The assertion that title trust was made in order to meet the requirements for establishment of a corporation and that there was no tax avoidance purpose.

It is difficult to deem that there was a substantial interval between the date and time of title trust and the date and time of default on taxes on trust in order to meet the requirements required by law and establish a company, and there was no monetary payment, there was no distribution or exercise of voting rights, and there was no intention of tax avoidance.

Article 41-2 of the Inheritance Tax and Gift Tax Act as Donation of Title Trust Property

All appeals are dismissed.

The costs of appeal are assessed against the defendant.

All of the records of this case and the judgment of the court below and the grounds of appeal were examined, but it is clear that the appellant's grounds of appeal fall under Article 4 of the Act on Special Cases Concerning the Procedure of Appeal and therefore, all of the appeals are dismissed pursuant to Article 5 of the same Act. It is so decided as per Disposition by

Seoul High Court 2006Nu7272 ( November 9, 2006)

1. Revocation of a judgment of the first instance;

2. On May 9, 2005, the Defendant imposed additional dues on the Plaintiff ○○○ on May 15, 1999, 37,107,770 won, 20,632,610 won of gift tax on June 24, 199, 200, 25, 25,283,540 won of gift tax on June 25, 200, 200, and 43,940,650 won of gift tax on June 24, 1999, 23,46,150 won of gift tax on June 24, 199, 200, 28, 30,000 won of gift tax on June 25, 200, 208, 30,000 won of gift tax on the gift tax on the Plaintiff ○○○○, 198,300 won of gift tax on the gift tax on the Plaintiff ○○.

3. The costs of the lawsuit shall be borne by the defendant in both the first and second instances.

Purport of request and purport of appeal

The decision is as follows (However, the portion of gift tax on May 15, 1999, stated by ○○○○○, stated in the purport of the purport of the claim and appeal, seems to have been written in error in terms of 37,107,770 won.)

1. Details of the disposition;

The following facts are not disputed between the parties, or can be acknowledged in full view of the whole purport of the arguments in Gap evidence 1 and evidence 2-1 to 9:

A. From October 22, 1998, the Plaintiff Lee ○ and Kim ○ were respectively listed as shareholders of ○○, Inc. (hereinafter “NE”) operated by Lee ○○, Inc. from May 15, 1999 to May 15, 1999.

B. From January 17, 2005 to March 17, 2005, the director of ○○ Regional Tax Office revealed that the whole of the shares in the plaintiffs’ names (hereinafter referred to as “the shares in this case”) were nominal trust by ○○ and notified the defendant thereof while conducting a tax investigation with respect to the non-party company.

다. 이에 따라 피고는 구 상속세 및 증여세법(2002.12.18. 법률 제6780호로 개정되기 전의 것, 이하′́법´이라고만 한다) 소정의 명의신탁재산의 증여의제 규정에 따라 원고들이 이 사건 주식을 이○○로부터 증여받은 것으로 보고, 2005.5.9. 주문 기재와 같이 원고들에게 각 증여세 부과처분을 하였고, 그 후 원고들이 위 각 증여세를 납부하지 않자 2005.6.10. 그 납부를 독촉하면서 주문 기재와 같이 원고들에게 위 각 증여세에 대한 각 가산금 부과처분을 하였다(원고 이○○는 2005.6.10. 부과된 합계 932,800원의 가산금 중 1998.10.22. 증여의제된 3,000주에 대한 가산금 58,500원을 제외한 나머지 가산금 합계 874,300원의 부과처분에 대하여만 그 취소를 구하고 있다. 이하 원고들이 취소를 구하는 각 증여세 및 그 각 가산금 부과처분을 ´이 사건 처분´이라고만 한다).

D. The number of shares held in title by this○○ to the Plaintiffs, the total number of shares issued in title, and the subsequent gift tax notice amount and each additional dues in arrears are as follows.

Date of donation

Number of shares

Value of one share;

Amount of increase in revenue

Notice Tax Amount

Additional Dues

○ ○

May 15, 1999

37,400

5,153 won

192,722,200 won

37,107,770 won

1,113,230 won

June 24, 1999

15,400

〃 4

79,356,200 won

20,632,610 won

618,970 won

June 25, 200

13,200

〃 4

97,244,400 won

25,283,540 won

758,500 won

May 15, 1999

42,500

〃 4

219,002,500 won

43,940,650 won

1,318,210 won

○ Kim

June 24, 1999

17,500

〃 4

90,177,500 won

23,446,150 won

703,380 won

June 25, 200

15,000

7,367 won

10,505,500 won

28,731,300 won

861,930 won

○ ○

october 22, 1998

3,000

5,000 won

15,000,000 won

1,950,000 won

58,500 won

March 29, 199

12,000

5,153 won

61,836,00 won

8,038,680 won

241,160 won

March 30, 199

18,000

〃 4

92,754,00 won

21,104,720 won

633,140 won

2. Whether the instant disposition is lawful

A. Summary of the plaintiffs' assertion

The plaintiffs are in title trust with non-party company's shares at the request of the shareholders' name in order to meet the number of promoters and shareholders above a certain number prescribed in the Commercial Act, etc. from Lee Chang-soo, the like creation of high school, but there was no fact of exercising the rights as shareholders, such as receiving dividends or exercising voting rights as shareholders. Thus, the plaintiffs did not have the purpose of tax avoidance.

(b) Related statutes;

Attached Table 1 is as written in terms of relevant Acts and subordinate statutes.

C. Determination

(i)a fact;

The following facts do not conflict between the parties, or may be acknowledged in full view of the following facts: Gap evidence 1, Eul evidence 10, Eul evidence 11-1, Eul evidence 11-2, Eul evidence 13, Eul evidence 14 and 15-1 through 6, Eul evidence 16-2, Eul evidence 17-1 through 3, Eul evidence 17-1, and Eul evidence 17-1 through 17-3, and the purport of the whole pleadings in the testimony of Lee ○-○ witness of the first instance trial.

(A) On October 22, 1998, the non-party company was established as an investment by EOO and EOO. The non-party company held the title trust of 12,00 shares among its own shares, including the title trust of 3,00 shares on October 22, 1998, which was established at EOOOOO, and 18,00 shares on March 30, 199, and 199. The non-party company held the title trust of 15,40 shares on June 24, 199; the non-party company held the title trust of 15,400 shares on June 24, 200; the non-party company held the title trust of 13,200 shares on June 25, 200; the non-party company held the title trust of 15,00 shares on May 16, 205, 2005, each of the non-party company held the title trust of ○ on May 19, 25, 2905.

(B) In order to satisfy the requirements of promoters, etc. required at the time of the establishment of the non-party company and the requirements for share distribution required at the time of filing for a request for a registration on KOSDAQ, this title trust was requested to the Plaintiffs, who are the motives of high school, and the Plaintiffs did not pay the financial compensation related to the above title trust.

(C) On the other hand, although ○○ had attempted to register the KOSDAQ of the non-party company, it did not register the KOSDAQ on the grounds of business depression, etc., and the non-party company did not have paid dividends to shareholders including the plaintiffs after its establishment.

(D) The Plaintiffs were under title trust with each other’s occupation (a public official, ○○○, ○○, and ○○○ is the National Health Insurance Corporation’s employee) upon the request of ○○○○○○○, but did not exercise the rights as a shareholder, such as exercising voting rights as a shareholder.

(E) After the incorporation of the non-party company, the non-party company did not default the global income tax imposed on it, but around June 2004, as the non-party company’s management became difficult due to the increase in raw material prices, etc., the non-party company started to pay taxes in excess of KRW 581 million and failed to pay taxes around January 2006.

(F) Meanwhile, ○○○ owned approximately 55% of the shares issued by Nonparty Company at the time of incorporation, approximately 72% of the shares issued by Nonparty Company around June 30, 199, and approximately 90% of the shares issued by Nonparty Company around June 30, 2001, and owned about 100% after April 20, 2002, and constitutes the secondary taxpayer of Nonparty Company under the Framework Act on National Taxes (the Nonparty Company closed its business on September 30, 2005).

(2) Determination

(A) The legislative purport of Article 41-2(1) of the Act is to recognize an exception to the substance over form principle in the purport that the act of tax avoidance using the title trust system effectively prevents tax justice, and thus, if the title trust was recognized to have been conducted 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, such title trust cannot be deemed to have an objective of tax avoidance under the proviso of Article 41-2(1). The burden of proving that there was no purpose of tax avoidance in the title trust exists a person claiming it (see, e.g., Supreme Court Decisions 2005Du14714, Jun. 9, 2006; 2003Du13649, Dec. 23, 2004); whether there was an objective of tax avoidance or not should not be determined as at the time of the title trust, and whether it was actually evaded later (see, e.g., Supreme Court Decision 2003Du43034, Jan. 27, 2005).

(B) On the other hand, even though this constitutes a secondary tax obligor of a non-party company under the Framework Act on National Taxes, the following facts revealed in the above facts: (i) although this ○○○ requested a title trust to the Plaintiffs, who were the motives of high school, to meet the requirements for share distribution at the time of the establishment of the non-party company and the request for review on KOSDAQ, it did not pay the Plaintiffs monetary compensation related to the above title trust; (ii) the Plaintiffs received shares of the non-party company under a title trust upon the request of this ○○ upon the request of the non-party, but did not receive dividends or exercise voting rights; and (iii) the non-party company did not have failed to pay global income tax imposed on it after its incorporation, but it was difficult to manage the shares due to business difficulties due to increase in raw material price, etc.; (iv) the company did not pay taxes after June 2005; and (v) the company did not appear to have been in arrears at the time of the tax investigation, and thus, did not appear to have been related to the above shareholder’s claim for title trust and the above stocks.

Therefore, it is recognized that the title trust of the shares of this case against the plaintiffs was made for reasons other than the purpose of evading gift tax, secondary tax liability, global income tax, etc., and in this case, only if there are circumstances where the designation of the secondary taxpayer was delayed after the designation of the second taxpayer, it cannot be deemed that the above title trust did not have any percentage of the purpose of evading the latter tax as prescribed in the proviso of Article 41-2(1) of the Act, and thus, the disposition of this case was unlawful.

3. Conclusion

Therefore, the plaintiffs' claims of this case are accepted due to the reasons, and the judgment of the court of first instance is unfair with different conclusions, so the judgment of the court of first instance is revoked, and it is so decided as per Disposition with the assent of all.