It is unlawful that the Plaintiff disposed of the shares of this case by deeming them to have been donated from the former representative.

The disposition of imposing gift tax on the ground that the Plaintiff acquired the shares of this case from a full-time representative by arbitrarily using the name of the executives and employees of the company according to the advice of the accounting officer, and the substance of the said stock transaction does not constitute donation, is unlawful.

Article 2 of the Inheritance Tax and Gift Tax Act [Gift Tax Taxables]

Seoul Administrative Court 2014Guhap53152 Revocation of Disposition of Gift Tax Imposition

KoreaA

00. Head of tax office

July 10, 2015

August 21, 2015

1. The Defendant’s gift tax of KRW 000 on September 2, 2013 against the Plaintiff (including additional tax) for the gift tax of KRW 2010 on the Plaintiff (2010)

(2) The disposition of imposition shall be revoked.

2. The costs of lawsuit are assessed against the defendant

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. On December 10, 1993, the Plaintiff was established as the representative director of BB Co., Ltd. (hereinafter referred to as “instant company”) whose main business purpose is non-designing construction business, waterproof construction business, etc., the instant company submitted the specifications of changes in stocks, etc. at the time of the business year 2010, including the Plaintiff and seven other (hereinafter referred to as “Plaintiff et al.”) who are its officers and employees during the year 2010, submitted the specifications of changes in stocks, etc. (hereinafter referred to as “Plaintiff et al.”) to KK and the former managing director, who are the former representative director of the instant company, and to obtain 25,246 shares of the instant company from MM, who are the former directors, [1] at the time of the business year 2010.

[Attachment 1] Report on Change of Stocks

B. From May 6, 2013 to June 19, 2013, the director of the tax office conducted an integrated investigation into the instant company (hereinafter “instant tax investigation”), and on December 14, 2010, the Plaintiff et al. deemed that 25,246 shares of the instant company (i.e., 1,410 shares acquired by the Plaintiff from KK) were donated free of charge from KK, LL, and (ii) notified the tax office having jurisdiction over the Plaintiff et al.’s domicile of taxation data.

C. Accordingly, the director of the tax office having jurisdiction over the plaintiff et al. including the defendant (hereinafter referred to as the "director of the tax office") shall make the shares of the company of this case according to the supplementary assessment methods under the Inheritance Tax and Gift Tax Act.

On September 2, 2013, after evaluating KRW 47,907 per week, the Plaintiff and other seven persons (including additional taxes) were determined and notified on December 14, 2010, totaling KRW 235,054,600 (including additional taxes), as shown below.

[Attachment 2] Imposition of Gift Tax

D. On October 30, 2013, Plaintiff et al. and seven others appealed and filed a request for a trial with the Tax Tribunal. On April 28, 2014, the Tax Tribunal rendered a decision to rectify the tax base and tax amount according to the result of re-investigation as to whether the Plaintiff acquired 25,246 shares including the instant shares with compensation from KK, LL, etc. The head of Samsung District Tax Office recognized the transfer of the shares transferred from LL to the Plaintiff from June 9 to July 4, 2014, and determined that the transfer of the shares transferred from the LLL cannot be deemed the transfer of the remaining shares, and the Plaintiff et al. and seven other parties protested against this and filed a request for a trial with the Tax Tribunal on July 23, 2014, but the Tax Tribunal dismissed Plaintiff et al.’s request on December 19, 2014.

[Ground of recognition] Facts without dispute, Gap evidence 2 through 10, Eul evidence 1 (including each number, if any) and the purport of the whole pleadings

2. The plaintiff's assertion

The shares of the company of this case, including the shares of this case, are 19,035 shares (excluding 6,211 shares transferred from 25,246 shares to the plaintiff) and 7 other than the plaintiff, and the plaintiff acquired the management right of the company of this case from KR in 2006 and acquired shares for consideration under the agreement with KR. In other words, the plaintiff at around 2006, 27,495 shares of the company of this case, which were the representative director of the company of this case, were to be disposed of in total 9,100,000,000 won of the shares of the company of this case (excluding 6,211 shares that were transferred from KR, from 25,246 shares), were to be disposed of in total by 19,000,000 won of the shares of the company of this case and to be disposed of in total 3.1 billion,000,000 won of the shares of the company of this case.

3. Relevant statutes;

It is as shown in the attached Form.

4. Determination

A. Generally, since the burden of proof of the facts requiring taxation exists in a lawsuit seeking revocation of a tax imposition disposition, the tax authority must clarify the facts presumed to have been subject to taxation in light of the empirical rule in the specific litigation process or in light of the fact presumed to have been subject to taxation in light of the empirical rule. In a case where the tax authority merely expresses the presumed facts in light of the empirical rule in the specific litigation process, the relevant facts constitute an unlawful disposition that does not meet the taxation requirement (see Supreme Court Decision 97Nu13894, Jul. 10, 1998).

나. 그러므로 원고가 2010. 12. 14. KKK으로부터 이 사건 주식을 증여받았는지 여부에 관하여 보건대, 이 사건 회사가 2010 사업연도 법인세신고시 위 [표1]과 같은 내용의 주식등변동상황명세서를 제출하였음은 앞서 본 바와 같고, 갑 제11호증의 1, 을 제2호증, 을 제10호증의 3 내지 8의 각 기재 및 증인 NNN의 증언에 의하면, KKK 이 "본인은 보유주식 16,920주에 대하여 직원들의 사기진작으로 인한 회사발전을 위하여 직원들에게 우리사주형태로 배분하기를 원하며 이에 확인합니다. 2010년 12월 14일 KKK" 이라는 내용의 확인서(갑 11호증의 1, 이하 'KKK 확인서'라 한다)를 작성한 사실, 이 사건 세무조사 당시 원고의 명의로 "본인은 BBB��주식 1,410주를 KKK(전 대표 이사)으로부터, 6,211주를 LLL(전 전무이사)에게서 애사심을 갖고 근무하기를 원하는 전 경영진의 뜻에 따라 무상으로 받았으며 열심히 회사의 발전을 위하여 노력할 것을 확인 합니다.2010년 12월 14일 확인자 AAA"이라는 내용이 인쇄된 확인서(을 제2호증)가, 원고 외 7인 중 원고와 JJJ을 제외한 나머지 6인의 명의로 "본인은 BBB��주식 ****주(위[표1]기재 각 주식수)를 애사심을 갖고 근무하기를 원하는 KKK(전 대표이사)의 뜻에 따라 무상으로 받았으며 열심히 회사의 발전을 위하여 노력할 것을 확인합니다. 2010년 12월 14일 확인자 ***"이라는 내용이 인쇄된 확인서(을 제10호증의 3 내지 8)가 각 작성되어 과세관청에 제출된 사실이 인정된다[KKK 확인서 중 KKK의 이름이 인쇄된 부분 오른쪽에 KKK의 인감도장이 날인되어 있음은 당사자 사이에 다툼이 없으므로, 그 날인행위가 KKK의 의사에 기한 것으로 추정되고, 나아가 민사소송법 제358조에 의하여 위 확인서 전체의 진정성립이 추정된다. 또한, 증인 KKK의 일부 증언에 의하더라도 KKK은 딸인 HHH이 주식과 관련하여 인감도장의 교부를 요청하여 HHH에게자신의 인감도장을 건네주었다는 것이고, 을 제9호증의 기재에 의하면, 이 사건 세무조사 당시 KKK이 직접 조사 담당 공무원에게 위 확인서를 제출한 사실을 인정할 수 있는바, 이러한 전후 사정에 비추어 보면, 위 인감도장의 날인이 KKK의 의사에 반하여 혹은 KKK의 의사에 기하지 않고 이루어졌다는 취지의 KKK의 일부 증언만으로는 위 진정성립의 추정을 번복하기에 부족하고, 달리 이를 번복할 만한 증거가 없으므로, KKK 확인서의 진정성립이 인정된다].

C. On the other hand, according to Gap's testimony (excluding the above rejection of witness testimony of KK), according to Gap's testimony (excluding the above rejection of witness testimony of KK), the following facts are acknowledged: Gap's testimony of 3, 4, 12, 15, 16, 17, 19, 20, 21, 31, 32, 33, 34, 35, and 36.

1) On December 10, 1993, LL, the father of the Plaintiff, served as a director of the instant company from the time when the instant company was established until December 10, 2005.

2) At the time of January 1, 2006, the shares of each shareholder of the instant company are as follows.

[Attachment 3]

3) From the time of incorporation to December 30, 206, the representative director of the instant company was KK (the single representative director), but on December 31, 2006, he was replaced with the Plaintiff (the single representative director) on December 31, 2006, and was converted into the Plaintiff and the PPP (each of the own representative directors) system on June 16, 201, and remains thereafter.

4) The date of birth (based on resident registration) of KK is April 15, 1940. The sales and net profits and losses of the company of this case from 2004 to 2010 are as shown below (based on resident registration).

[Attachment 4]

5) From April 24, 2006 to October 30, 2006, the sum of KRW 000,000 in the Plaintiff’s name from April 24, 2006 to October 30, 2006, and KRW 100,000,000 in the name of CCC, GG, DD, HH (hereinafter “CC”) as set forth in the following [Attachment 5] * bank account (35-12-08935).

[Attachment 5]

6) On August 29, 2013, the head of Tong in the name of KK affiliated with the bank account ** KK’s account is re-issued at the address of KK on August 29, 2013 ** even after the resignation of the representative director of the company of this case, KK received the national pension through the above account, paid the insurance premium, card price, newspaper subscription fee, resident tax, etc., and made a transaction of deposit and withdrawal with family members through the above account.

7) On January 11, 2007, the Plaintiff, as the representative director of the instant company, issued to KK a promissory note in the face value of KRW 00 million (hereinafter “instant promissory note”) with the issuer’s “BB” and the due date on December 31, 2010.

8) KK’s above ** bank’s account deposited in the bank account in total of KRW 00 billion in the name of CCC and three other persons on January 3, 201, and around that time, KK returned the Promissory Notes to the Plaintiff.

9) On September 30, 2010, the Plaintiff directly paid the amount of gift tax imposed on the holders of the instant company’s shares, excluding themselves, with the amount of money loaned from a corporate bank.

10) Of the Plaintiff and seven other holders, the remaining holders except the Plaintiff did not exercise voting rights or receive dividends during the period in which they were listed as shareholders in the register of shareholders of the instant company.

11) Of the Plaintiff and seven others, CCC joined the instant company on March 2, 201, and the number of employees of the instant company as of March 4, 2010 exceeded 25.

12) There is no relative relationship between the Plaintiff et al. and 7 and KK.

13) The value of the donated property of KK calculated by the chief of the competent tax office, including the Defendant, is KRW 000, KRW 4000, KRW 4000, KRW 000, KRW 500, KRW 000, Plaintiff, GG, and HH, respectively.

D. In light of the following circumstances known from the fact of recognition under the above sub-paragraph (c) above, it is sufficient to recognize that the Plaintiff received a donation of the instant shares from KR solely based on the facts acknowledged under the above sub-paragraph (b) above, to the extent that it can be ratified in light of this direct or empirical rule, and there is no other evidence to acknowledge this otherwise.

1) There are various circumstances that correspond to the assertion that the Plaintiff purchased the instant shares from KK, as follows.

A) The Plaintiff’s deposit of KRW 228,50,00 in the name of KK in 2006 as above [Attachment 5] ** bank account in total with the bank account in 228,50,000 is deemed to be for the payment of the price for the purchase of shares from KK as alleged by the Plaintiff (the Defendant appears to be for the above *** bank account is only a borrowed account opened by the instant company in the name of KK, but the bank account is also a borrowed account opened by the instant company in the name of K. However, in light of the fact that the instant account was managed by the Plaintiff for any reason in 2006, it is reasonable to view that the said account was not owned and operated by the Plaintiff in substance in light of the fact that the Plaintiff deposited large amounts of money in the said account for any reason.

B) On January 11, 2007, the Plaintiff issued the Promissory Notes to KK from the qualification of the representative director of the instant company and appears to be aimed at paying the price for the transfer of stocks between the aforementioned two persons. In other words, since a stock company is a separate legal entity that is separate from the natural person operating the said Promissory Notes, its property is also strictly divided and managed. However, even though a person operating a stock company arbitrarily withdraws the company’s funds by taking advantage of his status and uses them for personal purposes, the Plaintiff is also the largest shareholder of the instant company and the representative director, and the Plaintiff is also the strict owner of the instant company and the company’s name under the status of having management rights.

In light of the fact that the Promissory Notes were issued under the awareness that no distinction exists and that the Promissory Notes were to be repaid out of funds of anyone, and there is no circumstance to deem that the instant Promissory Notes was liable for the cause of the instant obligation to KK at the time of the issuance of the Promissory Notes, the said Promissory Notes are deemed to have been issued for the payment of the Plaintiff’s individual obligations.

C) In light of the fact that the time when the sum of KRW 00 million was deposited from cCC and 3 others in the bank account is close to the due date of the Promissory Notes, and that KR returned the Promissory Notes to the Plaintiff immediately after the said deposit, it seems that the Plaintiff actually paid KRW 100 million deposited in the said account in the name of cCC and 3 other than 3 persons.

D) There are circumstances consistent with the Plaintiff’s assertion that KK had continued to operate the instant company on its own, and that the Plaintiff had transferred the Plaintiff’s shares and management rights of the instant company to the Plaintiff by deeming that it had continued to operate the instant company on its own. In other words, K has been aged 66 on the basis of the date of birth on the resident registration at 2006, and the amount of sales and net income of the instant company for the business year 2005 has been significantly decreased compared to that of the immediately preceding year, and the 2006 sales and net income of the instant company have also deteriorated. Moreover, LL, the Plaintiff’s father, was a director of the instant company from the time of the establishment of the instant company until December 10, 205, and was a 21,721 share shares (30.81%) of the instant company on January 1, 2006, and the Plaintiff had been working as an employee for 105,719% of the instant company’s shares (the instant company’s shares).

2) There are many circumstances that are contrary to the Defendant’s taxation logic and the following circumstances.

A) The holders of the remaining shares, other than the Plaintiff, among the Plaintiff et al., are disputing the imposition of gift tax by the head of the competent tax office related to the shares of the instant company. Considering the value of the shares of the instant company, the amount imposed on the gift tax, etc., if the above holders of the instant shares were to have actually received the shares of the instant company from KK, it is deemed that there is no reason

B) If, as alleged by the Defendant, the Plaintiff et al. and seven other parties respectively donated 25,246 shares of the instant company from KK, LL, and MM without compensation, there is no reason to pay gift tax on the holders of shares that the Plaintiff excluded himself/herself by its own funds.

C) In full view of the following (1) through (4), it is difficult to give high value of evidence in the KK Certificate, which is a major supporting material for the instant disposition.

① According to the Defendant’s disposition, KK lost its largest shareholder status by selling its shares to CCC and DD 000 won, EE, and FF each of the instant companies equivalent to KRW 000, KRW 000, KRW 000, KRW 700, KRW 000, KRW 000, and the Plaintiff, GGG, and HH. Accordingly, KK did not have any relationship with its former representative director, and it is difficult to find any special motive or reason for KK to give high-priced gift to the above nominal owner, who is an employee of the company that did not serve as the representative director.

② As of December 14, 2010, the KON stated that the shares of the instant company were donated for the purpose of raising the morale of the employees of the instant company, and the Defendant also asserted that the shares of the instant company were donated to the Plaintiff et al. on the said date. Of the Plaintiff et al., the entry of the instant company by CCC in the Plaintiff et al. was March 2, 201, which is the subsequent month after the said preparation date. In addition, as of December 14, 2010, the instant company appears to have worked as a considerable number of employees other than the Plaintiff et al. and seven other employees (other than the Plaintiff et al. (CCC) at the time of December 14, 2010. In the event of the donation of shares only to some employees, the overall reduction was created among the employees, and it may cause interference to the boosting morale.

③ In the course of the instant tax investigation, the officer in charge of the instant investigation submitted a letter of confirmation (Evidence A 11-2) stating that “I want to allocate 19,606 shares to the employees in the form of shares for the development of the company due to the boosting employee’s morale.” On December 14, 2010, the name of the LL was printed, and the LL’s name was affixed on the right side of the printed part of the LL, and even according to the results of the reexamination of the Samsung T&T, 6,211 shares in the name of the LL was transferred for payment to the Plaintiff. Accordingly, the credibility of the said certificate should be deemed to have been considerably weak. The KK certificate was also prepared in the same form as above and submitted to the same other party (a public official in charge of investigation).

④ Even according to the language and text of the KK Certificate, it is merely intended to distribute its shares to the employee stock ownership association pursuant to the Framework Act on Labor Welfare in the form of having the employee stock ownership association acquire the shares of the company of this case, and it cannot be deemed that some employees intend to directly acquire the shares of the company

E. Therefore, the instant disposition is deemed an illegal disposition that fails to meet the taxation requirements, and the Plaintiff’s assertion pointing this out is with merit.

5. Conclusion

The plaintiff's claim of this case is reasonable, and it is so decided as per Disposition.