Cho High Court Decision 201Da1589 (Law No. 15, 2011)

not proved that the title trust was made for any purpose other than the avoidance of tax

Although the Plaintiff asserts that the above confirmation was prepared by the coercion of his employee, it is reasonable to view that the above assertion was held in title trust because there is no other evidence to prove otherwise, and it is not proven that the title trust was made for any purpose other than tax avoidance.

2011Guhap3683 Revocation of Disposition of Imposition of Gift Tax

XX

Kim Jong-soo

July 5, 2012

September 27, 2012

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposing gift tax of KRW 000 against the Plaintiff on August 3, 2010 shall be revoked.

1. Details of the disposition;

A. On November 23, 2006, the Plaintiff established XX General Construction Co., Ltd. (hereinafter referred to as the “P specific case”) and accepted 400,000 shares out of 700,000 shares issued in total of XX specific shares.

B. The Defendant: (a) deemed that the Plaintiff received title trust from AAA of the representative director of SP (hereinafter referred to as “P”) with respect to the said shares 400,000 shares (hereinafter referred to as “instant shares”); and (b) applied Article 45-2(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter referred to as “Inheritance Tax and Gift Tax”); and (c) imposed 000 gift tax on the Plaintiff on August 3, 2010 (hereinafter referred to as “instant disposition”).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, Eul evidence Nos. 1 and 2, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff asserts that the disposition of this case is unlawful since it was not a title trust from AA, but a domestic title trust was not for the purpose of tax avoidance, even if a domestic title trust was recognized, since it was not for the purpose of tax avoidance.

B. Determination

(1) Whether title trust is held

(A) In case where the actual owner and the nominal owner are different from the property (excluding land and buildings; hereinafter the same shall apply in this Article) which requires a registration, etc. for a transfer or exercise of the right, notwithstanding Article 14 of the Framework Act on National Taxes, the value of the property shall be deemed to have been donated by the actual owner by the nominal owner on the date when the actual owner and the nominal owner are registered, etc. as the nominal owner (where the property is subject to a transfer of ownership, referring to the date following the end of the year following the year in which the date of acquisition of ownership belongs), but this provision shall not apply in case where the property is registered under another person's name or the title of the actual owner who acquired the ownership is not registered

(B) The following circumstances, i.e., ① paid 00 won out of 00 won of the subscription price of the instant shares, ② deposit of 00 won in the accounts of NA on November 21, 2006 at 00 won of the subscription price of 200 won was made. The Plaintiff transferred 00 won to the above accounts of 200 won of the subscription price of the instant shares (the above 200 won of the subscription price of the instant shares) and 10 won of the subscription price of 200 won of the subscription price of the instant shares (the above 200 won of the subscription price of the instant shares). The Plaintiff asserted that 10 won of the subscription price of the instant shares was 60 won of the subscription price of the instant shares and 20 won of the subscription price of the instant shares. However, the Plaintiff did not appear to have been 100 won of the subscription price of the instant shares at 200 won of the subscription price of the instant shares.

(2) Whether the purpose of tax avoidance is to achieve tax avoidance

(A) The legislative intent of Article 45-2(1) of the Inheritance Tax and Gift Tax Act, which provides for the constructive gift of property trusted in title trust, recognizes an exception to the substance over form principle to the purport that the tax justice is realized by effectively preventing the act of tax avoidance by using the title trust system. Thus, only where the purpose of title trust is not included in the purpose of tax avoidance, the application of subparagraph 1 of the same paragraph is possible, and in such a case, the burden of proving that there was no purpose of tax avoidance is the person who asserts it (see, e.g., Supreme Court Decisions 2003Du13649, Dec. 23, 2004; 2004Du123, Jan. 28, 2005)

Therefore, the fact that there was no purpose of tax avoidance can be proven by means of proving that there was another purpose, not the purpose of tax avoidance. However, as the nominal owner who bears the burden of proof, there was a clear objective of tax avoidance to the extent that there was no objective of tax avoidance in the title trust, and if there was no tax evasion in the future at the time of the title trust or in the future, by objective and conclusive evidence, it should be proved to the extent that there was no doubt (see Supreme Court Decision 2004Du11220, Sept. 22, 2006).

(B) As to the instant case, there is no evidence to acknowledge that the title trust of this case had a clear objective of tax avoidance to the extent that it was recognized that there was no objective of tax avoidance, and the Plaintiff’s assertion is rejected.

3. Conclusion

Thus, the disposition of this case is legitimate, and the plaintiff's claim is dismissed.