early 2010 Heavy3222 ( December 16, 2010)

It constitutes a title trust if the use of the name is explicitly or implicitly permitted.

In full view of the personal relations, it is not sufficient to recognize that the use of the name was explicitly or implicitly permitted with respect to the acquisition of shares, and that there was a clear purpose of tax avoidance to the extent that it is recognized that there was no purpose of tax avoidance in the title trust.

2011Revocation of revocation of disposition imposing gift tax

KoreaA

Head of Central Tax Office

September 21, 2011

November 23, 2011

1. The plaintiff's claim is dismissed.

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

On September 1, 2010, the Defendant issued a disposition of reduction (if a disposition of reduction or correction was made, the disposition of reduction or exemption cannot be the subject of the lawsuit, and since the original disposition is the subject of the lawsuit that remains after reduction due to the disposition of correction, the date of the disposition in this case shall be September 1, 2010, which is the original date of the disposition, but the date of disposition in this case shall be August 23, 201, which is the date of disposition in the Plaintiff’s application for change of claim and cause of claim, entered the date of disposition as August 23, 201, which is the date of disposition of correction, in the application for change of claim and cause of claim. This is deemed to have been mistakenly stated) against the Plaintiff, the disposition of imposition in this case shall be revoked.

1. Details of the disposition;

A. On May 15, 199, the Plaintiff acquired 8,000 shares in BB industry (hereinafter referred to as “B industry”), 8,000 shares in BB industry on March 12, 2003, 4,000 shares in CCC (hereinafter referred to as “CCC”) on August 1, 2005.

B. On February 29, 2008, the Plaintiff transferred the instant shares to YangD, and reported and paid KRW 5,133,310 on June 2 of the same year.

C. The defendant conducted a tax investigation with respect to the plaintiff, confirmed that the actual owner of the shares in this case is E, the head of the plaintiff, and issued a tax investigation to the plaintiff on September 1, 2010 by applying the provision on deemed donation of title trust property under the Inheritance Tax and Gift Tax Act (hereinafter referred to as the "Act") to the tax amount of KRW 10,400,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000 (hereinafter referred to as the "the case").

D. Accordingly, the Plaintiff appealed to the Tax Tribunal on October 1, 2010, but the Tax Tribunal dismissed the request on December 16, 2010.

E. On August 23, 2011, the Defendant discovered that the Plaintiff did not apply the provision regarding the deduction of donated property between relatives, but did not apply the provision regarding the deduction of donated property between relatives, and subsequently corrected the gift tax of 1999 to KRW 9,750,00, the gift tax of 203 to KRW 22,214,720, and the gift tax of 205 to KRW 40,004,00.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 3, Gap evidence Nos. 4 and 5-1, 2, 3, Gap evidence Nos. 6, 10, 11, and 12, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) Although the Plaintiff did not allow EE to use the Plaintiff’s name, since EE acquired the instant shares by using the Plaintiff’s name without permission, the provision regarding title trust property donation cannot be applied.

(2) The transfer price of the instant shares was fully used by EE for debt repayment or the creation of an agricultural corporation, and the Plaintiff did not receive the interest rate with respect to the disposal of the instant shares, and thus, E was merely a nominal trust rather than a donation of the instant shares to the Plaintiff, and thus, the provision on deemed donation of title trust property cannot be applied.

(3) It goes against the principle of substantial taxation to impose gift tax on the Plaintiff even though the Plaintiff did not participate in the acquisition and transfer of the instant shares, and all economic benefits from the acquisition and transfer of the instant shares accrue to EE.

(4) The EE merely acquired shares in the name of the Plaintiff by requiring three promoters under the Commercial Act at the time of incorporation of the BB industry. Since BB industry did not distribute profits, there was no tax evaded through the title trust of the instant shares. Therefore, the instant disposition that was imposed on the gift tax even though there was no tax avoidance purpose is unlawful.

(5) The BB industry was established on July 30, 1997, and the two years thereafter, E under title trust with the Plaintiff around May 1999, assessing the value of the shares at the time of donation, thereby evaluating the value of the shares at the time of donation in accordance with Article 63(1)1(c) of the Act, it is unlawful to assess the amount of share capital as the donation value.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) The assertion that EE has used the Plaintiff’s name without permission

According to the evidence No. 6, No. 7-1, No. 2, and No. 3, No. 6, and No. 13 through No. 19 of the Plaintiff’s evidence No. 3, No. 2, and No. 3, No. 6, and No. 13 of the Plaintiff’s evidence No. 2, and the overall purport of each of these statements and arguments, the CB industry is a corporation engaged in manufacturing and selling organic fertilizers, and CCC’s chips, etc., and the Plaintiff is a corporation that manufactures and sells fire engines and tree chips, etc., from August 27, 1999 to February 20, 2005; the Plaintiff’s title of the BCC Co., Ltd., Ltd.’s 207, and the Plaintiff’s title of the BCC Co., Ltd., Ltd.’s 207, and the Plaintiff’s title of the BCC’s 20G directors from Oct. 4, 2005 to Oct. 24, 207

(2) The assertion that the provision on deemed donation of title trust property cannot be applied because it is not a actual donation.

The provision on the constructive gift of title trust property is deemed a gift if there exists a fact of title trust, and therefore a taxpayer is only able to contest the existence of the fact of title trust, and even if it is not a real donation, it is impossible to exclude the legal fiction provision, so even if it is not a donation, it cannot be exempted from tax payment liability pursuant to the application of the provision on the constructive gift of title trust property. Therefore, even if EE does not actually donate the stocks of this case under the name of the Plaintiff, even if it is not the actual donation of the stocks of this case under the name of the Plaintiff, this part

(3) The assertion that the substance over form principle is against

The provision on constructive gift of title trust property prescribed by the Act as a means of concealing a gift in a case where the title trust is used as a means of suppressing the gift, to the extent that the purpose of tax avoidance is limited, and the imposition of gift tax is recognized as reasonable as an appropriate method to realize the equity of tax justice and tax (see Constitutional Court Order 2004Hun-Ba40, Jun. 30, 2005). Thus, it cannot be said that the imposition of gift tax is contrary to the principle of substantial taxation by imposing gift tax pursuant to the above provision on the Plaintiff. Accordingly, the Plaintiff’s assertion on this part is without merit.

(4) The assertion that there was no purpose of tax avoidance

The legislative purpose of Article 41-2(1) and Article 45-2(1) of the Act (amended by Act No. 7010, Dec. 30, 2003) is to recognize an exception to the principle of substantial taxation with the intention of effectively preventing tax avoidance and realizing tax justice, since the title trust was not established for other reasons, and it cannot be concluded that there was no possibility that the Plaintiff had no other purpose of tax avoidance (see, e.g., Supreme Court Decision 2000Du170, Dec. 31, 2007) for the purpose of establishing the title trust 20 or more than 10% of the total stocks (amended by Act No. 6780, Dec. 18, 2002). In light of the above legislative purpose, it cannot be concluded that there was no other objective of establishing the title trust 30 or more of the Act, which is the witness of the title trust 40 or more of the Act.

(5) The assertion that the method of stock appraisal was wrong

Article 63(1)1 (c) and Article 54(1)1 of the Enforcement Decree of the Act (amended by Presidential Decree No. 1660, Dec. 31, 1999); Article 63(2)1 of the Act provides that non-listed stocks shall be the average of net asset value (net asset value of the corporation concerned ¡À total number of issued stocks) and net profit and loss value (the average rate determined by the Ordinance of the Ministry of Finance and Economy, taking into account the average interest rate formed in the financial market ¡À) for the last three years; a corporation of less than three years after the commencement of the business shall be the average of net asset value of 0.0 billion won per share; according to subparagraph 3, BB shall be the net asset value at the time of the commencement of the business, and the net asset value at the time of the transfer of 10.0 billion won and the net asset value at the time of the transfer of 10.0 billion won can be found to be the net asset value at the time of the transfer of 19.5 years 19.5 days after the transfer of shares to the Plaintiff.

3. Conclusion

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