If the purpose of the title trust had the intention of tax avoidance, it cannot be said that there is no purpose of tax avoidance.

Unless there are special circumstances, whether there was an object of tax avoidance or not shall be determined at the time of the title trust of the pertinent property at issue as to whether there was a deemed donation due to the title trust, and it shall not be determined as to which tax was actually evaded after the title trust

Article 45-2 of the Inheritance Tax and Gift Tax Act

2013Guhap4682 Revocation of Disposition of Imposition of Gift Tax

1.A 2.B

1.CC Director 2.D Director

July 18, 2013

September 26, 2013

1. All of the plaintiffs' claims are dismissed.

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

On December 1, 2011, the director of the tax office of the defendantCC revokes the imposition of the gift tax OOOO on the plaintiff Lee Dong-A and the imposition of the gift tax OOOOOB on December 1, 201 by the director of the tax office of the defendant DD against the plaintiff Lee Dong-B.

1. Details of the disposition;

A. The director of the regional tax office found the following facts: (a) the director of the regional tax office conducted an investigation into changes in the shares of EE Co., Ltd. (hereinafter referred to as 'EE'); (b) the plaintiff EF was converted into 5,091 shares of the non-party company (the 40,00 shares of the non-party company were converted into 40,00 shares of the non-party company on February 25, 2008; and (c) the total number of the non-party company ordinary shares at the time 440,598 shares of the non-party company was converted into 9.1%) and (d) the non-party company EF was converted into 5,884 shares of the non-party company (the above conversion priority was converted into 46,239 shares around February 2, 208; and (d) the total number of the non-party company common shares at the time of conversion into 440,598 shares; and (d) each of the above shares was reported to the defendants.

B. Accordingly, the Defendants applied Article 45-2 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8852, Feb. 29, 2008; hereinafter referred to as the "former Inheritance Tax and Gift Tax Act") to assess the value of the stocks of the non-party company as OOO per share, and the head of the defendantCC tax office assessed the non-party company's OOOOOO on December 1, 201, and the defendant DD director imposed the gift tax on the plaintiff Lee B on December 1, 201 (hereinafter referred to as "the disposition of this case") respectively (hereinafter referred to as "the disposition of this case").

C. The Plaintiffs filed an objection with the Commissioner of the National Tax Service on March 7, 2012, and the Defendants, on April 2, 2012, accepted part of the Plaintiffs’ claim, and deemed the market price of the instant shares as the OOO per share, which is the price acquired by Nonparty KimG from the National Pension 05-5 HHH Venture Partnership on December 28, 2007, not the “National Pension 05-5 HHH Venture Partnership”, as the price acquired from five venture partnerships, reduced the amount of OOO of gift tax on Plaintiff thisA and the gift tax on Plaintiff BB, respectively, and the Plaintiffs’ objection was dismissed on April 6, 2012.

D. The Plaintiffs filed a request for a trial with the Tax Tribunal on July 11, 2012, but were all dismissed on November 19, 2012.

[Based on Recognition] The respective entrys in Gap, Eul, Eul, Eul, Eul, Eul, three, and four (in the case of family number, including the number, hereinafter the same shall apply), and the whole purport of the pleading

2. Whether the instant disposition is lawful

A. The plaintiffs' assertion

1) The primary argument

In addition, there is no tax (tax liability under the Framework Act on National Taxes, global income tax on deemed acquisition tax of oligopolistic stockholders, global income tax on dividend income, transfer income tax, etc.) that is avoided due to title trust of the instant stocks for the purpose of tax avoidance as the FF, which is a type of business, was asked to identify all of its names, and so it was illegal to impose gift tax on the Plaintiffs by applying the provision on deemed donation of trust property by applying the provision on deemed donation of trust property.

2) Preliminary assertion

The transaction between the non-party KimG and the non-party six venture businesses association is conducted between the six venture businesses association to defend their management rights in the course of recovering their investments, and the OOOOO per share, the transaction price, is not ordinarily established when a free transaction is made between many and unspecified persons. Accordingly, the instant disposition that reported it as the market price is unlawful.

B. Relevant statutes

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

C. Determination

1) Judgment on the main argument

The legislative intent of the constructive gift of a nominal trust property is to effectively prevent tax avoidance using the nominal trust system, and to realize tax justice, and if the title trust was deemed to have been made for any reason other than the tax avoidance purpose, and only a minor reduction of tax incidental to the title trust occurs, it cannot be readily concluded that there was such a purpose of tax avoidance. However, in light of the legislative intent as above, only if the purpose of the title trust is not included in the purpose of tax avoidance, it cannot be deemed as a deemed donation by applying the proviso of the above provision, and if it is deemed that there was an intention of tax avoidance, it cannot be said that there was no other purpose of tax avoidance, and the burden of proving that there was no objective and objective purpose of tax avoidance in this case is 200, 2007Du1931, 200, and 207Du17175, Sept. 8, 2011, 2007).

In light of the above legal principles, in order to recognize that there was no objective of tax avoidance in the title trust of this case, the plaintiffs must prove the following circumstances which were recognized by the facts and evidence as follows, i.e., (i) in order to recognize that there was no objective of tax avoidance in the title trust of this case, the plaintiffs must prove that there was a clear objective of tax avoidance, which is irrelevant to the tax avoidance, and (ii) there is no clear objective of tax avoidance, and there is no evidence to prove that there was no objective of tax avoidance, and (iii) whether there was a objective of tax avoidance, should be determined at the time of the title trust, and even if the non-party company did not pay dividends after the title trust of this case, it is difficult to conclude that the non-party company was not liable to pay global income tax on the dividend income in the future as of the time of the title trust of this case, and there is no evidence to acknowledge that there was no objective of tax avoidance in the title trust of this case by the evidence submitted by the plaintiffs alone. Therefore, there is no reason to deem otherwise.

2) Determination on the conjunctive assertion

A) Facts of recognition

(1) On October 2006, the non-party company issued 35,710 shares per share, the sum of which is 35,710 won in the redemption priority for the conversion of the OOOO members, to five venture cooperatives, other than 'National Pension 05-5 HH ventures Partnership' (hereinafter referred to as "M venture cooperatives").

Company

Number of issued shares (States)

Issue value (won)

HH Co., Ltd.

714

OOO

National Pension05-5 HH Venture Partnership

6,428

OOO

II-DVF-7) Investment Association

7,142

OOO

II-Business Start-Up Care Fund Investment Association

7,142

OOO

J J Good Business Investment Association 1

7,142

OOO

National Pension Service 05-3 K Venture Association

7,142

OOO

Total

35,710

OOO

(2) On December 28, 2007, KimGG, the largest shareholder of the non-party company (38,14%) and the representative director of the non-party company, entered into a contract with the non-party company to acquire the converted redemption priority share owned by the six venture cooperatives from each of the six venture cooperatives.

(3) At that time, KimG borrowed 4 billion won from the F, Inc., LL (at that time, KimG and LeeF were listed as directors of the said company) from the F, and paid the said six venture businesses total sum of the share purchase price to the said six venture businesses.

(4) The FF received the instant shares (transfer preferential share 10,975 shares) from KimG in return for lending the OOOO source to KimG as above, and title trust was held against the Plaintiffs.

(5) Meanwhile, around February 2008, the transition preferential share held by KimG and LeeF was converted into about 280,598 common share ( approximately 7.86), and accordingly, the share of KimG was 61.1%.

(6) On February 25, 2008, LLL Co., Ltd. received 44,060 shares of common shares from KimG in return for lending OOOG to KimG as above.

(7) On June 16, 2008, thisF, as if the plaintiffs transferred 30,000 shares of the instant shares converted into common shares to YangM to YangM, was in title trust with YangM, but during the period from September 1, 2008 to October 27, 2008, transferred 200,000 won per share to LL, and on October 8, 2008, invested the remainder of 56,690 shares held in their own name in the amount per share.

[Based on recognition] The whole purport of Gap, Eul, Eul, Eul, Eul, and Eul, and Eul, and Eul, and Eul, and the whole argument

B) Determination

The main text of Article 49(1)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 20720, Feb. 29, 2008) provides that "if there is any transaction fact with respect to the pertinent property, the transaction value shall be deemed to be the market value" and the proviso provides that "if there is any transaction fact with a related party, the transaction value shall be deemed to be objectively unfair, such as the transaction value with the related party," the transaction value shall be deemed to be the market value, and if there is any transaction fact with a small market value, the transaction value shall be deemed to be the market value, and the transaction value shall not be evaluated by the supplementary assessment method stipulated in the former Inheritance Tax and Gift Tax Act, and the market value shall be deemed to mean the objective exchange value formed by the general and normal transaction, in order to be recognized as the market value, the circumstances should be recognized that the relevant transaction is made in a way that properly reflects the objective exchange value as at the date of donation at the market value (see, e.g., Supreme Court Decisions 2000Du4364.

In this case, the following circumstances are acknowledged through the health stand, the entire arguments, and the transaction value between KimGG and six venture cooperatives are the same as the issued value at the time when the transition preferential share is allocated to the six venture cooperatives, and thus, it cannot be considered as a relatively high-level price formed compared with the management premium. ② The 'venture fund' formed by six venture cooperatives as its main business to invest in the venture business is high growth, but the 'venture fund' formed and recruited for the purpose of investment in the venture business short of funds, and it seems that the purpose of the operation of the non-party company is not to maximize the investment profits. ③ In light of the fact that it is difficult to view that the six venture companies would threaten the management interest of the KimGG at the time of the transaction between KimGG and six venture businesses, it is reasonable to see that the 6 venture companies' share in each of the six venture businesses association would be converted into common share, and even if it is difficult to see that the 6GG and the 405G share in each of the two venture businesses were converted into the 6G shares.

Therefore, it is legitimate that the defendant calculated the value of the shares in this case by considering transaction example among KimG and six venture businesses associations as the market price is reasonable. The plaintiffs' preliminary assertion is also without merit.

3. Conclusion

The plaintiffs' claims are dismissed in entirety because they are without merit.