Seoul Administrative Court-2016-Gu 50259 (Law No. 19, 2016)

Seocho 2015west 3438 ( October 08, 2015)

It is difficult to readily conclude that there was no tax avoidance purpose in the title trust of the instant shares solely on the ground that the Plaintiffs asserted otherwise.

There is also a possibility that shares will be subject to the corporate tax rate higher than the transfer tax rate due to title trust, and there is an interest that can avoid the application of the wrongful calculation under Article 52 of the Corporate Tax Act in the case of transfer to the next person. Therefore, it is reasonable to deem that there was an intention to avoid such corporate tax burden in the title trust of the shares of this case.

Article 45-2 (Legal Fiction of Donation of Title Trust Property)

Article 69 (Tax Base Return of Gift Tax)

2016Nu6304 Revocation of Disposition of Imposing gift tax

○○ et al. and 20

○○ Head of Tax Office and 13

Seoul Administrative Court Decision 2016Guhap50259 decided August 19, 2016

February 23, 2017

September 21, 2017

1. Revocation of a judgment of the first instance;

2. All plaintiffs' claims are dismissed.

3. The costs of the lawsuit are assessed against the Plaintiffs.

1. Purport of claim

The imposition of each gift tax stated in the final tax column shall be revoked in the attached Table No. 1999, which the Defendants made to the Plaintiffs on the date indicated in the disposal date column.

2. Purport of appeal

The same shall apply to the order.

1. Quotation of judgment of the first instance;

1. Details of the disposition;

1. Of the reasoning of the judgment of this court, the part concerning "1. Reasons for the disposition" is identical to the corresponding part of the reasoning of the judgment of the court of first instance (Articles 8(2) and 420 of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

2. Whether the disposition is lawful;

A. The parties' assertion

1) The plaintiffs' assertion

The Plaintiffs, at the time of title trust by ○○ Shipping, not the Deceased, should be deemed to have no tax avoidance purpose because ○○ Shipping had no possibility of imposing taxes on any pretext. Therefore, the instant disposition is unlawful.

2) The defendants' assertion

A) In the first place, the Plaintiffs received the instant shares from the Deceased, and the Deceased avoided the secondary tax liability of investors and the comprehensive income tax at the time of dividend due to the title trust of the instant shares. Thus, the instant disposition is lawful.

B) Preliminaryly, the Plaintiffs were those who received the instant shares from ○○ Shipping, and ○○ Shipping avoided corporate tax due to the title trust of the instant shares, and the instant disposition is lawful.

B. Relevant statutes

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

C. Determination

1) As to the title truster of the instant shares

A) Comprehensively taking account of the overall purport of the statements and arguments stated in Eul evidence Nos. 23 through 33, 37 through 43, and 47, the deceased exercised de facto control and management rights by appointing executives of the company related to the ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ was the largest shareholder of ○○○○○○○○○○○○○○○○○, a ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ was the Nonindicted Shareholder on January 1, 200 to December 31, 202.

B) However, in addition to the purport of the entire pleadings, the following circumstances revealed: (a) it is difficult to conclude that the acquisition price of the shares of this case was appropriated for the funds owned by the deceased’s individual; (b) the statement made by ○○ Kim○, the representative director of ○○○, who was the representative director of ○○ Shipping, was merely an abstract side; and (c) the witness of the first instance court stated to the effect that he was the actual owner of the shares; and (d) in relation to the source of the purchase price of the shares of this case, the witness of ○○○ was given a temporary credit loan at the bank; and (e) the customer was raising the funds to the ○○○○○○○○○○○○○○’s personal funds with the thickness of the president, who was the representative of ○○○○○○○○○○○○○○; and (e) the Defendants stated that the funds of this case were insufficient to recognize that the funds of this case were actually paid for the ○○○○○○○’s shares.

C) However, the Plaintiffs are deemed to be the title truster of the instant shares as ○○ Shipping, and the Defendants also added them to the preparatory disposition grounds in the briefs dated February 20, 2017. If the addition of the aforementioned ancillary disposition grounds is permitted, the instant disposition based on the provision on the deemed donation of the instant shares is lawful insofar as the remaining requirements for deemed donation of the title trust are satisfied.

Even if there are errors or errors in part of the facts acknowledged at the time of the initial disposition by the tax authority, if the facts found thereafter are not different from the facts identical to the facts of the initial disposition, the identity of the disposition is maintained (see Supreme Court Decision 96Nu3272, Feb. 11, 1997). According to the aforementioned details of the disposition and additional circumstances of the conjunctive disposition, etc., the reason added to the original reason of the disposition in question is only different from the facts of the original disposition in a single objective factual relationship where the title truster is the deceased or about ○○ Shipping, and it does not change from the scope of the original facts identical to the facts of the taxation, and thus, the identity of the disposition is maintained. Thus, the defendants' addition of the ancillary reason in this case constitutes the addition and modification of the grounds for disposition made within the scope of maintaining the identity of the disposition.

Therefore, we examine the remaining arguments of the plaintiffs on the premise that the title truster of the shares of this case is ○○ Shipping.

2) As to the existence of the purpose of tax avoidance

A) The legislative purport of Article 41-2(1) of the former Inheritance Tax and Gift Tax Act is to effectively prevent the act of tax avoidance using the title trust system and realize the tax justice. As such, the proviso to the same Article is applicable only where the purpose of tax avoidance is not included in the purpose of the title trust. In such a case, the burden of proving that the purpose of tax avoidance was not included in the purpose of the title trust lies in the title claimant (see, e.g., Supreme Court Decision 2010Du24968, Mar. 28, 2013). In addition, in light of the legislative purpose of Article 41-2(1) of the former Inheritance Tax and Gift Tax Act, if it is recognized that the title trust was made for other reason than the purpose of tax avoidance and that the reduction of taxes incidental to the said title trust took place, it cannot be readily concluded that there was "tax avoidance purpose" in such title trust, but it cannot be deemed that there was no other purpose of tax avoidance by applying the same proviso, and thus, it cannot be deemed that there was no other purpose of tax avoidance (see, 3097.

B) The Plaintiffs asserted that even if a company acquires its own shares, it is without imposing acquisition tax, even if the company receives dividends as a shareholder, the dividend income tax is not likely to be imposed, and also, under Article 341 of the former Commercial Act (amended by Act No. 10600, Apr. 14, 2011; hereinafter the same) the grounds for acquiring its own shares are limited. The Plaintiffs asserted that the instant shares do not constitute grounds for acquiring its own shares under the Commercial Act, and that the title trust with the Plaintiffs

○○○ Shipping violated Article 341 of the former Commercial Act that limits the acquisition of the instant shares when acquiring the instant shares. Therefore, there is room to view that ○○ Shipping’s title trust of the instant shares was aimed at evading the provisions on the restriction on the acquisition of treasury shares under the Commercial Act. However, other than the above purpose, where ○○ Shipping sells the instant shares under the real name transfer to ○○○ Shipping, it may be subject to the high corporate tax rate by adding the transfer margin to the corporate tax base, and there is a possibility that it would be subject to the application of the corporate tax rate higher than the transfer income tax rate. In addition, it is reasonable to deem that ○○ Shipping intended to avoid the corporate tax burden that may arise when selling the instant shares under the name of ○ Shipping after conversion into the real name of ○○ Shipping (see, e.g., Supreme Court Decision 2007Du17175, Sept. 8, 201). In addition, it is difficult to conclude that the Plaintiffs’ assertion that this provision was applied to the instant shares under title transfer under the name transfer.

3. Conclusion

Therefore, all of the plaintiffs' claims are dismissed because they are without merit. Since the judgment of the court of first instance is unfair with different conclusions, all of the appeals by the defendants are accepted, and the judgment of the court of first instance is revoked, and all of the plaintiffs' claims are dismissed. It is so decided