Seoul Administrative Court 201Guhap1970 ( November 11, 2011)

Cho High Court Decision 2010Du0545 ( October 29, 2011)

Even if shares were returned according to the judgment on revocation of a fraudulent act, the gift tax imposed on the original title trust is legitimate.

Even if shares were to be restored by a judgment of revocation of a fraudulent act, such effect is only a relative effect between the Republic of Korea and the plaintiff who is the creditor and the beneficiary in accordance with the theory of relative invalidation of the right to revoke the creditor, and thus, the effect of title trust is not retroactively extinguished by the judgment, and thus the original gift

2011Nu40846 Revocation of Disposition of Imposition of Gift Tax

leAA

Head of Mapo Tax Office

Seoul Administrative Court Decision 2011Guhap19970 decided November 11, 201

February 29, 2012

March 21, 2012

1. The plaintiff's claim that changed the exchange in this court is dismissed. The two litigation costs are assessed against the plaintiff.

The decision of the first instance court is revoked. The decision of the Defendant revoked the disposition of rejection of the claim for revocation of the gift tax ○○○○○○○○○ on August 20, 209 (the Plaintiff sought revocation of the disposition of the above gift tax imposed on the Plaintiff on June 2, 2008 by the original Defendant, but the above claim was changed in exchange for the above claim).

1. Circumstances of dispositions;

A. On April 16, 2007, the Plaintiff acquired 18,200 shares ofCC oil business (hereinafter “instant shares”) from HanB, the representative director of DDDD Co., Ltd. (hereinafter “DDDD”).

B. On April 2008, the director of the Seoul Regional Tax Office confirmed that the instant shares transferred to the Plaintiff by HanE was held in title trust, and notified the Defendant of the taxation data to levy gift tax on the title trust property.

C. On June 2, 2008, the Defendant applied Article 45-2(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010; hereinafter “Inheritance Tax and Gift Tax Act”) with respect to the instant shares to the Plaintiff on June 2, 2008 according to the said taxation data, and determined and notified ○○○ won as gift tax on April 16, 207, by applying the provision on deemed donation of title trust property.

D. Meanwhile, on March 19, 2009, Korea filed a lawsuit seeking revocation of a fraudulent act with the Seoul Central District Court on March 19, 2009, in order to terminate the title trust relationship of the instant shares for DDDD’s disposition of national taxes (the secondary taxpayer) and restore the pertinent shares to HanB as the actual owner, and thus appropriate for a tax claim. On May 29, 2009, the said legal officer revoked the share transfer contract concluded on April 16, 2007, and the Plaintiff issued a judgment (2009 Gohap 30972) that “the Plaintiff shall implement the procedures for transferring shares due to revocation of the share transfer contract” (the title on the register of shareholders of the instant shares was changed to HanB as the said judgment became final and conclusive.

E. On July 27, 2009, the Plaintiff filed a claim with the Defendant to revoke the above gift tax ○○○○○○○○ on the ground that the transfer contract for the instant shares was revoked in accordance with the above judgment. However, on August 20, 2009, the Defendant rendered the instant disposition rejecting the above claim on August 20, 2009.

F. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on February 2, 2010, but the said claim was dismissed on March 29, 2011.

[Reasons for Recognition] Facts without dispute, Gap evidence 1, 2, Eul evidence 1 to 5 (including additional numbers), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff principal

The instant shares as unlisted shares were non-listed shares, not for the purpose of tax avoidance, but for the Plaintiff, the instant shares transfer contract was revoked, which is the basis of the instant disposition, in accordance with the judgment of revocation of fraudulent act filed against the Plaintiff by the Republic of Korea, and the shares were returned to BB. Therefore, the instant disposition rejecting revocation or correction of the gift tax imposed on the Plaintiff is unlawful. In addition, the instant disposition imposing gift tax on the Plaintiff even though the transfer contract was revoked by the judgment of revocation of fraudulent act is in violation of the excessive prohibition principle.

B. Relevant statutes

As shown in the attached Form.

C. Determination

1) The legislative purport of Article 45-2(1) of the Inheritance Tax and Gift Tax Act is to recognize an exception to the substance over form principle to the effect that the act of tax avoidance using the title trust system is effectively prevented, thereby realizing the tax justice. In such a case, only if the purpose of tax avoidance is not included in the purpose of the title trust, the proviso to the same Article can be applied, and in such a case, the burden of proving that there was no purpose of tax avoidance. Therefore, the fact that there was no purpose of tax avoidance may be proven by means of proving that there was a purpose other than the purpose of tax avoidance. However, the nominal owner who bears the burden of proof was not related to the tax avoidance to the extent that it is recognized that there was no purpose of tax avoidance in the title trust, and that there was no tax avoidance at the time of the title trust or in the future, it should be proven to the extent that it does not have any doubt if the said provision was ordinarily obtained by objective and conclusive evidence (see, e.g., Supreme Court Decision 2004Du120, Sep. 222, 2006).

2) In light of the above legal principles, the fact that the Plaintiff received the instant shares from Korea, as seen earlier, is insufficient to recognize that the title trust was a title trust without any objective and objective evidence to acknowledge that the instant shares were held for reasons other than tax avoidance purposes. In addition, even if the instant shares were to be restored to original status according to the judgment on a fraudulent act lawsuit, there is no evidence to acknowledge it as a title trust without any purpose of tax avoidance (see, e.g., Supreme Court Decision 2009Du1488, Apr. 2, 2009). At the time of the instant title trust, Korea-B was expected to impose high-value tax on DB as the representative director of DDDD, and it appears that Korea-B entrusted the instant shares with the name of the Plaintiff as a means to avoid its secondary tax liability. This does not change solely on the ground that the first revocation lawsuit against DDD and Korea-B obtained a favorable judgment in a revocation lawsuit against B, etc. Furthermore, even if it did not have any effect on the Plaintiff’s claim that the instant shares were null and voiding agreement between the Plaintiff and the beneficiary.

3) Therefore, the Plaintiff’s assertion on the premise different from this premise cannot be accepted in entirety. The instant disposition based on the premise that Article 45-2(2) of the former Framework Act on National Taxes does not apply to the Plaintiff is lawful.

3. Conclusion

The plaintiff does not accept the claim that the plaintiff changed the exchange in this court on the ground that it is reasonable.