Cho High Court Decision 2010Du056 (2010.04.07)

Whether there was an objective of tax avoidance in stock title trust

It is difficult to readily conclude that there was no possibility of evading corporate tax, etc. to be borne by AAta in the event that the secondary tax liability and the dividend of oligopolistic shareholders are carried out at the time of the title trust or in the future, and it does not change on the ground that no secondary tax liability accrue after the title trust or no dividend has been paid.

The contents of the decision shall be the same as attached.

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1. All of the plaintiffs' claims are dismissed.

2. The costs of lawsuit are assessed against the plaintiffs.

The imposition of gift tax of KRW 125,326,250 on September 3, 2009 and the imposition of KRW 225,468,90 on September 4, 2009 by the head of the tax office of Bright, which was made against the Plaintiff UCC, shall be revoked in entirety.

쇠鹬 쇠鹬 3000 쇠鹬 3000

1. Details of the disposition;

A. On April 1, 1986, AABT Co., Ltd. (hereinafter “ABT”) established a BBT sales company (hereinafter “BT”) and deposited 50,000,000 capital with the capital of ABT and owned 10,000% of issued and outstanding shares. However, the name of shares was nominal trust in the name of Plaintiff BCC and 7 others.

B. BBE issued new shares of KRW 50,000 to increase the capital from KRW 50,000 to KRW 150,000,000. At the time, BBE offered new shares of KRW 20,000,000, all of the 20,000 shares issued were acquired by AAE at the time. However, the name of the underwriter of the shares was nominal trust in the name of the Plaintiff Company and 7 others.

C. After that, ABL changed the FF from among the above trustees to KimG on 1990, but the title of BBL’s shares on December 28, 1998 during the grace period under Article 43(1)2 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 5582, Dec. 28, 1998; hereinafter “the former Inheritance Tax and Gift Tax Act”) was transferred to the title of the Plaintiff (15,030; hereinafter “the shares of this case”) from the above 8 persons to the title of the 30,000 shares of BBL (hereinafter “the shares of this case”). The title trust was made by changing the name of the Plaintiff’s Trade Committee (15,030 shares, 50.1%) Plaintiff AD (14,970 shares, 49.9%).

D. On April 30, 2004, AAE terminated the title trust with the Plaintiffs, and changed the entire shares of this case into AAE’s name.

E. After the director of the Seoul Regional Tax Office explained a tax investigation with respect to AAT, on December 28, 1998, he notified the Defendants of the taxation data that the Plaintiffs would be presumed to have been donated pursuant to Article 43(1) of the Act, since the Plaintiffs received title trust from AAE on December 28, 1998. Accordingly, the director of the Seoul Regional Tax Office notified the Defendants of the taxation data that the Defendants would have received donation pursuant to Article 43(1) of the Act. On September 3, 2009, the director of the Seoul District Tax Office imposed gift tax amounting to KRW 125,326,250, and the director of the Seoul Regional Tax Office imposed gift tax amounting to KRW 225,468,99,90 on the Plaintiff AD (hereinafter

F. The Plaintiffs appealed and filed an appeal with the Tax Tribunal on November 26, 2009, but the Tax Tribunal dismissed each claim against the Plaintiff’s UCC on April 7, 2010, and on May 24, 2010.

[Ground of Recognition] Facts without dispute, Gap evidence Nos. 1 through 7, Eul evidence Nos. 1 and 2 (including each number), the purport of the whole pleadings

2. Whether each of the dispositions of this case is legitimate

A. The plaintiffs' assertion

AAE established a separate sales corporation BBT at a level of enhancing business and competitiveness with respect to a special trading office which is difficult to manage in a general business form through an existing branch. AAE, a single shareholder, was exposed to the fact that ABT controls BBT as a shareholder, it is anticipated that there would be counter-influence of other business partners, and thus, the Plaintiffs could not be held in title trust. There was no reason to avoid the secondary tax liability of oligopolistic shareholders due to title trust, avoidance of deemed acquisition tax by oligopolistic shareholders pursuant to the Local Tax Act, and avoidance of corporate tax on dividend income. Therefore, each of the dispositions of this case, which the Defendants deemed to have the object of tax avoidance, was unlawful.

B. Relevant statutes

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

C. Determination

The legislative purport of Article 43(1) of the Act is to recognize an exception to the principle of substantial taxation to the purport that the act of tax avoidance using the title trust system is effectively prevented, and thus, it is possible to apply the proviso of the same Article only if the purpose of the title trust is not included in the purpose of the tax avoidance, and in such a case, the burden of proving that there was no purpose of the tax avoidance exists, not the purpose of the tax avoidance. Therefore, the burden of proving that there was another purpose of the tax avoidance, not the purpose of the tax avoidance, can be proven by the title holder who bears the burden of proof. However, the title holder who bears the burden of proof has an obvious and obvious purpose of the tax avoidance in the title trust to the extent that it is recognized that there was no objective of the tax avoidance in the title trust, and that there was no tax avoidance in the future at the time of the title trust or in the absence of the tax avoidance (see Supreme Court Decision 2004Du1220, Sept. 22, 2006).

In light of the following circumstances, i.e., the disclosure of the fact that BB had been controlled by AB, and that it is likely that BB had been trusted to the Plaintiffs, and even if it was alleged that BB had been trusted to the executives and employees of AAB, all of the claims were not trusted to the executives and employees of BAB from the beginning. In particular, it is difficult to accept the said claim in light of the fact that BA was the wife of AAB vice-chairperson, and AAA was again entrusted to the Plaintiffs during the grace period from January 1, 1997 to December 31, 198, it is difficult to conclude that BA had no other purpose of implementing BA’s tax evasion, as seen above, since it is difficult to deem that BB had no other purpose of implementing BA’s tax avoidance or otherwise, it is difficult to deem that BA had no other purpose of acquiring BA’s stocks at the time of its establishment, as otherwise alleged in the evidence that there was no possibility that BA had no other purpose of acquiring BA’s stocks at the time of its establishment.

3. Conclusion

Therefore, all of the plaintiffs' claims seeking revocation of each of the dispositions of this case are dismissed as it is without merit. It is so decided as per Disposition.