock trading from this case's 3BB, and accordingly, the plaintiff directly received the above share transfer of this case's shares under the name of this case's 30-1.

(4) Judgment on the fourth argument

As seen earlier, the legislative purport of Article 41-2(1) of the Act is to recognize an exception to the principle of substantial taxation to the purport that the title trust system effectively prevents tax avoidance and realize tax justice. Thus, in light of such legislative intent, only when the purpose of title trust is not included in the purpose of tax avoidance, the rate of deemed donation by applying the proviso to the above provision cannot be determined, and if it is deemed that there was an intention of tax avoidance in addition to the other main purpose, the burden of proving that there was no purpose of tax avoidance exists no purpose of tax avoidance is against the person who asserts it.

Therefore, there is no evidence to find that there was no tax avoidance purpose with respect to the title trust of the shares of this case. Moreover, according to the facts acknowledged earlier and the purport of the entire pleadings in the evidence Nos. 4-1, 2, and 6-2 of the evidence No. 4-2, as well as the overall purport of the pleadings, the major shareholder of this case, who held 25.08% of the shares of BB at the time, held the title trust of BB's shares 763,618 shares to 7, including the plaintiff, around 2002, after the comprehensive taxation on financial income was made. This portion of the Plaintiff's shares was without merit in light of the following facts: (a) the dividend income of BB accrued from the shares of this case, which this case was nominal in the name of the plaintiff et al., and (b) the dividend income of 2003, including the plaintiff, was KRW 162,000,000,000,000.

3. Conclusion

Therefore, the plaintiff's claim seeking the revocation of the disposition of this case is dismissed as it is without merit. It is so decided as per Disposition.