Cho High Court Decision 2010Da3678 ( October 30, 2011)

To the extent that public officials in charge take different opinions, there are legitimate grounds for recognition.

The subject of gift tax based on the listing, etc. includes new shares with capital increase, and if public officials in charge of tax investigation take different opinions in the interpretation of the conflicting statutes, it is reasonable to deem that there is a justifiable reason that the Plaintiff is not liable to pay gift tax on the above listing marginal profits.

2011Guhap2819 Revocation of Disposition of Imposition of Gift Tax

MaO

Head of tax office

March 29, 2012

May 17, 2012

1. The Defendant’s disposition imposing gift tax of KRW 000 on the Plaintiff on July 7, 2010, in excess of KRW 000, shall be revoked.

2. The plaintiff's remaining claims are dismissed.

3. One-third of the costs of lawsuit shall be borne by the Plaintiff, and the remainder by the Defendant.

The Defendant’s disposition imposing gift tax of KRW 000 on the Plaintiff on July 7, 2010 is revoked.

1. Details of the disposition;

A. On December 8, 2004, the Plaintiff, who was an employee of the non-party company ○○ (hereinafter referred to as “non-party company”), acquired 3,000 shares issued by the non-party company, who was the non-party company at the time of acquisition of the shares issued by the non-party company (hereinafter referred to as “the first shares acquired”) from ○○○○○, who was the largest shareholder, etc. of the non-party company, pursuant to Article 41-3(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010).

B. The non-party company conducted capital increase with consideration on December 22, 2005. The plaintiff's shares owned by himself.

The shares of the non-party company (hereinafter referred to as the "new shares of this case") were acquired in KRW 000 per share of KRW 750 per share. The non-party company conducted a par split of KRW 1:10 on January 2008 and increased to KRW 37,500 per share. The shares of the non-party company were listed on the KOSDAQ market on January 25, 2008.

C. Busan regional tax office’s integration of Non-Party Company from August 10, 2008 to September 30, 2009

After its implementation, gift tax was imposed on the Plaintiff regarding KRW 000 of the profits accrued from the listing of 3,000 shares originally acquired (30,000 shares after the split-off of face value). However, gift tax was not imposed on the profits accrued from the listing of new shares with compensation in this case.

D. On January 25, 2010, the Board of Audit and Inspection issued a request to audit the business affairs of Busan Regional Tax Office to levy a tax on KRW 000 of the interest accrued from the listing of the instant shares with compensation, and the Defendant

On July 7, 2010, the Plaintiff imposed gift tax of KRW 000 (including additional tax of KRW 000) on the Plaintiff as the value of donated property (hereinafter “instant disposition”).

E. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on September 17, 2010, but the Tax Tribunal dismissed the disposition on June 30, 201.

Facts without any dispute, Gap 1, 2, Eul 1, and 2, the purport of the whole pleadings, and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1. The assertion that the listed marginal profits from stocks issued with capital increase are not subject to gift tax

① The language and text of Article 41-3(6) of the Inheritance Tax and Gift Tax Act provides that “in the application of the provisions of paragraph (1), new shares acquired through capital increase shall be included.” Since shares received through capital increase do not meet the requirements of paragraph (1) because they were not donated or acquired with compensation from the largest shareholder, it does not constitute Article 41-3(6) of the same Act. If gift tax is imposed on the listed marginal profits of shares acquired through capital increase on the ground that

② Meanwhile, even if shares received through capital increase with consideration under the Commercial Act are independent shares that are separate from the original shares acquired at issue, and are not subordinate rights to the previous shares, such shares shall not be deemed as subordinate interests to the previous shares acquired at issue and shall not be deemed as subject to gift tax.

③ In addition, in calculating the listing marginal profits under Article 31-6(4) and (5) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, the amount of increase in the stock value from the date of donation to the date of listing by multiplying the amount obtained by the number of shares issued as of the date of donation as of the date of the date of settlement of accounts, and the listed marginal profits shall be calculated by subtracting the amount of cumulative profits of the company from the date of donation to the date of listing by considering the amount of increase in the company’s real value as of the date of listing the amount of increase in the company’s real value. The above provision does not fully consider the change in the real value of the company’s capital increase in the calculation of the listing marginal profits on the premise that only the shares received without compensation, which do not change in the real value, are included in the calculation

④ It is reasonable to interpret that the gift tax is imposed only on shareholders who received capital increase through the shareholder allotment method and does not impose tax on shareholders who received capital increase through the third party allotment method.Therefore, as the interpretation of Article 41-3(1) and (6) of the Inheritance Tax and Gift Tax Act does not include the listed gains on shares received through the capital increase in return for the capital increase in return for the capital increase in return for the capital increase in return for the capital increase in return for the capital increase in return for the capital increase in return for the capital increase in return for the capital increase in return for the capital increase in return for capital

2) The case where Article 41-3(6) of the Inheritance Tax and Gift Tax Act, which is the basis for the instant disposition, includes the listing marginal profits of shares received through capital increase that is subject to the taxation of gift tax under Article 41-3(1) and (6) of the Inheritance Tax

① Article 41-3(6) of the Inheritance Tax and Gift Tax Act imposes gift tax on the listed marginal profits on the stocks received with consideration on the corporation. This is irrelevant to the legislative purpose of Article 41-3(1) through (3) of the Inheritance Tax and Gift Tax Act, which is to ensure the balance of tax by imposing tax on the profits accruing from listing in cases where the stocks received without consideration from the largest shareholder are listed. The purport is to achieve the legislative purpose in an excessive way to impose marginal profits on the stocks received with consideration for listing. As such, it goes against the principle of excessive prohibition under the Constitution by impairing the appropriateness of means, the minimum of damage, and the balance of legal interests.

② Since the point at which a juristic act, which is subject to taxation, is performed, that is, only after the lapse of five years from the time when the shares were first donated by the largest shareholder, the amount of donated property and the amount of gift taxes can be known to the public, it infringes on the legal stability and predictability of the taxpayer, and it is not to impose gift tax on such profits by calculating the profits derived from listing, but rather, by deeming the donated shares as the price after listing at the price after listing, the method of imposing gift tax after retroactively calculating the amount of donated property and the amount of gift tax which

(3) As the shareholder paid the subscription price for new shares to the company and received new shares issued, the gift tax is imposed as to the shares received without compensation, notwithstanding the fact that they are completely different from the capital increase without compensation, and as to the shareholders who have received the same payment and received the new shares issued, only those shareholders who have donated or acquired shares with compensation from the largest shareholder in the initial special relationship with the shareholder, among the shareholders who received the new shares issued the new shares, are subject to the discrimination without reasonable grounds. Unlike all other kinds of property donation, gift tax is imposed on the non-listed shares listed within five years from the date of the listing, regardless of the date of donation, on the basis of the stock price on which three months from the date of the date of

④ Even though shares issued with capital increase are shares acquired with payment for the capital increase, the gift tax is contrary to the principle of ability to pay for it. As such, Article 41-3(6) of the Inheritance Tax and Gift Tax Act is unconstitutional.

3) The assertion that there are justifiable grounds for not imposing additional tax

Even if the listing marginal profits of new stocks with consideration in the instant case are subject to gift tax, the Defendant imposed tax pursuant to the opinion of the Board of Audit and Inspection after being pointed out by the Board of Audit and Inspection even though it was conducted on August 10, 2009, on the basis that it did not impose gift tax on the listing marginal profits of new stocks with consideration. Whether to impose gift tax on the listing marginal profits of stocks with consideration to be paid with consideration constitutes a conflict of views under tax law among the tax authorities. Therefore, since the Plaintiff cannot expect the return and payment of gift tax on the premise that it is subject to taxation from the beginning, the Plaintiff’s failure to pay gift tax can not be expected as a justifiable reason for the Plaintiff’s failure to pay gift tax, and thus, the part of penalty tax in the instant disposition is wholly unlawful. Even if there is no justifiable reason due to conflict in the interpretation of the domestic tax law, even if the Defendant notifies the wrong tax investigation result that the Plaintiff did not pay the penalty tax on August 10, 2009, it is unlawful to impose the penalty tax on the Plaintiff.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Determination as to the assertion that stocks issued with capital increase are not subject to gift tax

A) The legislative intent of Article 41-3 of the Inheritance Tax and Gift Tax Act is to obtain enormous market price gains from the Korea Securities and Exchange Exchange (referring to those listed on the securities market or the KOSDAQ market) through internal information that is not open to the public with respect to the management of the company, and the largest shareholder, etc. is related

In the event that non-listed stocks are donated or transferred at a cost, the gift tax is imposed on the profits increased by the listing of stocks in order to prevent the abnormal inheritance or transfer of high-value assets by imposing taxation on the listed marginal profits. Meanwhile, Article 41-3(6) of the Inheritance Tax and Gift Tax Act is newly established on December 18, 2002. The above amendment is intended to add the cases where only the stocks directly received from the largest shareholder or acquired at a cost are subject to taxation but can be used as a means of tax avoidance by being excluded from the taxable object despite the same economic effect. In other words, even if the largest shareholder recognized as in a position to use non-disclosure information on the management of the company did not directly donate or transfer his/her stocks to the specially related person, it is intended to enable the specially related person to evade the gift tax through the amendment of Article 41-3(1) of the Inheritance Tax and Gift Tax Act, and thus, it seems that the specially related person is subject to taxation by means of tax avoidance.

B) In addition, the language and text of Article 41-3(6) of the Inheritance Tax and Gift Tax Act provides that “the acquisition of shares shall include new shares issued by the corporation to increase its capital (including investments).” It does not distinguish whether new shares are issued by capital increase or capital increase without consideration, and whether shares are allocated to shareholders or third parties even with respect to capital increase. Therefore, according to the language and text of the above provision, it shall be interpreted that capital increase, capital increase, capital increase, and capital increase are included in the taxable object of gift tax on the listing marginal profits. In addition, the language and text of the above provision include not only the requirement of Article 41-3(1) of the Inheritance Tax and Gift Tax Act, but also the scope of “stocks” that are issued by the corporation to increase its capital increase. Therefore, it is difficult to view that the provision is unreasonable to interpret the same as that of new shares issued by the corporation without consideration as otherwise alleged in Article 41-1(3) of the Inheritance Tax and Gift Tax Act, but also the provision does not apply to the acquisition of shares without consideration.

D) In calculating the listing marginal profit under Article 31-6(4) and (5) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, the Plaintiff only calculates the listing marginal profit subject to taxation by subtracting this amount from the increase in stock value in consideration of the company’s net value accumulated amount from the date of donation or the date from the date of acquisition to the

It does not take into account the change in the real value of the company due to the offering of new shares. Thus, it is based on the premise that the shares acquired as a beneficiary of the reason of Article 41-3(6) of the Inheritance Tax and Gift Tax Act are not included. However, in the calculation of the profits arising from the substantial increase in the corporate value, Article 31-6(5) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act and Article 10-4(1) of the Enforcement Rule of the Inheritance Tax and Gift Tax Act (amended by Ordinance of the Ministry of Strategy and Finance No. 74 of Apr. 23, 2009; hereinafter the same shall apply) provides that the total amount of net profits and losses per share shall be calculated as the net amount of profits and losses calculated pursuant to Article 56(3) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act for the evaluation of the unlisted shares for the purpose of the evaluation of the unlisted shares. In calculating the listed profits and losses directly donated by the largest shareholder, even if the above method changes in the real value of the company, it cannot be deemed to be excluded.

E) Therefore, in light of the legislative intent and contents of Article 41-3 of the Inheritance Tax and Gift Tax Act, it is interpreted that the new shares under Article 41-3(6) of the Inheritance Tax and Gift Tax Act include new shares resulting from capital increase with consideration. Therefore, the Plaintiff’

2) The determination on the assertion that Article 41-3(6) of the Inheritance Tax and Gift Tax Act is unconstitutional

A) As seen earlier, Article 41-3 of the Inheritance Tax and Gift Tax Act provides that “If the largest shareholder, etc., who is in the position of using information that is not disclosed to the company’s management, donates unlisted stocks to a related party, etc. or transfers them for consideration, it shall be subject to the taxation by the largest shareholder, not by itself, but by allocating profits from the listing.” In such a case, Article 41-3 of the Inheritance Tax and Gift Tax Act provides that “If the largest shareholder, etc., who is in the position of using information that is not disclosed to the company’s management, etc., donated stocks to a related party prior to listing or transfers them for consideration, it shall be subject to the taxation by allocating profits from the listing rather than by the listing itself.” In addition, Article 41-3 of the Inheritance Tax and Gift Tax Act provides that “If the largest shareholder, etc., who is in the position of using the listed stocks, receives stocks for consideration” as well as stocks donated by the largest shareholder, it shall not be subject to the taxation of the total shareholder or non-listed stocks for which is not subject to disclosure.”

B) The taxation requirement under Article 41-3 of the Inheritance Tax and Gift Tax Act

(1) Any person having special relationship with the largest shareholder, etc. of an unlisted corporation shall donate, obtain for consideration, or obtain new stocks of the unlisted corporation from the largest shareholder, etc.;

(2) The relevant stocks shall be listed within five years from the date of donation or acquisition;

③ The above person with special interest can obtain profits more than the standard under Article 31-6 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act due to an increase in the value of stocks listed on the list. Therefore, all taxation requirements are satisfied only when the person with special interest obtains profits from the listing of stocks. Since Article 41-3(2) of the Inheritance Tax and Gift Tax Act provides that the listing gains shall be calculated at the time when three months have passed from the listing date as of the closing date, it is possible to predict the value of donated assets and the amount of gift taxes at the time of meeting taxation requirements.In addition, Article 41-3(1) of the Inheritance Tax and Gift Tax Act provides that the taxable amount shall be calculated by calculating the profits acquired from the listing under Article 31-6 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act in addition to the original taxable amount of gift taxes, the Plaintiff’s assertion that Article 41-3(3) of the Inheritance Tax and Gift Tax Act provides that the taxation basis and tax amount of gift tax should be calculated by adding the profits from the listing to the listing price.

C) In addition, Article 41-3 of the Inheritance Tax and Gift Tax Act, unlike the donation of a different kind of property, is subject to taxation, not the said property itself, but the benefit acquired by its listing, and thus, the size of the benefit can be assessed properly after the listing was actually made. Therefore, it cannot be deemed that there is a discrimination against the case of donation of a different kind of property

D) Therefore, Article 41-3(6) of the Inheritance Tax and Gift Tax Act cannot be deemed as unconstitutional against the principle of excessive prohibition, the principle of clarity of the requirements for taxation, the principle of equality of taxation, and the principle of ability to respond. Therefore, the Plaintiff’s objection cannot be deemed as

Part of the assertion is without merit.

3) Determination as to the assertion on additional tax portion

A) Where a taxpayer violates various duties, such as a return and tax payment, without justifiable grounds, in order to facilitate the exercise of a taxation right and the realization of a taxation right, penalty tax under tax law is an administrative sanction imposed as prescribed by individual tax law, and the taxpayer does not know his/her duties.

It is unreasonable to say that there is a justifiable reason not to impose an obligation, such as when there is a circumstance that makes it difficult to present the relevant party or when it is unreasonable to expect the relevant party to perform the obligation, etc. (see Supreme Court Decision 2003Du4089, Apr. 15, 2005). The tax law that regulates the economic phenomena and transactions that are ordinarily broad and changing at all times is technically difficult to interpret. Thus, beyond the scope of simple legal sites or misunderstanding, there is a conflict of opinion due to the interpretation of the tax law. In this case, if a taxpayer takes a different opinion from the Government’s opinion, and thus, it is too harsh for the taxpayer to impose additional tax (see, e.g., Supreme Court Decision 92Nu2936,92Nu2943, Oct. 23, 1992). However, it cannot be deemed that there is a justifiable reason not to impose an error on the taxpayer, i.e., a taxpayer’s return and payment of additional tax, regardless of whether there is a justifiable reason or not.

B) On August 10, 2009 through September 30, 2009, the Busan regional tax office conducted a tax investigation with respect to the non-party company's profits from the listing of the newly acquired stocks and imposed gift tax on the Plaintiff on the profits from the listing of the newly acquired stocks, but did not impose gift tax with respect to the listing profits from the listing of the new stocks at issue. According to the records of the evidence Nos. 3 and 4, the public official of the Busan regional tax office can recognize the fact that the public official of the Busan regional tax office did not impose gift tax with respect to the new stocks at issue by taking the same view as the Plaintiff after careful legal review as to whether the listing profits from the listing profits of the new stocks at the time of the above tax investigation should be levied. In light of the above facts, it is unreasonable for the Plaintiff as the taxpayer to believe that there is no liability to pay gift tax on the listing profits due to trust in the audit results of the Busan regional tax office, and thus, it cannot be deemed as a mere legal ground or misunderstanding. Meanwhile, if the Plaintiff is not liable to impose gift tax on the above profits from listing profits.

C) Therefore, the part of the penalty tax in the instant disposition is unlawful, and this part of the Plaintiff’s assertion is with merit.

4) Sub-committee

The part of the Disposition in this case, which exceeds the balance of 000 won excluding the penalty tax (00 won), shall be revoked.

3. Conclusion

Thus, the plaintiff's claim of this case is accepted within the above scope of recognition, and the remaining claims are made.

Therefore, it is dismissed.