early 208 Heavy2073 ( October 13, 2009)

Whether the title trust tax avoidance is determined by adding up the tax burden of the title truster and the trustee.

Although tax avoidance can be made as much as the amount of tax increased in applying progressive tax rates by the title trust of shares, if there is no change in the aggregate of the tax burden imposed on the title truster and the title trustee, or the difference is insufficient, the title trust for the purpose of tax avoidance cannot be deemed as

1. The Defendant’s disposition of imposition of KRW 1,803,353,680 against the Plaintiff on February 4, 2008 shall be revoked.

2. The plaintiff's remaining claims are dismissed.

3. 1/10 of the costs of lawsuit shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

The disposition of imposition of KRW 48,880,00 and KRW 29,760,840 against the plaintiff on February 4, 2008 is revoked. The disposition of imposition of KRW 48,880,000 against the plaintiff on February 4, 2008 is revoked.

1. Details of the disposition;

A. On March 16, 1987, the formerCC established AAD Construction Co., Ltd. (hereinafter referred to as "DA Construction"). AD General Construction Co., Ltd. (hereinafter referred to as "DD General Construction") changed its trade name on September 15, 1992 through several changes on September 15, 1992, and the EEE EE Construction Co., Ltd. was partially divided and established on June 3, 2000. EEE EE Construction Co., Ltd. changed its trade name on April 10, 201 to DD General Construction Co., Ltd. (hereinafter referred to as "D Integrated Construction") and DD Integrated Construction Co., Ltd changed its trade name on April 13, 2005 to DD General Construction Co., Ltd. (hereinafter referred to as "instant Company").

B. On June 22, 1999, the formerCC purchased 28,000 shares of DD Integrated Construction (the price of KRW 8,500 per share; hereinafter referred to as “instant shares”) in the name of the Plaintiff. On August 23, 1999, it purchased 9,750 shares of FF Construction Co., Ltd. (the price of KRW 12,000 per share; hereinafter referred to as “instant shares”) under the name of the Plaintiff.

C. On December 9, 2004, the instant company issued new shares with capital increase issued 820,000 shares. Of them, the formerCC acquired 473,714 shares under its own name, 49,364 shares and 9,512 shares respectively in the name of HaH and HaK’s name, 24,682 shares (hereinafter “third shares of this case”) under the name of the Plaintiff, and paid the acquisition price in full.

D. On February 4, 2008, the Defendant notified the Central Regional Tax Office of taxation that the formerCC will take over each of the shares of this case by lending the Plaintiff’s name, and applied the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 2002; hereinafter referred to as the “former Inheritance Tax and Gift Tax Act”) and 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 the “Inheritance Tax and Gift Tax Act”) with respect to the deemed donation of title trust property, the Defendant imposed the Plaintiff on February 4, 2008, KRW 480,800 (hereinafter referred to as the “first Disposition”) with respect to the shares of this case, KRW 29,760,840 (hereinafter referred to as the “instant shares”) with respect to each of the instant shares belonging to the Plaintiff in 199; and imposed the gift tax on KRW 30303830,305 (hereinafter referred to each of this case”).

E. The plaintiff appealed and filed an appeal with the Tax Tribunal on May 1, 2008, but the Tax Tribunal rendered a decision to dismiss the plaintiff's appeal on March 13, 2009.

F. On the other hand, stocks, which the formerCC stated as the Plaintiff’s owner on the D comprehensive construction, FF construction and the statement on the change in the shares and equity shares of the instant company using the Plaintiff’s name, are as follows.

[Reasons for Recognition] The entry of Gap evidence Nos. 1 through 4 in Gap's evidence No. 1. 7. 8 (including each number), the purport of the whole pleadings

2. Whether the first and second dispositions of this case are legitimate

A. The plaintiff's assertion

(1) In the absence of a change of entry on the register of shareholders, only the fact that the Plaintiff stated in the list of shares and changes in equity shares submitted by attaching the tax base and amount of corporate tax to the Plaintiff when filing the report on the change of equity shares cannot be deemed to have held title trust with the Plaintiff the instant shares Nos. 1 and 2.

(2) Even if the title trust of shares Nos. 1 and 2 of this case is recognized, since there is no purpose of tax avoidance, it cannot be deemed as a gift.

(b) Statutes;

Attached Form 1 is as shown in the relevant statutes.

C. Determination

(1) Whether title trust is established

Article 41-2 (1) of the former Inheritance Tax and Gift Tax Act provides that "in case where the actual owner and the nominal owner are different with respect to the property which requires the transfer or exercise of the right, the value of such property shall be deemed to have been donated to the actual owner on the day when the registration, etc. is made to the nominal owner." Thus, the transfer of registered shares does not oppose the company unless the name and address of the acquisitor are entered in the register of shareholders (Article 337 (1) of the Commercial Act). Therefore, it is reasonable to view that "registration, etc., necessary for the exercise or transfer of the right to registered shares under the Commercial Act" refers

However, the transfer of ownership is a technical system for protecting a company in disputes between shareholders by uniformly recognizing only a shareholder whose change of ownership is changed in the process of frequent and mass distribution of shares. The meaning of Article 337(1) of the Commercial Act is that the transferee of shares can oppose the company as a shareholder if there is a change of ownership (Article 337(1) of the Commercial Act). It means that the transferee of shares is determined as a shareholder who is to be recognized as a shareholder in relation to the company, and if the acquisitor of registered shares does not open the name of a shareholder on the register of shareholders, he/she cannot assert his/her shareholder rights against the company. It is unreasonable to recognize a de facto shareholder who does not change of ownership as a shareholder on the register of shareholders from the company’s side (see Supreme Court Decision 89Meu14714, Oct. 24, 198). In addition, where shares are transferred before the issuance of share certificates after six months have elapsed since the date of incorporation, the declaration of intention by the parties alone pursuant to the general principle on the transfer of nominative claim.

According to the evidence mentioned above and the evidence stated in Gap evidence No. 4 (including each number), the formerCC was established on March 16, 1987, and acquired shares under its name under the name of HongB (Death February 9, 200), HaH and JeonK, and it paid the acquisition price. The HongB was likely to die, and it was likely that HongB would have borrowed the plaintiff's name, and the Plaintiff acquired shares No. 1 shares of this case from HongB on June 22, 1999, while it purchased shares No. 2 shares of this case from Park GG on August 23, 199; DD comprehensive construction was established on March 16, 1987; and FF construction was established on January 13, 199, 199 that the Plaintiff did not prepare and submit a list of shareholders and changes in shares of this case for the purpose of preparing and submitting a list of shareholders of this case for the purpose of 9 years, or 9 years since its use of shares of this case as 9 years.

According to Article 45-2(3) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 7010 of Dec. 30, 2003), where the first and second shares of this case appear to have been in title trust to redB and ParkG as actual shareholders (in particular, the Plaintiff has recognized that the first shares of this case were in title trust to HongB from the date of the establishment of the company). The title trust refers to that the truster holds ownership and manage them in the internal relationship, and only the title holder in the form is a trustee. In the case of shares, the title trust refers to that the title holder shall be deemed to have the status to exercise shareholders' rights in relation to the company. According to Article 45-2(3) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 7010 of Dec. 30, 2003), if the shareholder registry or employee registry has not been prepared, it is not necessary to keep the detailed statement of change in the name of the shareholder as well as the documents and list of shareholders in question.

(Supreme Court Decision 93Nu3103 Decided April 27, 1993 cited by the plaintiff is a case where the actual owner completed a transfer of ownership in the name of actual owner for the shares, and the actual owner acquired the shares in the name of trustee only in the statement of stock transfer. The Supreme Court Decision 93Nu14196 Decided February 22, 1994 ruled that a portion of the shares owned by the actual owner after the establishment of the company is transferred to the trustee, and that the transfer of ownership is not made only in the statement of stock transfer, and it cannot be invoked in this case where the plaintiff, the external nominal owner, acquires new shares under his name.)

(2) Whether the purpose of tax avoidance is recognized

Article 41-2(1) of the former Inheritance Tax and Gift Tax Act provides for an exception to the principle of substantial taxation, as it is to realize tax justice by effectively preventing the act of tax avoidance using the title trust system. Therefore, if it is recognized that the title trust was made for any reason other than the purpose of tax avoidance, and it is merely a minor reduction of tax incidental to the said title trust, it cannot be deemed that there was a "purpose of tax avoidance" under Article 41-2(1)1 of the former Inheritance Tax and Gift Tax Act, and in such a case, the burden of proving that there was no purpose of tax avoidance is the person who asserts it (see Supreme Court Decision 2004Du7733, May 12, 2006).

This part of the plaintiff's assertion is without merit, since there is no proof that there was no purpose of tax avoidance.

(3) Therefore, the first and second dispositions of this case are lawful.

3. Whether the third disposition of this case is legitimate

A. The plaintiff's assertion

(1) As long as a transfer of title is not made in the name of the plaintiff on the register of shareholders with respect to the third stocks of this case, the title trust of the stocks cannot be deemed to exist solely on the ground that the plaintiff is stated in the statement on the change of stocks such as stocks, which is merely a data for taxation, and as a result, Article 45-2(3) of the Inheritance Tax and Gift Tax Act, which provides that the transfer of title shall be determined based on the "detailed statement on the change of stocks such as stocks," is in violation of the principle of excessive prohibition (Article 23(1) of the Constitution) under the Constitution, and thus, it cannot be deemed that the third stocks of this case were held in the title trust to the plaintiff on the ground that it violates the principle of equal

(2) Even if the formerCC held a title trust with the Plaintiff of the instant 3 shares, it cannot be deemed as a new title borrowed from the extension of the title borrowed from HongB at the time of the establishment of AAB. Thus, the purpose of title trust with the instant 3 shares is to obtain the initial acquisition required for the establishment of a corporation, to strengthen the Plaintiff’s location in the instant corporation, and to further to strengthen the tax evasion in the title trust with the instant 3 shares, in that there are almost no taxes actually avoided due to the nominal borrowing, the title trust with the instant 3 shares does not have the purpose of tax avoidance. Accordingly, the instant 3 shares do not constitute a deemed donation of title trust property, and thus, the instant 3 shares are unlawful.

(b) Statutes;

Attached Form 2 is as shown in the relevant statutes.

C. Determination

(1) Whether title trust is established

(A) According to the above evidence, the company of this case has no record of preparing and keeping a register of shareholders since DD comprehensive construction was divided and established, but it is recognized that the "detailed statement on stock and change in equity shares" has been prepared every year for the purpose of submitting them to the tax office, etc.

However, unlike Article 337(1) of the Commercial Act requiring a change of holders to transfer registered shares pursuant to Article 337(1), there is a shareholder’s right and duty from the date following the due date of payment if an underwriter of new shares pays the subscription price on or before the due date pursuant to Article 423(1) of the Commercial Act. Thus, even if the company did not prepare and keep a register of shareholders under the Commercial Act, as long as the formerCC has paid all the amount of new shares acquired in the name of the Plaintiff as the actual owner of the 3th shares of this case, it does not interfere with the exercise of shareholder’s right as a shareholder regardless of the change of holders. This constitutes “where the actual owner and the nominal owner are different in property requiring a transfer or exercise of rights” (see Supreme Court Decision 99Du3843, Sept. 3, 199).

Therefore, this part of the Plaintiff’s assertion denying title trust with respect to the third stocks of this case on account of the absence of a change of entry in the register of shareholders is without merit.

(B) It can be sufficiently recognized solely on the fact that the share price of the new shares subscribed under the Plaintiff’s name was fully paid to the Plaintiff. As such, since the instant company entered the “detailed statement on the changes in shares and equity shares submitted to the head of the competent tax office in relation to the acquisition of the third shares,” whether the title trust is held does not change. In other words, in the case of the third shares of this case, the title trust is not deemed pursuant to Article 45-2(3) of the Inheritance Tax and Gift Tax Act.

Therefore, this part of the Plaintiff’s assertion that Article 45-2(3) of the Inheritance Tax and Gift Tax Act is unlawful since it violates the Constitution, is without merit.

(2) Whether the purpose of tax avoidance is recognized

(A) Determination criteria

As seen earlier, the burden of proof on the absence of the purpose of tax avoidance lies in the nominal holder who asserts it.

In this case, the nominal owner who bears the burden of proof has a clear purpose of tax avoidance to the extent that it is recognized that there was no tax avoidance purpose in the title trust, and the fact that there was no tax avoidance at the time of the title trust or in the future has to be proved to the extent that there was no doubt if the ordinary person is based on objective and correct evidence. On the other hand, whether there was the purpose of tax avoidance or not should be determined at the time of the title trust (see Supreme Court Decision 2004Du11220, Sept. 22, 2006).

(B) The purpose of this case’s title trust

Comprehensively taking into account the following facts: ① the formerCC established on March 16, 1987 a construction of AA and issued shares under the name of HongB (Death on February 9, 200), HaHH and HaK in order to satisfy the number of promoters required under the Commercial Act at the time of the establishment of A., the formerCC purchased shares under the name of HongB (Death on February 9, 200), and paid the purchase price. ② Furthermore, the formerCC purchased shares of this case from HongB on June 22, 199 with the possibility of the death of HongB, and the purchase price of shares of this case from HongB on June 22, 199. ③ The company purchased shares of this case under the name of the Plaintiff, with capital increase on December 9, 204, issued shares 80,000,000 shares with the subscription price for shares issued under the name of the Plaintiff, and ④ the change in the number of shares before HaB in the name of the Plaintiff 2, 363, and 4, etc.

First, even if the formerCC borrowed the name of the Plaintiff on June 22, 1999, immediately before the death of February 9, 200, on the extension line of the name borrowed from the name borrowed by HongB to meet the number of promoters at the time of the establishment of AAD Construction, the Commercial Act at the time of the issuance of new shares only requires three or more promoters (the Commercial Act does not impose any limitation on the number of promoters at the time of the issuance of new shares) and from that time, it is difficult to view that the name was punished in consideration of the title trust of the third shares of this case. In light of the fact that the new shares of this case were issued by the company of this case after a considerable period of time after the issuance of new shares of this case was made by the company of this case, the title trust of the third shares of this case should be determined as at the time of tax avoidance, since the title trust of this case was different from the title trust of HongB, or the title trust of the Plaintiff in the name of the Plaintiff in the name of the first.

Meanwhile, according to Article 418 of the Commercial Act, where a corporation issues new shares for the purpose of raising funds after its establishment, the existing shareholders have the right to receive the allotment of new shares based on the number of shares held by them, unless otherwise stipulated in the articles of incorporation, and where shareholders voluntarily waive their preemptive rights without exercising such preemptive rights, the so-called forfeited stocks may occur. With respect to such forfeited stocks, the corporation may re-consign the forfeited stocks to a third party other than the relevant forfeited shareholders through the prescribed procedure in order to achieve the purpose of capital increase, or may dispose of the forfeited

However, as seen earlier, inasmuch as the Plaintiff maintained the aforementioned share ratio when a company was divided into a company under a title trust with HongB at the time of the establishment of AAB, and thereby, the Plaintiff came to hold shares as a shareholder by title trust with the Plaintiff at the time of the establishment of AAB, and the Plaintiff maintained the aforementioned share ratio, thereby making the Plaintiff allocated new shares based on shareholders’ rights even at the time of the issuance of the company’s new shares, the formerCC should have acquired and adjusted the Plaintiff’s shares before the issuance of new shares, or made the Plaintiff waive the preemptive rights after the issuance of new shares, and it should have acquired the forfeited shares by itself. However, according to Article 416 of the Commercial Act, the method of transferring preemptive rights under Article 416 of the Commercial Act may be issued only where the method of transferring preemptive rights should be issued, and the preemptive rights can be transferred by the articles of incorporation or the resolution of the board of directors. Thus, according to the evidence No. 6 of A, the Plaintiff did not have to voluntarily transfer the preemptive rights at the time of the instant company.

Therefore, it is reasonable to view that the Plaintiff, as the Plaintiff, has made a new title deposit for the third shares of this case by directly paying the acquisition price of new shares, which are mechanically allocated according to the shares of this case, without the need to transfer the third shares under one’s own name, inasmuch as the formerCC has the right as a shareholder of each share in the Plaintiff’s name under the previous title trust, by undergoing a resolution of the board of directors on what method and revising the details of the change in shares. However, as long as the formerCC has a right as the latter has a right as the actual owner of each share in the Plaintiff’s name under one’s own name, it is reasonable to view that the third shares of this case was made. Accordingly, the purpose of the title trust of the third shares of this case was not to avoid the tax avoidance purpose, but to avoid the timely procedure following the termination of the previous

(c) consider the items of the avoided tax;

The issue of taxation that may be avoided through the title trust of the third stocks of this case is the burden of oligopolistic stockholders’ secondary tax liability, deemed acquisition tax by oligopolistic stockholders under the Local Tax Act, and global income tax based on the global income tax accumulated from dividend income, barring any special circumstance. We examine whether the formerCC was aimed at evading each tax at the time of title trust of the third stocks of this case.

① According to Article 39 of the former Framework Act on National Taxes (amended by Act No. 8139 of Dec. 30, 2006) and Article 22 of the Local Tax Act, where it is deemed that an oligopolistic shareholder’s secondary tax liability is impossible for an unlisted corporation to collect taxes due to its failure to pay taxes, a person who actually exercises the rights to 51/100 or more of the total issued stocks of the relevant corporation, the spouse of the person who actually exercises the management of the relevant corporation, and lineal ascendants or descendants living with the spouse of the person who actually exercises the management of the relevant corporation, etc., are subject to secondary tax liability. As seen earlier, the formerCC does not seem to have held 57.7% of the shares of the relevant corporation (67.32% where the shares of the spouse and lineal descendants are combined) and the adjacent shareholder who already owns 57.7% of the shares of the instant corporation (67.32%

② According to Article 78(2) of the Enforcement Decree of the Local Tax Act, an oligopolistic shareholder of a non-listed corporation is deemed to have a new acquisition as much as the increased portion when the oligopolistic shareholder’s share ratio has increased. At the time of title trust of the third shares of the instant case, the formerCC, as an oligopolistic shareholder of the instant company, has already acquired the shares acquired in the name of the Plaintiff, high HH, or Jeon K directly, as an oligopolistic shareholder of the instant company, has increased by 8.19% [((49,364 + 9,512 + 24,682] ± 1,020,000] ± 951,58,488,480 won of the instant company’s tangible assets in 204, which were to be newly borne by the formerCC, is merely a 1,558,701 won (=951,588,480 won of acquired articles x 200,000 won prior to the increase in shares).

③ In relation to global income tax, as dividend income is divided by dividing the above stocks into title trust, the reduction of tax burden is possible as much as the global income tax increased by applying progressive tax rates. In such a case, whether to reduce the tax burden should be determined by summing up the tax burden of the title truster and the trustee (i.e.,, even if the tax burden of the title truster is reduced due to the title trust, if the same amount of the tax burden is newly incurred to the trustee, the total tax burden cannot be deemed tax avoidance, as there is no change in the amount of

In full view of the aforementioned evidence, Gap evidence, and the purport of Gap evidence No. 8, the non-listed corporation of this case. The company of this case, as the 5th day of March 8, 2004, conducted interim dividends of 5 billion won (25,000 won per share) in the name of the plaintiff HaH and Jeon K (3.01%, 50, 6.02%, 300, 300, 300, 3000, 300, 3000, 58, 000, 300, 58, 500, 300, 300, 200, 300, 500, 300, 500, 2000, 360% of the total dividend income of the above 36% of the total dividend income of each of the above 204, 36% of the dividend income of each of the above 3600% of the dividend income tax base of the plaintiff.

Comprehensively taking account of the above facts acknowledged, insofar as the Plaintiff’s tax base of the formerCC was equal to 36%, regardless of whether the aforementioned dividends were included, as long as the formerCC took measures to explain and convert the instant 3 stocks and registered the title trust to the Plaintiff, it is reasonable to deem that the sum of the total amount of the formerCC and the Plaintiff’s tax burden is not equal or larger in the event that the formerCC took measures to explain and convert the instant 3 stocks and the Plaintiff held the title trust to the instant 3 stocks. Accordingly, it is difficult to

(D) Sub-determination

Ultimately, the title trust of the third stock in this case was conducted not for tax avoidance but for the purpose of resolving the title trust relationship at the time of the acquisition of new stocks, and merely for the occurrence of minor tax reduction incidental to the said title trust, it cannot be said that there was a "purpose of tax avoidance" in the title trust of the third stock in this case. Accordingly, the prior Defendant’s disposition of this case was unlawful on a different premise.

4. Conclusion

Therefore, the plaintiff's claim is justified within the above scope of recognition, and the remaining claims are dismissed as it is without merit. It is so decided as per Disposition.