Seoul Administrative Court-2016-Gu Partnership-83631 ( December 22, 2017)

It is not applicable to the donation of title trust because it constitutes a fraudulent name theft and has no purpose of tax avoidance.

Gift tax taxation is illegal because it constitutes a fraudulent name theft and it does not apply to the constructive gift of title trust.

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

2017Nu76182 Revocation of Disposition of Imposition of Gift Tax

AA, BB, CCC, DD

O Head of the tax office and two others

Seoul Administrative Court Decision 2016Guhap83631 Decided September 22, 2017

March 19, 2018

April 18, 2018

1. Revocation of a judgment of the first instance;

2. With respect to the Plaintiff AA and BB, the head of the UOOO office revokes the imposition of each gift tax on the Plaintiff CCC by the head of the UOOO office, as described in the separate sheet of imposition of the gift tax on the Plaintiff DD.

3. The total costs of the lawsuit shall be borne by the Defendants.

The same shall apply to the order.

1. Details of the disposition;

The reasoning for this part of this Court is that the corresponding part of the judgment of the court of first instance is the same as that of the corresponding part of the judgment of the court of first instance (Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act (hereinafter the meaning of the abbreviations used in this part is the judgment of the court of first instance).

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

A. The plaintiffs' assertion

The reasoning for this part of this Court is that the corresponding part of the judgment of the court of first instance (from 4th to 15th page) is the same as the corresponding part of the judgment of the court of first instance (from 8th to 5th page), and thus, it is accepted in accordance with Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act (However, the "(title 1)" is added after the last part of the 4th 19th and the fifth 7th 7-9

B. Relevant statutes

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

C. Determination

1) As to the absence of a title trust agreement

A) The provision on deemed donation under Article 41-2(1) of the former Inheritance Tax and Gift Tax Act and Article 45-2(1) of the Inheritance Tax and Gift Tax Act shall apply where, in property requiring a registration, etc. for the transfer or exercise of the right, the actual owner and the nominal owner have made a registration in the future of the nominal owner under an agreement or communication. As such, the provision on deemed donation under Article 41-2(1) of the same Act shall not apply where a registration is made unilaterally using the nominal owner regardless of the intent of the nominal owner. In such a case, if the tax authority proves that the actual owner is different from the nominal owner, the burden of proving that the registration, etc. in the nominal owner was made by the unilateral act of the actual owner regardless of the intent of the nominal owner

B) Each of the following facts is not disputed between the Parties, or acknowledged by comprehensively considering the overall purport of the arguments in Gap evidence Nos. 2, 4 through 23, and 25 (including any number, if any) and the testimony of the court of first instance EE and FF:

(1) Plaintiff AA, BB among the first title trust

GG. After the request of the competent tax office for the entry of the 198 BG, no longer than the OB’s first title trustee, and then, the POB’s statements were issued to the Plaintiff Company with a certified copy of the FG’s title trust agreement that it was necessary to use the Plaintiff’s name at the time, and the POB’s new shares were issued to the Plaintiff Company with a certified copy of the No. 1’s title trust agreement that it was necessary to use the PO’s name. The PE was also issued to the Plaintiff Company with a certified copy of the No. 1’s existing shares that it was necessary to use the Plaintiff’s new shares, and the POB was also issued to the Plaintiff Company with a certified copy of the No. 2 of the No. 1’s title trust agreement that it was necessary for the Plaintiff Company to use the No. 2’s new shares. The Plaintiffs were also issued with a certified copy of the No. 1’s existing shares issued to the Plaintiff Company.

(2) Plaintiff CCC among the first title trust

HaG HG’s request for the issuance of a certified copy of the Plaintiff’s resident registration under the name of the Plaintiff CCC at the time of 20 years’ request. The Plaintiff CCC’s employee prepared a sales contract for the acquisition of shares under the name of the Plaintiff CCC (the Plaintiff CCC also resulted in title trust based on capital increase). HaG’s request was allowed to use shares under the name of the Plaintiff CCC at the time of 20 years’ request, and the Plaintiff CCC’s request for the issuance of a certified copy of the Plaintiff’s resident registration under the name of the Plaintiff CCC. On the other hand, the Plaintiff CCC’s request for the submission of a certified copy of the Plaintiff’s resident registration under the name of the Plaintiff CCC. HaG’s request for the submission of a certified copy of the Plaintiff CCC at the time of 20 years’ request for the submission of a certified copy of the Plaintiff’s shares. On the other hand, the Plaintiff CCC’s request for the submission of a certified copy of the Plaintiff’s shares under the name of the CCC.

(3) Second title trust (Plaintiff DD)

At the time of Plaintiff B’s request, FF retired from 20O.O., EE, which received a certified copy of Plaintiff A’s resident registration, also requested HG to provide other nominal holders with a certified copy of 20O.O., HG had issued a certified copy of Doctrine’s name to Doctrine, so that it would not cause any damage to Doctrine, and that the Plaintiff would have received a certified copy of Doctrine’s name from 20O.O.O., Plaintiff AA and BB’s name and would have received a certified copy of Doctrine’s name and would have received a certified copy of Doctrine’s name from Doctrine to Doctrine to Doctrine. It was also necessary that the head of the non-party company would have received a certified copy of Doctrine’s name and would have received a certified copy of Doctrine’s name from Doc.

(4) Other facts

Prior to each title trust of this case, the Plaintiffs did not issue a seal imprint certificate or a certificate of personal seal to the non-party company. Employees EE, and III of the non-party company, upon receiving the direction of the GG, prepared a sales contract on the non-party company’s shares in the name of the Plaintiffs, and the GG paid taxes, such as securities transaction tax and capital gains tax, or the purchase price of new shares by Plaintiff AA, BBB, and CCC at the time of the first title trust, and there was no direct participation of the Plaintiffs in the process.GG around 200O.O.O., Plaintiff AA, BB, and DD, unilaterally used the same name to register the non-party company as the shareholder of the non-party company without permission, and thus, GGG was awarded a certificate of confirmation and performance.

C) In full view of the following circumstances revealed in the above facts of recognition, it is reasonable to deem that each of the instant title trust was unilaterally made by GG without the express or implied agreement between GG and the Plaintiffs.

(1) The documents provided by the plaintiffs in relation to each title trust of this case are only a certified copy of their resident registration, and there is no other certificate of the personal seal impression or certificate of the personal seal impression. The fact that the plaintiffs who did not participate in the business of the non-party company could have used their names when they delivered a certified resident registration certificate from the plaintiffs' standpoint. However, it is difficult to deem that some of the shares of the non-party company could have become a shareholder in the name of title trust of the non-party company.

(2) After issuance of a certified copy of resident registration, the Plaintiffs did not participate in the preparation of documents, etc. necessary for each of the instant title trusts. In the case of Plaintiff CCC, it seems that there was no other opportunity to know that each of the instant title trusts was made in its own name until around 20O.O.O. around 200, the time when GG demanded the head of Tong and its seal imprint to return the shares in its name again, and in the case of the remaining Plaintiffs, until around 20O.O.O. around 200, the O.O. would have received an official notice demanding an order to explain the transfer and acquisition of the shares of Nonparty.

(3) The Plaintiffs have sought an explanation to the extent necessary for the non-party company from the EE, FF, and H H to whom their respective copies of resident registration were requested to each themselves, and without verifying any further specific purpose, specifically explain the personal relationship that could have been issued to the non-party company, as well as the trust relationship that has been accumulated for a long time from the investigation stage by the tax authorities to the instant case. The explanation includes each individual content, and is not a uniform and typical one.

(4) After the tax authority’s request for explanation on each title trust of this case was commenced, the part that “the Plaintiffs and GG, EE, FF, and HH’s statements were not modified as to the part that “the Plaintiffs did not explain that they will use the Plaintiffs’ names for the purpose of title trust of shares in the process of requesting the Plaintiff to obtain and request a certified copy of resident registration as required by the non-party company,” and the statement that could be deemed to have been made under the circumstances or proviso to deem that there was an agreement on each title trust of this case, even if the use for the title trust was notified and received or implicitly received a certified copy of resident registration, is not revealed in all the statements of the aforementioned parties including the Plaintiffs.

D) As to this, the Defendants asserted to the effect that, in light of the Plaintiffs’ behavior, the Plaintiffs may be deemed to have given implied consent to each title trust of this case, at least after the fact, in light of the following: (a) the Plaintiffs did not limit the use while issuing a certified copy of resident registration; and (b) the Defendant did not file a criminal complaint

However, according to the reasoning of the judgment below, Plaintiff CCC’s request for 20O.O.O. again lent its passbook and seal impression, as seen earlier, there is no dispute between the parties on the charge of forging, etc., which is an actual shareholder, even though the tax authority conducted a tax investigation on the grounds of each of the instant title trust, and considering the overall purport of the pleadings, the text messages sent by Plaintiff DD to H around the time of the above tax investigation, “I would like to know what is the data or documents that I would have to prepare for the submission period of the submission period of the instant tax investigation? I would like to know how I would know that I would have been aware of the fact that I would have been aware of the fact that I would not know that I would have been able to use it in the first place, and that I would like to know that I would not know that I would have been able to know that I would have been able to know about the fact that I would have been able to use it in the first place before the above investigation.”

2) As to the absence of the purpose of tax avoidance

The reasons why this Court has regard to this part are as follows, the corresponding part of the judgment of the first instance other than to write down or add a part of the judgment of the first instance (Articles 13 to 6, 18).

Since the entry is the same as the entry, it shall be quoted in accordance with Article 8(2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

After the first instance of first instance, GG added "(the fact that the Plaintiff CCC paid OO0 won to deemed acquisition tax is recognized as a result of the increase in the external stock holding ratio as a result of the recovery of the shares held in the name of the Plaintiff CCC under its own name, in full view of the overall purport of the pleadings in the statement in No. 3.)."

The 16th parallel 14 to 18th parallel 7 shall be followed as follows:

(4) Finally, comprehensively taking account of the overall purport of the pleadings in respect of the avoidance of global income tax on dividend income, the global income tax base of the non-party company was about KRW 50 million in 200, KRW 600, KRW 900,000 in 202, approximately KRW 1.2 billion in 203, KRW 204, KRW 3.9 billion in 205 billion in 206, approximately KRW 3.7 billion in 2007, KRW 2007, KRW 2000 in 207, KRW 3.7 billion in 2008, KRW 3.7 billion in 2000 in global income, Plaintiff 207, KRW 3.7 billion in 200 in 209, KRW 3.77 billion in 2000 in 207, KRW 2010 in 205, KRW 251 billion in global income, Plaintiff 205.

However, considering that the fact that the non-party company did not pay dividends once again does not conflict between the parties, and that the first title trust with the plaintiff AA, BB, and CCC had already been terminated without paying dividends. Even if the non-party company paid dividends, considering the share ratio in the plaintiffs' names and the amount of distributable profits, the possibility of applying the same global income tax as the case where GGG received dividends at 100% is considerably high, it is difficult to deem that the non-party company had a purpose of evading the application of the global income tax pursuant to the cumulative taxation on global income in each of the instant facts at the time of each of the instant title trust (i.e., each of subparagraphs 1 through 4 of the evidence 6 and 8 of this Article), it is difficult to deem that the defendant applied the same 35% tax rate to the plaintiff and GGG when calculating the estimated global income tax in the year 205 and 206. According to each of the above evidence, even if the same global income tax rate had been applied, it is difficult to view that the amount of global income tax was actually recovered and thus increased.

C) Ultimately, in full view of the above circumstances, even if the plaintiffs' names are not stolen, and at least it may be deemed that each title trust of this case was made by implied agreements, it is reasonable to view that the purpose of tax avoidance was not to raise foreign confidence with the advice of the bank at the time of each title trust of this case ( comprehensively taking account of the overall purport of the pleadings in the statement No. 2 of the evidence No. A, while explaining the tax authority, GG knew that if the shares of private shares were in excess of 50% through the bank, it would have been known that it would be at a disadvantage in the loan due to the omission of awareness, such as a decline in credit delivery, considering it as a personal company, and it is also acknowledged that the OO bank, the principal bank of the bank, was aware of the fact that the person in charge of receiving credit of 1998 and 200 years, pointed out the amount of capital in comparison with the sales amount in the year 198 and the fact that the non-party company actually increased the capital in the year 1998 and 200 billion won).

3) Sub-decisions

Therefore, each of the instant dispositions is unlawful without having to examine the remainder of the Plaintiffs’ claim on title trust in the first trust.

3. Conclusion

If so, all of the plaintiffs' claims seeking the revocation of each of the dispositions of this case are justified, and the judgment of the court of first instance differs from this conclusion, which accepted the plaintiffs' appeal and decided to revoke the judgment of the court of first instance and revoke all of the dispositions of this case. It is so decided as per Disposition.