The Plaintiff’s transfer of shares from the deceased constitutes a donation, and cannot be deemed a consolation money paid at the time of de facto marriage resolution.

The Plaintiff’s transfer of shares from the deceased constitutes a gift, and cannot be deemed a solatium paid at the time of resolving de facto marital relationship, and even if the Plaintiff and the Deceased received consolation money, the claim for consolation money is not legally recognized in the relationship of de facto marital relationship.

Article 2 of the Inheritance Tax and Gift Tax Act

2016 Disposition of revocation of the imposition of a gift tax

○ ○

The director of the Southern Incheon District Office

July 8, 2016

July 29, 2016

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The Defendant’s disposition of imposing gift tax of KRW 136,163,700 (including additional tax) against the Plaintiff on December 10, 2014 shall be revoked.

1. Details of the disposition;

A. On December 2, 2004, the Plaintiff acquired 8,800 non-listed shares (50% of the total issued shares) of A Co., Ltd. (hereinafter referred to as “instant Co., Ltd.”) from the deceased Magsan (the birth of April 8, 194, and death of August 10, 2013, hereinafter referred to as “the deceased”) and paid 10,000 shares out of the new shares issued by the instant Co., Ltd. as capital increase for consideration on December 20, 2004 (hereinafter referred to as “the shares of this case”).

B. On December 10, 2014, the Defendant assessed the market price of the instant shares at KRW 349,78,00,00 in accordance with the Act on Supplementary Evaluation of Standard Market Price, etc., and notified the Plaintiff of the determination of KRW 59,957,60 and KRW 76,206,109 (i.e., penalty tax of KRW 11,91,520 + penalty tax of KRW 64,214,589 + penalty tax of KRW 64,214,589). (hereinafter “instant disposition”).

C. On January 15, 2015, the Plaintiff dissatisfied with the instant disposition and filed an objection with the Commissioner of the Central Tax Office, but the Director of the Central Tax Office dismissed the Plaintiff’s objection on May 22, 2015. The Plaintiff filed an appeal with the Tax Tribunal on July 14, 2015, but the Tax Tribunal dismissed the Plaintiff’s appeal on December 9, 2015.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 7, 9 (including branch numbers for those with additional numbers; hereinafter the same shall apply), Eul evidence Nos. 1, 2, and 4, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

The Plaintiff maintained a de facto marital relationship between the Deceased and the Deceased, and established the instant company as well as the business of the Deceased. However, the Deceased treated the Plaintiff in a de facto marital life, and committed unlawful acts with the △△△△△△△, which eventually decided to liquidate a de facto marital relationship around December 2004. In the process, the Plaintiff acquired the instant shares from the Deceased as compensation for damages caused by the deceased’s tort, property division and consolation money due to de facto marital liquidation.

In other words, since the plaintiff did not receive a donation from the deceased, the disposition of this case should be revoked unfairly.

B. Determination

1) In light of the following circumstances acknowledged by comprehensively taking into account the respective descriptions and arguments of evidence Nos. 3 through 10, and Nos. 1 through 3, the Plaintiff cannot be deemed to have liquidated a de facto marital relationship with the Deceased on or around December 2004, or acquired the instant shares from the Deceased under the pretext of compensation for damages, division of property, consolation money, etc.

A) On or around December 2004, the Plaintiff asserts that the de facto marital relationship was resolved on the ground of the deceased’s cause attributable to the deceased. However, the Plaintiff was registered as a director of the instant company from April 17, 2008 to March 31, 2014, which was after the time of claiming that the de facto marital relationship was resolved with the deceased, and the deceased held and used a certificate of deposit in the name of the Plaintiff during the period of 2011, and the Plaintiff disposed of the instant shares after the deceased’s death ( August 10, 2013).

B) On August 10, 2013, the Deceased operated the instant company prior to the death of the Deceased, and the shares of the instant company were owned by the Plaintiff and the Dong △△△△ up to 50% until the time of the Deceased’s death. As the Plaintiff’s assertion, even though de facto marital relationship was resolved due to the Plaintiff’s de facto marriage, allowing the Deceased to hold 50% of the shares of the instant company would have to defend the Plaintiff’s management right of the instant company. In addition, the Plaintiff’s acquisition of 8,800 shares out of the shares of the instant case on December 2, 2004, and thus, the instant company deposited 20,000 shares (the face value KRW 20 million) and paid new shares accordingly. If the Deceased had economic power to procure new shares in such a size, it seems reasonable to receive cash rather than to have been paid in cash as a de facto marital relationship with the Deceased.

C) The Plaintiff acquired the instant shares under the pretext of property division and consolation money, etc., due to the cause attributable to the Deceased’s de facto marriage. However, there is no evidence showing that the Plaintiff and the Deceased acquired the instant shares under the pretext of property division and consolation money, and there is no document to clarify the responsibility for resolving the de facto marriage relationship due to one’s cause attributable to the Plaintiff and to prevent further liability in the future.

D) A statement submitted by the Plaintiff to the tax authority on December 2, 2004, stating that the Plaintiff was unaware of the status of the giftr of the instant shares, and that there was no consent from the Deceased on December 2, 2004 at the Tax Tribunal. This is inconsistent with the Plaintiff’s assertion that the Plaintiff acquired the instant shares under the name of division of property and consolation money at the Plaintiff’s request around December 2, 2004 (No. 10, No. 3-1 of the Plaintiff’s name) was not prepared, and the date of preparation and the date of processing without a seal. However, the statement submitted in the tax authority’s investigation cannot be deemed as invalid merely because it was not an essential act, and there was no signature or seal of the originator, and that there was no reason to believe that the Plaintiff’s submission of the written statement cannot be said to have been made under the same name of the Plaintiff at the time of the Plaintiff’s submission of the written statement under the name of the Plaintiff’s Criminal Tribunal (No. 3 of the written statement).

E) In the course of the tax investigation, the Plaintiff submitted a confirmation document signed by Kim Jong-Gyeong and 50 other, stating that “the Plaintiff and the Deceased liquidated a de facto marital relationship at around 2004,” but it is insufficient to recognize that only such confirmation document was a de facto marital relationship in 2004, and it is difficult to believe it as it is in light of the above circumstances.

2) Even if the Plaintiff and the Deceased, as alleged by the Plaintiff, liquidated a de facto marital relationship around December 2004, a de facto marital relationship refers to a case where the parties have subjective intent to marry, and objectively there is a substance of marital life that can be recognized as a marital life in terms of social order in light of social norms, and even if the other spouse is under a separate marital relationship with a third party, barring any special circumstance, protection equivalent to legal divorce may not be granted by recognizing it as a de facto marital relationship, barring special circumstances (see, e.g., Supreme Court Decision 2000Da52943, Apr. 13, 2001).

As to the instant case, the following circumstances acknowledged by the purport of the statements and arguments in No. 6, No. 7, and No. 1, and No. 6 and No. 7, and the deceased’s overall purport of the pleading, namely, the deceased’s report of marriage with Kim Jong-chul on May 12, 1971. After the deceased’s death, his spouse under the deceased’s law was Kim Jong-tae until the deceased’s death, and the deceased’s possession of certificates of deposit in the name as well as in his name in 2011. In light of the fact that the deceased’s and Kim Jong-tae cannot be viewed as having never existed the substance of the marital relationship with the deceased, the deceased’s legal spouse during the period of claiming a de facto marital relationship with the deceased is Kim Jong-chul, which is a de facto marital relationship not permitted by the Civil Act. Furthermore, it is difficult to view that the Plaintiff’s de facto marital relationship between the Plaintiff and the deceased constitutes a de facto marital relationship, and there is no special reason to recognize that the Plaintiff was a de facto marital relationship with the deceased at the time of his death.

3) Therefore, it cannot be deemed that the Plaintiff liquidated a de facto marital relationship with the deceased at the time of acquiring the instant shares from the deceased and acquired them under the pretext of consolation money, etc. In addition, insofar as a de facto marital relationship with the deceased is a de facto marital relationship, and thus the rights equivalent to legal divorce, such as division of property, cannot be deemed to have been acknowledged to the Plaintiff. As such, the Plaintiff is bound to have acquired the instant shares from the deceased without compensation, the instant disposition imposing gift tax on the instant shares is justifiable.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.