[1] Legislative intent of Article 48(1) of the former Inheritance Tax and Gift Tax Act and standard point of time to determine whether “the sum of shares held by a contributor and a person with a special relationship with the contributor is the largest” under Article 13(4)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (=the point of time after the share was contributed)

[2] The meaning of "a person who establishes a nonprofit corporation by contributing property" under Article 19 (2) 4 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act

[1] [Majority Opinion] In full view of the provisions of Articles 48(1) and 16(2) proviso of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter “Act”), even if the shares of a domestic corporation contributed to a public-service corporation exceed 5/10 of the total number of shares issued by the domestic corporation, a special relationship should be established between the contributor and the domestic corporation in order to impose gift tax on the shares contributed.

In this regard, Article 13(4) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 18177, Dec. 30, 2003; hereinafter “Enforcement Decree”) provides that “A domestic corporation that does not have a special relationship with a contributor of the relevant public-service corporation” under the proviso to Article 16(2) of the Act refers to a domestic corporation that does not fall under any of the following subparagraphs 1 and 2, and subparagraph 1 provides that “a contributor or a person in a special relationship with the contributor (referring to a person in a relationship with the contributor, excluding the relevant public-service corporation) who is a stockholder or a person in a special relationship with the contributor (excluding the relevant public-service corporation) who is in excess of 1/5 of the current number of the contributor or a person having a special relationship with the contributor (referring to a person in a relationship with the contributor under each subparagraph of paragraph (6) 1) is the largest requirement of a domestic corporation (hereinafter “the relevant public-service corporation”).

If the legislative purport of Article 48(1) of the Act is to regulate the contribution of “the person who was the largest shareholder of a domestic corporation” before the contribution of stocks of the domestic corporation, the requirement for largest shareholder shall be determined at the time of contribution before the contribution of the stocks. If the legislative purpose is to regulate the contribution of “the person who becomes the largest shareholder of a domestic corporation” after the contribution of stocks, the requirement for largest shareholder shall be determined at the time of contribution after

If the shares contributed to a public-service corporation are shares of “the largest amount of shares held by the contributor and a person having a special relationship with the contributor (hereinafter “Contributors, etc.”)”, it can be avoided inheritance tax or gift tax by means of stock contribution to the public-service corporation even though the public-service corporation can be used as a means of controlling the domestic corporation by affecting dividends, etc. based on the control over the domestic corporation. Thus, it is understood that this provision has been established to prevent such harm.

Therefore, whether a “large shareholder requirement” constitutes a “large shareholder” ought to be determined at the time of contribution after shares were contributed, rather than at the time of contribution. Even if a shareholder was the largest shareholder before shares were contributed, if the shareholder lost his/her status as the largest shareholder due to contribution, the contributor may no longer affect a public-service corporation based on control over domestic corporations, nor can a public-service corporation use it as a means of control over domestic corporations.

[Dissenting Opinion by Justice Kim Yong-deok, Justice Kim So-young, and Justice Park Sang-ok] The proviso to Article 48(1) of the Act does not intend to block the formation of an indirect governance structure of a company using a public-service corporation, as seen in the Majority Opinion, but it is clear that the Majority Opinion stipulates that gift tax should be imposed only on the case where the contributor contributes to the shares of a specific company under the existing control and uses the public-service corporation as a means of indirect succession to a specific company. In other words, the previous limit of non-taxation was set at 5% of the total number of outstanding shares, but the limit of non-taxation was alleviated up to “a case where

Therefore, the standard point of time for determining the requirements for shareholders and the requirements for the largest shareholder in relation to Article 48(1) of the Act is bound to be at the time of contribution of shares. The language and text of the Act provides that “where shares, etc. are contributed by a domestic corporation that is not in a special relationship with a contributor” shall be determined at the time of contribution to determine whether a relationship exists between a contributor and a domestic corporation is accurately reflected in this purport. Therefore, there is no room for determination based on the time after the share was contributed, as

[2] [Majority Opinion] In order to benefit from non-taxation when shares are contributed to a public-service corporation, the contributor, etc. does not fall under the largest shareholder of the domestic corporation. In determining the largest shareholder at the time after shares were contributed, the “relevant public-service corporation” that received shares from the domestic corporation shall be subject to guidance from the person in a special relationship with the contributor. In this regard, Article 19(2)4 of the Enforcement Decree, which applies mutatis mutandis pursuant to Article 13(6)3 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 18177, Dec. 30, 2003; hereinafter “Enforcement Decree”), provides that “non-profit corporation established by the contributor, etc. either forms the majority of the directors or contributes property,” as a person in a special relationship with

According to the language and text of the above provisions, “the pertinent public-service corporation” is naturally included in a non-profit corporation, and if the requirements of the above provisions are met, it can be deemed as a “non-profit corporation in a special relationship with the contributor.” Article 13(4)1 of the Enforcement Decree also clearly specifies this point by including the pertinent public-service corporation in the scope of persons related to the requirements for the largest shareholder. Therefore, if “the stock contributor, etc. constitutes a “public-service corporation established with the contribution of the pertinent public-service corporation by the contribution of property” or the pertinent public-service corporation constitutes a “public-service corporation established with the contribution of property,” it shall be determined whether the contribution constitutes the largest shareholder by including not only the shares held by the pertinent public-service corporation but also the shares

Considering the principle and legislative purport of the interpretation of tax laws and regulations, the legislative history of Article 19(2)4 of the Enforcement Decree, the contents of other tax laws prescribing the scope of a non-profit corporation having a special relationship, the formulation of the articles of incorporation, and influence of the establishment of a director in the course of operation of a public-service corporation, etc., the term “person who has established a non-profit corporation by contributing property” under Article 19(2)4 of the Enforcement Decree shall be deemed to mean a person who has exercised substantial influence over the establishment of a non-profit corporation in the course of establishing the articles of incorporation

However, whether a person who contributed to shares exercises a dominant influence over the establishment of a non-profit corporation is not always limited to cases where he/she participated in the preparation of the articles of incorporation or the appointment process of directors in the position of promoters, etc., but the substance should be determined as to the degree of involvement of the contributor in the preparation of the articles of incorporation or the appointment of directors. It may be inferred through the behavior of a

[Dissenting Opinion by Justice Kim Yong-deok, Justice Kim So-young, and Justice Park Sang-ok] The requirements for the special relationship between the contributor and the public-service corporation as prescribed by Article 19(2)4 of the Enforcement Decree refers to the nonprofit corporation established by the contributor with the contribution of property.

As the Majority Opinion states that “the establishment of a property by contribution” under Article 19(2)4 of the Enforcement Decree is “the case where it is recognized that an act of contribution and exercise dominant influence over the establishment of a public-service corporation in the process of preparing its articles of incorporation, appointing its first director, and registering its establishment.” The meaning of “contribution established by contribution” under the above Enforcement Decree should be found in the fact that it focuses on the contribution to determine the existence of a special relationship with an emphasis on the contribution, and if the contributor is a “corporation which results in the establishment by contribution of property,” it should be deemed that the said

If a contributor did not participate in the preparation of the articles of incorporation or the appointment of the first director at the time of the establishment of a public-service corporation, it cannot be said that there is no room to control the public-service corporation at all times. It is sufficiently possible to control the public-service corporation by taking account of the position of the president or director of the public-service corporation established by the contributor pursuant to the relevant statutes, such as the Civil Act, and in reality, the transfer of dominance over the public-service corporation takes place considerably. In such a case, it is difficult for the contributor

[1] Articles 16(2) and 48(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007); Article 13(4)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 18177, Dec. 30, 2003) / [2] Article 13(4)1 and (6)3 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 18177, Dec. 30, 2003); Article 19(2)4 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act

Gu Head School Foundation (Law Firm Chungcheong, et al., Counsel for the defendant-appellant-appellee)

Head of Suwon Tax Office (Attorney Cho Jae-ho, Counsel for the defendant-appellant)

Seoul High Court Decision 2010Nu26003 decided August 19, 201

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. A. Article 48(1) main text of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter “the Act”) provides that gift tax shall not be imposed on “property contributed to a public-service corporation.” This is a provision to support the activities of the public-service corporation from a tax policy perspective, taking into account the fact that public-service projects conducted by the public-service corporation are their original duties to be performed by the State or local governments.

However, the proviso of Article 48(1) of the Act provides that gift tax shall be imposed on the case where “where a public-service corporation receives a contribution of stocks of a domestic corporation, the contributed stocks, etc. exceed 5/100 of the total number of issued voting stocks of the relevant domestic corporation.” The purpose of the proviso is to prevent avoidance of inheritance tax or gift tax while using a public-service corporation as a means of controlling a domestic corporation by means of stock contribution to the public-service corporation in a creshion of

Meanwhile, the proviso of Article 48(1) of the Act provides that the scope on which gift tax shall be imposed pursuant to the proviso of Article 48(1) of the Act by stipulating that “the cases falling under the proviso of Article 16(2) of the Act (hereinafter “proviso of Article 16(2)”) shall be excluded” within a comprehensive title, thereby restricting the scope on which gift tax shall be levied pursuant to the proviso of Article 48(1) of the Act. In other words, the proviso of Article 16(2) of the Act provides that no gift tax shall be levied on “where stocks of a domestic corporation that is not specially related to a public-service corporation are contributed” of the domestic corporation’s shares exceeding 5/100 of the total number of issued voting stocks of the domestic corporation are contributed to a public-service corporation. In short, in cases where a public-service corporation

B. In full view of the provisions of Article 48(1) and the proviso of Article 16(2) of the Act, even if the shares of a contributed domestic corporation exceed 5/100 of the total number of issued and outstanding shares of the said domestic corporation, in order to impose gift tax on the contributed shares, the “special relationship” between the contributor and the domestic corporation should be recognized.

In this regard, Article 13(4) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 18177, Dec. 30, 2003; hereinafter “Enforcement Decree”) provides that “A domestic corporation that does not have a special relationship with a contributor of the relevant public-service corporation” under the proviso to Article 16(2) of the Act refers to a domestic corporation that does not fall under any of the following subparagraphs 1 and 2, and subparagraph 1 provides that “a contributor or a person in a special relationship with the contributor (referring to a person in a relationship with the contributor, excluding the relevant public-service corporation) who is a stockholder or a person in a special relationship with the contributor (excluding the relevant public-service corporation) who is in excess of 1/5 of the current number of the contributor or a person having a special relationship with the contributor (referring to a person in a relationship with the contributor under each subparagraph of paragraph (6) 1) is the largest requirement of a domestic corporation (hereinafter “the relevant public-service corporation”).

Therefore, it can be deemed that there is a special relationship between a contributor and a domestic corporation meeting both the aforementioned “shareholders’ requirements” and “large shareholder requirements,” and only in such a case, gift tax may be imposed on the shares of a domestic corporation contributed to a public-service corporation.

C. A public-service corporation is a corporation engaged in a business aimed at religion, charity, academic research, or other public interest (Article 16(1) of the Act). “Business aiming at public interest” can be realized more mature and complete when members of the society actively participate, and the public-service corporation plays an important role here. From this perspective, the tax law has not imposed taxes on the contribution of property to a public-service corporation for a long time without asking for the type of donated property. Accordingly, in order to impose the burden on a donee, a donee, who is a public-service corporation that is subject to the heavy tax rate of 50%, as in ordinary donations, which is subject to the heavy tax rate of 50%, as in ordinary donations, should be supported by reasonable grounds therefor.

However, the establishment of the proviso of Article 48(1) of the Act only for stock contribution to impose gift tax by means of the establishment of a new proviso to Article 48(1) of the Act is derived from measures taken to prevent the abuse of a public-service corporation as a means to control a domestic corporation in the course of avoiding inheritance tax or gift tax. This is an exceptional measure against cases of abuse. The exceptional measure ought to be applied to the extent necessary to prevent such harm. The act of stock contribution to a public-service corporation itself and the act of abusing it as a means to control a domestic corporation in the course of avoiding inheritance tax or gift tax should not be presumed or presumed to be recklessly. The statutory interpretation based on the foregoing erroneous perception is highly likely to escape the framework of constitutional interpretation. Rather, the method of stock contribution, other than cash contribution, is essential for the substantial financial basis of a public-service corporation.

Therefore, the proviso of Article 48(1) of the Act ought to be interpreted in such a way that the act of contributing shares that may be abused as a means of control over domestic corporations with the avoidance of inheritance tax or gift tax can be rationally and harmoniously divided.

2. Where the contributor contributes the shares of a domestic corporation to a public-service corporation, the total amount of shares of the contributing domestic corporation together with the contribution shall be reduced by the number of shares contributed, and the total amount of shares of the domestic corporation held by the public-service corporation shall be increased by the

However, “The largest shareholder requirement” means the total amount of shares held by the contributor and those held by the person in a special relationship with the contributor, and does not exclude the pertinent public-service corporation which received contributions within the scope of the person in a special relationship with the contributor. According to Articles 13(6)3 and 19(2)4 of the Enforcement Decree, where a person under Article 19(2)1 through 3 of the Act (hereinafter “stock contributor, etc.”) either forms the majority of the directors of a public-service corporation or where a public-service corporation established by the public-service corporation through the contribution of property by the fund contributor, etc., such public-service corporation also constitutes a person in a special relationship with the contributor. Therefore, if a public-service corporation with which the contributor and the stocks were contributed are specially related, the domestic corporation that was held as a result of the contribution by a public-service corporation or the stocks of a domestic corporation

Therefore, depending on the existence of a special relationship between a contributor and a public-service corporation with which shares are contributed, and whether such special relationship exists at any time, whether it constitutes the largest shareholder requirement. Accordingly, even if the contributor was the largest shareholder of a domestic corporation before the contribution, even if he/she is determined based on the time of “the largest shareholder requirement”, he/she may not become the largest shareholder after the contribution, and even if he/she was not the largest shareholder before the contribution, he/she may become the largest shareholder

A. If the legislative purport of Article 48(1) of the Act intends to regulate the contribution of the “person who was the largest shareholder of a domestic corporation” before the contribution of stocks of the domestic corporation, it shall be determined at the time before the contribution of the stocks is made. If it is intended to regulate the contribution of the “person who becomes the largest shareholder of the domestic corporation” after the contribution of stocks, the requirement for largest shareholder shall be determined at the time after the contribution of stocks is made.

If the shares contributed to a public-service corporation are shares of “the largest amount of shares held by the contributor and a person having a special relationship with the contributor (hereinafter “Contributors, etc.”)”, it can be avoided inheritance tax or gift tax by means of stock contribution to the public-service corporation even though it has affected the public-service corporation by means of influence on dividends, etc. based on the governing power over the domestic corporation, thereby using the public-service corporation as a means of controlling the domestic corporation. Therefore, it is understood that this provision has been established to prevent such harm.

Therefore, whether a “large shareholder” constitutes a “large shareholder” should be determined at the time of contribution after shares were contributed, rather than at the time of contribution. Even if shares were the largest shareholder before shares were contributed, if the shares lost their status as the largest shareholder due to such contribution, the contributor cannot affect a public-service corporation based on control over domestic corporations, and the public-service corporation cannot be used as a means of control over domestic corporations.

On the other hand, if the determination of whether a case constitutes “the largest shareholder requirement” is based on the time before the contribution was made, gift tax shall be imposed insofar as the contributor et al. was the largest shareholder of a domestic corporation before the contribution was made, and furthermore, there is no room to examine whether a public-service corporation can be used as a means of controlling a domestic corporation after the contribution. This would result in deeming the contributor et al. to abuse the public-service corporation as a means of controlling a domestic corporation as long as the contributor et al. was the largest shareholder of the domestic corporation before the contribution was made. Such interpretation is unreasonable, as well as is contrary

In addition, according to such standard of determination, even though the contributor et al. becomes the largest shareholder of a domestic corporation by combining the shares already held by a public-service corporation with those of a public-service corporation, which led to the establishment of a special relationship between the contributor and the public-service corporation, and became the largest shareholder of the domestic corporation, the gift tax may not be levied on the public-service corporation solely on the ground that the contributor et al. was not the largest shareholder of the domestic corporation before making the contribution. As a result, the legislative intent cannot be achieved by enabling the avoidance of inheritance tax or gift tax by means of

Therefore, the legislative intent of Article 48(1) of the Act is not to regulate the contribution of “the person who was the largest shareholder of a domestic corporation” before the contribution of stocks, but to regulate the contribution of “the person who becomes the largest shareholder of a domestic corporation after the contribution of stocks.”

B. It is also confirmed that the provision of the proviso of Article 48(1) of the Act and Article 48(11)1 of the Act are also to regulate the contribution of “the person who was the largest shareholder of a domestic corporation,” not to regulate the contribution of “the person who was the largest shareholder of the domestic corporation.”

(1) The proviso of Article 48(1) of the Act provides that “Where a public-service corporation has received a contribution of stocks of a domestic corporation, and where the sum of stocks, contributors, and those of the same domestic corporation held by the relevant public-service corporation at the time of such contribution exceeds 5/100 of the total number of issued voting stocks of the relevant domestic corporation, where the sum of stocks, contributors, and those of the same domestic corporation that contributed to another public-service corporation other than the pertinent

This is the case where the sum of the shares of the same domestic corporation held by the pertinent public-service corporation at the time of the contribution by the public-service corporation after receiving the contribution from the public-service corporation exceeds 5/100 of the total number of issued shares of the relevant domestic corporation as the taxation requirement.

As can be seen, if the proviso of Article 16(2) of the Act, which is a non-taxable requirement excluding the application thereof, is determined at the time of contribution. Therefore, the “large shareholder requirement” as a basis for determining a special relationship between a contributor and a domestic corporation ought to be determined at the time of contribution, rather than at the time of contribution.

In addition, the requirement of “public interest corporation falling under the proviso of Article 49(1) of the Act,” which is another non-taxation requirement as stipulated in the said proviso, is satisfied only if the share contributor, etc. does not exceed 1/5 of the current number of directors of the public interest corporation. Such requirement also accords with the legislative intent of regulating the control of public interest corporations by the contributor at the time of contribution and then at the time of contribution. Therefore, the requirement of “stocks of a domestic corporation that is not a contributor with no special relationship” as stipulated in the said proviso should also be met at the same time. In this regard, it can be confirmed that the determination of “large shareholder requirement” specifically prescribed in the said proviso should be made at the same time after the contribution of shares.

(2) Article 48(11) of the Act provides that “Where a public-service corporation falling under the proviso of Article 16(2) holds more than 5/100 of the total number of outstanding stocks of a domestic corporation in a special relationship with the contributor concerned, gift tax shall be imposed pursuant to the provisions of Article 48(1).” This provision stipulates that when a public-service corporation receives a contribution of stocks, it shall be deemed that the public-service corporation may be abused as a means of control of a domestic corporation if it satisfies the non-taxation requirement under the proviso of Article 16(2) of the Act but fails to meet the non-taxation requirement thereafter.”

When a contributor does not account for a majority of the directors of a domestic corporation at the time of contribution to a public-service corporation, and there was no special relationship between the contributor and the public-service corporation, but later, when the contributor and his relative, employee, etc. occupy a majority of the directors of the public-service corporation, the special relationship between the contributor and the public-service corporation is made at that time.

Accordingly, not only the shares of a domestic corporation that had been held by a public interest corporation due to the contribution of the contributor but also the shares of a domestic corporation that had been held by the public interest corporation at the time of the contribution are included in the number of shares determining the largest shareholder requirement. When meeting the largest shareholder requirement, Article 48(11) of the Act is applied at that time and gift tax is imposed on a public interest corporation. It means that not only the contribution of a “person who was the largest shareholder of a domestic corporation” but also the contribution of a “person who becomes the largest shareholder of a domestic

(A) Before making the contribution, the contributor et al. was not the largest shareholder of a domestic corporation but became the largest shareholder if the contributor et al. was combined with shares of a domestic corporation held by the charitable entity

In a case where a contributor, etc. forms a majority of the directors of a public-service corporation and a special relationship exists between a contributor and a public-service corporation, gift tax is imposed as a result of including not only the stocks of a domestic corporation held by the public-service corporation due to the contributor’s contribution but also the stocks of a domestic corporation held by the public-service corporation at the time of contribution by the public-service corporation as a result of determining the largest shareholder requirement. On the other hand, the stocks of a domestic corporation held by the public-service corporation due to the contribution are included in the number of stocks determined the largest shareholder requirement as those held by the contributor himself/herself before the contribution was made, but the stocks of the domestic corporation held by the public-service corporation at the time of contribution are included in the number of stocks held by the contributor, but no gift tax is levied as a result of the fact that the shares of the domestic corporation held

Therefore, when determining “the largest shareholder requirement” as of the time prior to the contribution of shares, taxation may not be granted in cases where the contributor et al. forms a majority of the directors of the public-service corporation while making a contribution, while, at the time of contribution, there was a special relationship between the contributor and the public-service corporation, but later, taxation is possible in cases where a special relationship is established by taking account of the majority of the directors of the public-service corporation. In other words, in cases where a person becomes the largest shareholder while making a contribution, liability for tax payment is not established, while the person becomes the largest shareholder is not at the time of contribution, but at the time of the contribution, but at the later time, the person becomes the largest shareholder is liable for tax liability. Article 48(11) of the Act provides on the premise that “the requirement of the largest shareholder” is determined at the time of contribution after the contribution of shares. However, in applying Article 48(1) of the Act, it is derived from interpreting “the requirement of the largest shareholder” as of the time before the contribution is made.

(B) Prior to the contribution, the contributor et al. was the largest shareholder of a domestic corporation, but the contributor et al. excludeds the shares of a domestic corporation that contributed to a public-service corporation.

In cases where there is no special relationship between a contributor and a public-service corporation at the time of contribution, the shares of a domestic corporation held by the public-service corporation due to the contribution of the contributor are not included in the number of shares determined by the largest shareholder, and thus cannot be the largest shareholder, no gift tax shall be imposed on the public-service corporation. On the other hand, if the “large shareholder requirement” is determined at the time before the contribution was made, the contributor et al. was the largest shareholder of the domestic corporation before the contribution, and thus gift tax shall be imposed on the public-service corporation.

Therefore, when determining “the largest shareholder requirement” as of the time before the contribution was made, the establishment of tax liability is recognized solely on the basis that the contributor and the public corporation were the largest shareholder of the domestic corporation before the contribution was made, even though there was no special relationship between the contributor and the public corporation. In addition, where the contributor et al. after the contribution constituted “the requirement for the largest shareholder” as a special relationship between the contributor and the public corporation, then the establishment of tax liability under Article 48(11) of the Act is at issue at the time of the contribution. The establishment of tax liability is established even if the largest shareholder was not at the time of the contribution, and it becomes possible for the largest shareholder again to become final and conclusive according to the same standard. However, the establishment of tax liability is not based on the interpretation of Article 48(11) of the Act, but rather on the basis of the interpretation of Article 48(1) of the Act. In addition, even if the contributor et al., a public-service corporation after the contribution, etc., forms a majority of the directors of the public-service corporation, it should be established.

C. The proviso of Article 16(2) of the Act provides that “(i) falls under the proviso of Article 49(1) with the exception of its subparagraphs, and (ii) does not have special relationship with an enterprise group subject to the restriction on mutual investment under Article 9 of the Monopoly Regulation and Fair Trade Act; (iii) contributes stocks of a domestic corporation which is not in special relationship with the contributor of the relevant public-service corporation; and (iv) does not impose gift

To recognize that a public-service corporation is not likely to be used as a means of control over a domestic corporation, the above four requirements must be satisfied.

The key issue of the instant case pertains to “(3) where shares of a domestic corporation which is not in a special relationship with the contributor of the relevant public-service corporation are contributed.” This requirement is to prevent the possibility of using the public-service corporation as a means of control over the domestic corporation by affecting the public-service corporation through the influence of dividends, etc. based on control over the domestic corporation.

On the other hand, the requirement that “A public-service corporation that falls under the proviso of Article 49(1)” is to regulate that a public-service corporation that has received stocks contributions can operate reasonably in accordance with its purpose, and to block the possibility that a stock donor directly controls a public-service corporation to use it as a means of controlling the domestic corporation.

② Even if the requirements of ① and ③ are satisfied, non-taxation benefits will not be granted to a public-service corporation in a special relationship with a certain large enterprise group in the event that it contributes shares of a domestic corporation. Furthermore, even if the requirements of ①, ②, ③ are satisfied, the requirements of ① “where the competent Minister deems it necessary to efficiently carry out the purpose of a public-service corporation” (Article 13(5) of the Enforcement Decree). In addition, the requirements of non-taxation should be satisfied. Moreover, according to Article 13(5) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act amended by Presidential Decree No. 26069, Feb. 3, 2015, Article 13(5) of the Enforcement Decree of the Inheritance Tax and Gift

However, according to the Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Act No. 8828 of Dec. 31, 2007) and the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 20621 of Feb. 22, 2008), the requirements of 1 were very strengthened.

According to the amended legislation, ① in order to meet the requirements, either a contributor (excluding a person who has contributed an amount equivalent to 1/100 of the total value of the property contributed by the relevant public-service corporation as of the date of contribution or 20 million won, whichever is smaller) or a person in a special relationship with such contributor (referring to a person in a relationship falling under any of the subparagraphs of Article 19(2)) shall be “public-service corporation with no more than 1/5 of the current number of directors of the public-service corporation (if the current number of directors is less than five, referring to five)” (Article 13(3)2 of the Enforcement Decree of the Inheritance Tax

In other words, if a contributor or a person in a special relationship with the contributor who received shares as a contribution exceeds 1/5 of the current number of directors of a public-service corporation, gift tax is imposed on the person who fails to meet the requirements. In addition, if the amount exceeds 1/5 of the current number of directors after the contribution of shares, even if the above requirements are met, if a public-service corporation falling under the proviso of Article 16(2) does not fall under a public-service corporation under the proviso of Article 49(1), then the provisions of Article 48(11) of the Act, "in addition to the taxable value of gift tax pursuant to Article 48(1)."

Accordingly, even if the contributor et al. accounts for more than 1/5 of the majority of the directors who can control the decision-making among the incumbent members of the public-service corporation, gift tax is imposed at all times. The possibility of direct control of the public-service corporation by the contributor et al. is legally and legally prevented. This is to prevent the control of the domestic corporation by direct control of the public-service corporation. Ultimately, gift tax is not imposed only where the contributor et al. accounts for less than 1/5 of the incumbent members of the public

D. As seen above, when determining “the largest shareholder requirement” as at the time after the contribution was made, the case where the contributor et al. was the largest shareholder of a domestic corporation before the contribution but the gift tax is not imposed after the contribution is made can be seen as not only when the contributor et al. loses the status of the largest shareholder due to the lack of special relationship between the contributor et al. at the time after the contribution was made, but also when the contributor et al. took up not more than 1/5 of the directors of the public-service corporation. Furthermore, it is not the case where the contribution was made to the public-service corporation with a special relationship with a certain large enterprise group, and the competent Minister’s share contribution is not necessary for the efficient performance of the purpose business of the public-service corporation. In such a case, the legislators can be understood as having no possibility that the contributor would use the public-service corporation as a means to control the domestic corporation. Ultimately, the Majority shareholder of

Nevertheless, inasmuch as the contributor, etc., after the contribution of shares, was the largest shareholder of a domestic corporation prior to the contribution, regardless of whether the contributor, etc., is in the largest shareholder of a domestic corporation, and whether the number of directors of a public-service corporation is in excess of 1/5 of the current number of directors of the domestic corporation, the view that a public-service corporation should be deemed to use the public-service corporation as a means of controlling the domestic corporation and practically block the contribution of shares of the largest shareholder by imposing gift tax is not meaningful, and ultimately, it seriously infringes on the principle of no taxation without law. In addition, this view is acceptable in that it causes a problem that no gift tax may be imposed even if the contributor, etc., was able to use the

In conclusion, the act of contributing shares, which is highly likely to be abused as a means of control over domestic corporations, while evading inheritance tax or gift tax by determining “large shareholder requirement” as at the time when shares were contributed, may be divided by rational and harmoniously and can be deemed to be able to maintain the principle of no taxation without law. Furthermore, maintaining the regulatory method and interpretation as seen above, it may be within the framework of constitutional legislation and interpretation as it does not violate the principle of no taxation without law.

3. A. Meanwhile, in order to receive non-taxation benefits upon stock contribution, the contributor, etc. should not be deemed the largest shareholder of a domestic corporation. In determining the largest shareholder at the time after stock contribution was made, the “relevant public-service corporation” which received the shares of the domestic corporation shall be subject to the guidance of the person in a special relationship with the contributor. In this regard, Article 19(2)4 of the Enforcement Decree which applies mutatis mutandis pursuant to Article 13(6)3 of the Enforcement Decree (hereinafter “the Enforcement Decree of this case”) provides that “non-profit corporation established by the contributor, etc. who either forms the majority of the board of directors or contributes assets to the person in a special relationship with the contributor.”

According to the language and text of the above provisions, “the pertinent public-service corporation” is naturally included in a non-profit corporation, and if the requirements of the above provisions are met, it can be deemed as a “non-profit corporation in a special relationship with the contributor.” Article 13(4)1 of the Enforcement Decree also clearly specifies this point by including the pertinent public-service corporation in the scope of persons related to the requirements for the largest shareholder. Therefore, if “the stock contributor, etc. constitutes a “public-service corporation established with the contribution of the pertinent public-service corporation by the contribution of property” or the pertinent public-service corporation constitutes a “public-service corporation established with the contribution of property,” it shall be determined whether the contribution constitutes the largest shareholder by including not only the shares held by the pertinent public-service corporation but also the shares

B. In this case, the meaning of “a person who has established a non-profit corporation by contributing property” is the key issue, namely, whether the pertinent public-service corporation constitutes “public-service corporation established by contributing property.”

As examined below, comprehensively taking account of the principle of interpreting tax laws and legislative purport, legislative history of the provisions of the Enforcement Decree of this case, contents of other tax laws prescribing the scope of a non-profit corporation having a special relationship, formulation of the articles of incorporation, and influence on the process of operating a public-service corporation, etc., the term “person who establishes a non-profit corporation by contributing property” under the provisions of the Enforcement Decree of this case shall be deemed to mean a person who actually exercises a dominant influence over the establishment of the non-profit corporation in the process of preparing the articles of incorporation, appointing directors,

(1) Under the principle of no taxation without law, the interpretation of tax laws and regulations shall be interpreted in accordance with the text of the law, barring special circumstances, and it is not allowed to expand or analogically interpret without reasonable grounds (see, e.g., Supreme Court Decision 2012Du3972, Jul. 5, 2012). As to the provision of the Enforcement Decree of the instant case, the interpretation that the meaning of “establishment” in the provision of the Enforcement Decree of the instant case ought to be apparent or ambiguous cannot be permitted. It is more so true if the taxpayer causes unfavorable consequences to taxpayers.

The Supreme Court has strictly interpreted tax laws and regulations in relation to the scope of specially related persons (see Supreme Court en banc Decision 2008Du150, Jul. 21, 201) or the scope of specially related persons (see Supreme Court Decision 2009Du4746, Nov. 25, 2010) who are the requirements for the application of the regulations on the unfair calculation of unfair act and calculation of corporate tax. Likewise, when interpreting the meaning of the provisions of the Enforcement Decree of the case where the scope of a non-profit corporation with a special relationship with a stock contributor is defined, the meaning of the provisions of the Enforcement Decree of the case where the stock contributor, etc. contributes property to the establishment of a non-profit corporation shall be faithful to the language of the “corporation established.” Notwithstanding such language, interpreting the provision of the Enforcement Decree of the case as “a non-profit corporation with which the fund contributor, etc. has contributed property to the establishment of a non-profit corporation” in the Enforcement Decree of the case where the fund contributor, etc. actually deleted the phrase “establishment” to establish a non-profit corporation, even if not participate in the establishment process.

(2) It is possible to interpret the pertinent provisions in harmony with the relevant provisions only when it is interpreted as a “incorporated person” by faithfully contributing property to the language and text of the Enforcement Decree of the instant case. It also accords with the legislative history of the instant provision.

The interpretation of Article 16(2) proviso of the Enforcement Decree of the instant case does not affect only the scope to which the proviso of Article 16(2) of the Act applies, but is related to the scope of a non-profit corporation having a special relationship with a specific person that is at issue in overall with inheritance tax and gift tax. The provision of Article 19(2) of the Enforcement Decree is because the scope of “a person having a special relationship” as stipulated in the provision on the deemed donation at the time of low price acquisition, high price transfer (Article 35 of the Act), the provision on the deemed donation due to capital increase (Article 39 of the Act), the provision on the deemed donation of convertible bonds, etc. (Article 40 of the Act), the provision on the deemed donation of profits from a transaction with a specific corporation (Article 41 of the Act), the provision on the deemed donation of stocks or equity shares (Article 41-3 of the Act), and the provision on the deemed donation of money lending (Article 41-4 of the Act) is a general provision regarding the donation of stocks to a public-service.

In addition, Article 41 (2) 4 of the Enforcement Decree of the Corporate Tax Act provides that “If a transferor and a person falling under subparagraphs 1 and 2 contribute not less than 50/100 of the contribution for the establishment of a majority of directors or one of them is a non-profit corporation which has established,” which provides for the scope of persons having a special relationship with respect to the imposition of gift tax on low-price transfer, the amendment of Article 41 (2) 2 of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 13196, Dec. 31, 190) is somewhat modified in the amendment process. Article 41 (2) 4 of the Enforcement Decree of the Corporate Tax Act provides that “Where a person falling under subparagraphs 1 and 2 contributes not less than 50/100 of the contribution (limited to the contribution for the establishment of a non-profit corporation) to which the founder is a non-profit corporation under Article 10 (2) 2 of the Enforcement Decree of the Corporate Tax Act or a non-profit corporation under Article 17(3) of the Enforcement Decree of the Corporate Tax Act.

According to the provisions of Article 41(2)4 of the Enforcement Decree of the Inheritance Tax Act, a specific person cannot be deemed as having a special relationship with a non-profit corporation solely on the basis that a specific person contributed at least 50/100 of the contributions to establish a non-profit corporation or at least 30/100 of the contributions.

(3) In addition, the “non-profit corporation” under the provision of the Enforcement Decree of the instant case includes not only the incorporated foundation but also the “incorporated Association”, and this should also be considered in mind. The non-profit incorporated association is incorporated by preparing the articles of association, which is the fundamental rules of the incorporated foundation, and by registering its incorporation with the permission of the competent authority. The contribution of property is essential to establish the incorporated foundation. However, for the establishment of a non-profit incorporated association, property should not be contributed for the establishment of the incorporated foundation. In the case of a non-profit incorporated association, the act of establishing a foundation, such as the preparation of the articles of association, not the contribution of property, can be deemed as the core elements of the incorporated foundation. Therefore, the contribution of property by a share donor may not be deemed to result in the establishment of a non-profit incorporated association by contributing property. Meanwhile, in the case of a incorporated foundation, it

(4) Meanwhile, Article 19(2)6 of the Enforcement Decree provides that “A corporation in which the contributor and the person referred to in subparagraphs 1 through 5 own 30/100 or more of the total number of issued and outstanding shares are specially related to the contributor.” This provision sets forth the scope of “profit-making corporation” in a special relationship with the contributor.

On the other hand, unlike investors, a share contributor who contributed to a non-profit corporation has no means to participate in the decision-making process of a non-profit corporation in the status of investors.

In interpreting the provision of the Enforcement Decree of the instant case as “a non-profit corporation that has led to the establishment of a non-profit corporation by contributing property, a special relationship exists solely on the ground that the contribution was made to establish a non-profit corporation, even in cases where there is no means to participate in the decision-making process of the non-profit corporation. Considering that there is a special relationship with a profit-making corporation, the said interpretation is difficult to accept as a interpretation that expands the scope of a person in a special relationship with a non-profit corporation without reasonable grounds, in view of the fact that a person who has contributed to stocks as

(5) Furthermore, we examine the specific meaning of the above "establishment".

Unless otherwise provided in the articles of incorporation, the performance of affairs by a public-service corporation shall be determined by a majority of directors (Article 58 of the Civil Act). In the event that a majority of the directors of a public-service corporation accounts for a public-service corporation, a share contributor may exercise dominant influence over the public-service corporation. The instant provision stipulates that a person who is entitled to exercise dominant influence over a non-profit corporation is a person who is in a special relationship with the non-profit corporation. Therefore, the language of “non-profit corporation established by a share contributor, etc. with property contributed”

Property contributed is the physical foundation of the Incorporated Foundation, and the Incorporated Foundation shall not be incorporated unless it is so established. However, the operation of the Incorporated Foundation after its incorporation may be controlled by the articles of incorporation prepared at the time of its incorporation and the first appointed directors.

Articles 45(1) and 45(3) of the Civil Act provide for the purpose of a foundation corporation, the appointment and dismissal of directors, and the method of decision-making in the performance of its affairs, etc. are stated in the articles of incorporation, and the articles of incorporation of the foundation may be amended only when the method of change is prescribed in the articles of incorporation (Article 45(1) of the Civil Act). An amendment to the articles of incorporation is ineffective without obtaining permission from the competent administrative agency (Articles 42(2) and 45(3) of the Civil Act). Accordingly, the articles of incorporation of the foundation established at the time of its incorporation shall be bound by the fundamental rules of the foundation after the foundation was established, barring special circumstances. The directors appointed at the time of its establishment may secure continuity of performance of affairs through the selection of the latter director. As such, the preparation of the articles of incorporation at the time of

In light of the above, the enforcement decree of this case provides that a person who contributes property to establish a nonprofit corporation and exercises substantial influence over the establishment of the nonprofit corporation in the process of preparing the articles of incorporation and appointing directors shall be deemed to have a special relationship with the nonprofit corporation.

However, whether a person who contributed to shares exercises a dominant influence over the establishment of a non-profit corporation is not always limited to cases where he/she participated in the preparation of the articles of incorporation or the appointment process of directors in the position of promoters, etc., but the substance should be determined as to the degree of involvement of the contributor in the preparation of the articles of incorporation or the appointment of directors. It may be inferred through the behavior of a

4. A. According to the reasoning of the lower judgment, the lower court premised on the premise that “a person who established a nonprofit corporation by contributing property” means “a person who led to the establishment of a nonprofit corporation by contributing property and does not need to do so.” As long as Nonparty 1 contributed property in the process of the establishment of the Plaintiff as a public-service corporation, the Plaintiff constitutes “a nonprofit corporation established by contributing property” and accordingly, determined that there was a special relationship between Nonparty 1 and the Plaintiff.

B. However, as seen earlier, “a person who establishes a non-profit corporation by contributing property” under the provision of the Enforcement Decree of this case refers to a person who contributes property to establish a non-profit corporation and exercises a substantial influence over the establishment of the non-profit corporation in the process of preparing the articles of incorporation and appointing directors. However, according to the reasoning of the judgment below, Nonparty 1 and Nonparty 2, who is his sixth degree of relationship, contributed 10% of the same shares to the Plaintiff, a domestic corporation, and held 90% of the same shares. Accordingly, Nonparty 1, the contributor of the shares, who is a public interest corporation established by the Plaintiff, etc. by contributing property, constitutes “a person in a special relationship” with the Plaintiff, and as a result, included 90% of the shares owned by the Plaintiff in the number of shares determined “the largest shareholder requirement”.

Therefore, even if Nonparty 1, etc. deemed to have contributed to the Plaintiff, the lower court should further examine whether Nonparty 1, etc. can be deemed to have established the Plaintiff by exercising substantial influence during the process of establishing the Plaintiff’s articles of association and the establishment of directors.

C. Nevertheless, the lower court determined that the instant disposition was lawful on the premise that Nonparty 1, etc. constituted a public-service corporation established by Nonparty 1, etc. with the Plaintiff’s contribution of property, on the ground that the instant disposition constituted “a person having a special relationship” as prescribed by the Enforcement Decree of the instant case’s provision. In so doing, the lower court erred by misapprehending the legal doctrine on the interpretation, etc. of the Enforcement Decree of the instant case’s provision, which

5. Therefore, without examining the remaining grounds of appeal, the judgment of the court below shall be reversed, and the case shall be remanded to the court below for a new trial and determination. It is so decided as per Disposition.

With the exception of the Dissenting Opinion by Justice Kim Yong-deok, Justice Kim So-young, and Justice Park Sang-ok, the Majority Opinion concurring with the Majority Opinion by Justice Kim Chang-suk, and concurring with the Dissenting Opinion by Justice Kim Yong-deok.

6. Dissenting Opinion by Justice Kim Yong-deok, Justice Kim So-young, and Justice Park Sang-ok

A. Inheritance Tax and Gift Tax Act has maintained a distinction between imposing gift tax depending on whether the property contributed by a public-service corporation is a stock or not.

The gift tax cannot be exempted as a matter of course on the ground that it is a public-service corporation. Article 2 of the Act provides that the transfer, etc. of property to another person without compensation shall be subject to gift tax, and Article 4(1) provides that a donee, including a non-profit corporation, is obligated to pay gift tax. As such, one of the public-service corporations is obliged to pay gift tax when it is transferred without compensation. However, Article 48(1) of the Act provides that the property contributed by the public-service corporation shall not be included in the taxable value of gift tax

Even if historical review is conducted, the Act has long been different from the assessment of gift tax on a public-service corporation depending on whether the property is not a stock. On December 31, 1990, the amended Act stipulated that the amount of excess should be included in the taxable value of gift tax in cases where a public-service corporation has received a contribution of stocks exceeding a certain limit, and again, on December 31, 1993, the amended Act stipulated that the value of the property used for the acquisition of excess stocks shall be included in the taxable value of gift tax in cases where stocks are acquired by using the property contributed by the public-service corporation. The holding of stocks by a public-service corporation and the operation of a for-profit corporation is because it does not fall under the original purpose of a public-service corporation that operates a business for religious, charity, academic or other public interest purposes. In the United States, it is based on such consideration that imposing a regulation tax equivalent to 10% of the value of stocks when holding stocks exceeding 20%.

However, based on Article 48(1) and (2) of the amended Act on December 29, 2000, the public corporation should not include the contribution or acquisition of stocks exceeding the limit of the previous strict attitude in the taxable value of gift tax under certain conditions, if it is possible to utilize the profits from holding stocks as the source of the public service.

The issue of whether a public-service corporation imposes gift tax on the property contributed by a public-service corporation is a matter of legislative policy, since it does not operate a business related to a large number of interests, that is, a business related to a public-service corporation, or a business related to a public-service corporation on behalf of the State or a local government. Furthermore, holding stocks of a public-service corporation, which is a profit-making corporation, does not correspond to the original purpose and the significance of existence of the public-service corporation. Accordingly, our law takes an attitude of imposing gift tax in principle when a public-service corporation has received stocks from a long time to a public-service corporation.

B. Article 48(1) of the Act provides that gift tax shall be levied only where a contributor can use a public-service corporation as a means of succession to a specific company controlled by the contributor.

(1) If a public-service corporation holds shares to the extent that it can control an enterprise, the structure that can indirectly control the issuing company through the public-service corporation is created. If such indirect governance itself is to block such indirect governance itself, it would be reasonable to impose gift tax without exception in cases where a public-service corporation holds shares in excess of a certain limit, such as the Act before the amendment on December 29, 200. However, the general proviso of Article 48(1) of the Act as amended on December 29, 200, which amended on December 29, 200, provides that gift tax shall not be levied in cases where shares exceed the maximum limit are “stocks of a domestic corporation that is not in a special relationship with the contributor,” and the Enforcement Decree provides that the said special relationship is established when the requirements of the shareholder and the requirements of the largest shareholder are met.

Article 48(1) proviso of the Act provides that gift tax shall be imposed only on a domestic corporation with a special relationship with a contributor, but only on a simple basis, if the form and structure of the provision are complicated, but the shares of the domestic corporation with a special relationship with the contributor are contributed, and gift tax shall not be imposed on other shares. The requirement for shareholders and the requirement for the largest shareholder refers to the case where the contributor and his/her specially related person are the largest shareholder, namely, the domestic corporation that is the largest shareholder. Therefore, the proviso of Article 48(1) proviso of the Act provides that gift tax shall be imposed only on a case where the contributor and his/her specially related person uses it as a means of indirect succession to a specific company by contributing shares of the specific company under the former control as stated in the Majority Opinion. In other words, the previous limit of non-taxation is limited to the case where the contributor and his/her specially related person are the largest shareholder, but is not the largest shareholder.

The legislative intent of Article 48(2) of the Act is the same. This provision is to impose gift tax on a public-service corporation, in principle, on the acquisition of stocks of a domestic corporation exceeding a certain limit of the property contributed by the public-service corporation, on the grounds that the value of the property used is included in the taxable value of donated property, but in the case of acquisition of stocks of a domestic corporation that is not in a special relationship with a contributor, on the acquisition of stocks of a contributor. In a case where a public-service corporation acquires stocks of a corporation controlled by a contributor using contributed property, gift tax is imposed on the indirect succession of the contributor, since it is used for the indirect succession of the contributor.

Therefore, the standard point of time for determining the requirements for shareholders and the requirements for the largest shareholder in relation to Article 48(1) of the Act is bound to be at the time of contribution of shares. The language and text of the Act provides that “where shares, etc. are contributed by a domestic corporation that is not in a special relationship with a contributor” shall be determined at the time of contribution to determine whether a relationship exists between a contributor and a domestic corporation is accurately reflected in this purport. Therefore, there is no room for determination based on the time after the share was contributed, as

(2) Only at the time of contribution but only at the time of contribution reveals the function and purpose of “shareholders’ requirements.” This requirement has an important meaning in Article 48(1) and (2) of the Act.

Article 48(2) of the Act, which was newly established as of December 31, 1993 under the Act, as of December 31, 1993, provides for the imposition of gift tax on the property originally contributed under certain conditions when a public-service corporation acquires stocks by using a property other than stocks, once it receives a contribution of the property other than stocks. The amendment of Article 48(1) and (2) of the Act on December 29, 200 at the same time under Article 48(1) and (2) of the Act, which was amended as of December 29, 2000 at the same time, is to allow the acquisition of stocks of a public-service corporation to the extent that it is not used as a means of succession by a specific company controlled by the contributor.

Accordingly, if the contributor and his specially related person are not a shareholder of the domestic corporation that issued the above stocks at the time of acquiring the stocks as the assets contributed by the public interest corporation, there is no room to regard them as being used for the indirect succession by the contributor, and thus, it is subject to non-taxation of gift tax by failing to meet the requirement of shareholder. In this case, the reason for excluding the pertinent public interest corporation within the scope of a specially related person is that the contributor does not hold the stocks of the relevant domestic corporation, and the reason for excluding the relevant public interest corporation is that the contributor does not hold the stocks of the relevant domestic corporation, the case where the contributor indirectly intends to succeed to the company under his control rather than indirectly by affecting the decision-making of the public interest corporation. Thus, it is intended to open a path for raising

In addition, even if meeting the shareholder requirements, the contributor is not used for the succession of the company under the control of the contributor, and thus, is exempted from gift tax. In determining whether the contributor is a domestic corporation under the control of the contributor, the pertinent public-service corporation needs to be examined including shares held in the case of a person with a special relationship. Thus, the requirements for determining whether the person is a domestic corporation under the control of the contributor stipulate that the pertinent public-service corporation

Meanwhile, Article 48(1) of the Act applies to cases where a contributor contributes stocks to a public-service corporation directly, so the “shareholders’ requirements” may always be automatically met without any need to comply with the largest shareholder requirement. However, when amending Article 48(1) and (2) of the Act on December 29, 2000, the amendment of Article 48(1) and (2) of the Act on December 29, 200, which stipulates the “shareholders’ requirements” and the “largest shareholder requirements” in lieu of each subordinate provision, it appears to be the same form by reflecting the fact that only Article 13(4)1 of the Enforcement Decree of the Act provides for the “requirements” and the “largest shareholder requirements” and it is not any inconsistency or impediment in interpreting the “large shareholder requirements as at the time of contribution.” Moreover, the time of determining whether a special relationship exists upon delegation of the parent law is determined based on the existence or absence of special relationship.

C. In contrast, the Majority Opinion erred by misapprehending the purport and subject matter of regulation under Article 48 of the Act, which determines the existence of special relationship between the contributor and the domestic corporation immediately after the contribution.

(1) The Majority Opinion is out of the legal language and text. The Majority Opinion is an interpretation that can only be derived from the statutory language and text that “in a case where the contributor contributes shares, etc. of a domestic corporation that is not in a special relationship with the contributor,” which reads “in a case where shares, etc. of a domestic corporation that is not in a special relationship with the contributor are to be contributed immediately after the contribution.” The Majority Opinion determines whether the contributor becomes the largest shareholder of the domestic corporation as a result of the contribution of shares of the domestic corporation to the public-service corporation. As such, the Majority Opinion is construed on the premise that, by offering shares in his/her own hand, it is difficult for the contributor to

On the other hand, the Majority Opinion states that the shares contributed to a public-service corporation may affect the public-service corporation by means of influence on dividends, etc. based on governing power over a domestic corporation in cases where the total amount of shares held by the contributors and their specially related persons is the largest amount of shares of the domestic corporation. Based on this, the Majority Opinion states that if the contributors and their specially related persons lose their status as the largest shareholder immediately after the contribution of shares, it may no longer affect the public-service corporation based on governing power over the domestic corporation, and it is reasonable to determine whether the requirements of the largest shareholder have been satisfied

However, such reasoning is erroneous in view of the “indirect governance structure of a domestic corporation through a public-service corporation” subject to the regulation under Article 48 of the Act established by the Majority Opinion. If a contributor has a governing power by making a substantial contribution to a public-service corporation or by neglecting its operating status, it is unnecessary to determine whether the contribution may affect a public-service corporation through the distribution of stocks owned by the public-service corporation. On the other hand, if the contributor does not have such governing power, it should not immediately reach the conclusion that it does not directly affect a public-service corporation, nor can it be deemed that there exists any influence on a public-service corporation through dividends. Whether it indirectly affects the distribution of stocks after making a contribution to a public-service corporation, and whether it is possible to indirectly reflect the intent of the contributor into a public-service corporation by indirectly affecting the distribution of stocks after making a contribution to the public-service corporation, it can not be a means to control the public-service corporation. If the legislators decided whether the contributor has control over the public-service corporation based on this, it should be two requirements for “the share occupied in the relevant public-service corporation.”

(2) According to the Majority Opinion, a taxation confession that is impossible to rationalize Article 48(1) of the Act takes place. First, in cases where a contributor, who is the largest shareholder of a particular company, contributes all the shares, according to the Majority Opinion, the contributor is no longer a shareholder of the relevant domestic corporation immediately after his/her contribution, and thus cannot satisfy the requirement for shareholder, so no gift tax is always levied on the contributor and the public-service corporation, regardless of whether there is a special relationship between the contributor and the public-service corporation. However, in such cases, even if based on the Majority Opinion’s logic, the contributor may have control over the domestic corporation through the public-service corporation. From the Dissenting Opinion’s perspective, inasmuch as he/she is used as a means of succession

These problems arise from the fundamental point of view of the Majority Opinion that does not explain why the requirement of a shareholder is necessary. The Majority Opinion argues that, on the basis of the date of contribution, where a person with a special relationship, including a contributor and the pertinent public-service corporation, is the largest shareholder of a domestic corporation, gift tax should be levied on the relevant public-service corporation, since the contributor uses the public-service corporation as a means of controlling the domestic corporation. Accordingly, in the case of the entire contribution of shares as above, if the relevant public-service corporation constitutes a person with a special relationship in accordance with the criteria of the Majority Opinion and becomes the largest shareholder immediately after the contribution, gift tax should be levied on the contributor and the person with a special relationship since it does not have to use the public-service corporation as a means of controlling the domestic corporation. As long as the contributor and the person with a special relationship become the largest shareholder, there is no difference between the contributor and the person with a special relationship holding shares of the domestic corporation in the name of the contributor immediately after the contribution and the control of the domestic corporation. Nevertheless, the Majority Opinion concludes that gift tax should not be levied upon the logic of the Majority Opinion.

In addition, according to the Majority Opinion, unreasonable consequences arise that can easily avoid gift tax by contributing stocks to a public-service corporation already established by another person. When determining “requirements for the largest shareholder” as of the time when stocks are contributed according to the Majority Opinion, the question is whether the pertinent public-service corporation is a contributor’s specially related person to whom stocks are transferred immediately after the contribution is made, that is, a public-service corporation established by the next contributor. However, in the case of a public-service corporation already established by another person, there is no room for falling under the above-mentioned specially related person of the contributor. As such, as a result, there is no possibility that the donation may be exempted from gift tax because the contributor and specially related person, other than the pertinent public service corporation, can not satisfy the largest shareholder requirements as soon as the share contribution is made. To this end, to allow it, it would be possible for the contributor to avoid gift tax by way of wholly or partially contributing stocks to a small-scale public service corporation, not by newly establishing a public-service corporation, and then to achieve an indirect corporate succession by neglecting the operation of the public-service.

Nevertheless, if it is required to determine the “shareholders’ requirements” and “large shareholder requirements” as of the time after stock was contributed as stated in the Majority Opinion, this would result in breaking down the way of easy tax avoidance to the contributors who indirectly intend to succeed to the company by using a public-service corporation.

(3) Such a margin of taxation may not be resolved pursuant to Article 48(11) of the Act. Although the Majority Opinion is capable of establishing a firm control by post-management regulations under Article 48(11) of the Act, it is not an appropriate answer as to how to regard the scope of non-taxation of gift tax pursuant to Article 48(1) of the Act at the stage of stock contribution. If there is a provision for post-management, it can not be explained from the beginning that the Act provides for the requirement of imposing gift tax at the stage of stock contribution. Furthermore, a sufficient post-management may not be conducted pursuant to Article 48(11) of the Act in cases where a contributor contributes shares to a public-service corporation established by another person. In other words, even if a contributor controls a public-service corporation and a domestic corporation in succession by a method such as becoming the chief director of the public-service corporation, the post-management subject of Article 48(11) of the Act is not subject to post-management under Article 48(11) of the Act.

Meanwhile, the provision imposing gift tax pursuant to Article 48(11) of the Act where a contributor occupies more than 1/5 of the current number of directors of a public-service corporation is added to the Inheritance Tax and Gift Tax Act amended by Act No. 8828, Dec. 31, 2007; and accordingly, the Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 20621, Dec. 31, 2007; hereinafter “amended Act”) amended by Presidential Decree No. 20621, Dec. 22, 2008. Thus, the Majority Opinion’s view that the portion of “public-service corporation falling under the proviso of Article 49(1)” among the non-taxation requirements under the proviso of Article 48(1) of the Act is a requirement to prevent the contributor from directly controlling the public-service corporation, and thus, it does not conform to the Act before and after the amendment of the Act, even if the contributor’s ex post facto management does not exceed 1/50 of the current number of directors.

(4) Meanwhile, at the time when the proviso of Article 48(1) of the Act was received as a contribution by a public-service corporation, the Majority Opinion states that “Where the aggregate of the shares contributed and the shares of the same domestic corporation held by the pertinent public-service corporation at the time of contribution exceeds 5/100 of the total number of issued shares of the relevant domestic corporation” as a taxation requirement. Thus, the Majority asserts that the proviso of Article 16(2) of the Act, which is a non-taxable requirement,

However, the proviso of Article 48(1) of the Act provides for the determination of whether the limit of contribution exceeds the limit of contribution by aggregating “stocks already held” and “stocks contributed” before the contribution. This provision was introduced on December 31, 1993, and lowers the limit of contribution from 20% to 5%. On the other hand, even if shares already held by a public-service corporation prior to the amendment of the Act on December 31, 1990, which introduced the system for imposing gift tax on shares contributed, it was established to strengthen the limit of contribution of shares to the public-service corporation and prevent the distribution of shares. The proviso of Article 48(1) of the Act provides for the limit which is exempt from gift tax at the time of contribution, and it is nothing more than that at the point of time to determine whether the excess of the limit constitutes “the maximum amount of shares not subject to taxation” as of “the date of non-taxation of shares after the contribution of Article 48(1) proviso to the same Act. It is not an exceptional issue to determine whether shares are “the immediately before and after the date of contribution.”

(5) In addition, the Majority Opinion asserts that the Dissenting Opinion, which determines the existence of a contributor and a domestic corporation’s special relationship at the time immediately preceding the contribution, causes inconsistency that is inconsistent with Article 48(11) of the Act.

(A) First, the majority opinion argues that “If the contributor et al. was not the largest shareholder of a domestic corporation, but the special relationship is established between the contributor et al. and the public-service corporation by taking account of the majority of the directors of the public-service corporation. If the contributor et al. becomes the largest shareholder of the domestic corporation by combining the shares of the domestic corporation held by the public-service corporation, it is difficult to be the largest shareholder of the contributor et al., and thus, gift tax is not levied on the contributor et al., on the other hand, where the contributor et al. constitutes a special relationship by taking account of the majority of the directors of the public-service corporation, the liability

However, as indicated in the Majority Opinion, it is unreasonable to argue that gift tax cannot be levied upon the Dissenting Opinion in a case where the contributor, etc. forms a majority of directors of a public-service corporation in making contributions, as indicated in the Majority Opinion. The establishment of a special relationship between a contributor and a public-service corporation refers to the state of a specific point at the time of contribution, i.e., when the contribution is made. As such, whether a special relationship exists should be determined as of the time of contribution. There is no reason to apply the proviso of Article 48(1) of the Act or Article 48(11) of the Act depending on when the special relationship was established before or after the contribution. As alleged in the Majority Opinion, it is difficult to understand whether the relationship between the contributor, etc. occupies a majority of directors of the public-service corporation and the case where the contributor, etc. occupies a majority after the contribution is made. However, this is a matter of determining when the effect of the contribution is completed, and at least at that time, whether the contributor, etc. is in a state of serving as a majority of directors

(B) The Majority Opinion argues that, in a case where a contributor et al. was the largest shareholder of a domestic corporation before the contribution was made, inasmuch as there is no special relationship between the contributor and the public interest corporation at that time, gift tax is imposed according to the Majority Opinion which determines “requirements for the largest shareholder” as at the time of contribution after the contribution was made, according to the Dissenting Opinion which determines as at the time immediately before the contribution was made. If the contributor et al. later accounts for a majority of the directors of the public interest corporation and satisfies the “requirements for the largest shareholder” by establishing a special relationship between the contributor and the public interest corporation, following the Dissenting Opinion, the establishment of tax liability under

However, such assertion does not accord with the language and text of Article 48(11) of the Act. Article 48(11) of the Act provides that “When a public-service corporation, etc., falling under the proviso of Article 16(2) holds stocks, etc. of a domestic corporation in a special relationship, etc. in excess of 5/100 of the total number of outstanding stocks, etc. of the relevant corporation” with the relevant contributor as the requirement for imposing gift tax. According to the Dissenting Opinion, since gift tax is already imposed pursuant to the proviso of Article 48(1) of the Act at the time of initial contribution of stocks, it cannot be a public-service corporation falling under the proviso of Article 16(2) of the Act, and later, the result of imposing gift tax pursuant to Article 48(11) of the Act, which accounts for a majority of

In addition, Article 48(11) of the Act provides for supplementary provisions in preparation for cases where a contributor intends to escape Article 48(1) of the Act. The pertinent public-service corporation does not fall under a public-service corporation under the proviso to Article 49(1) of the Act, or “where the contributor holds stocks, etc. of a domestic corporation in a special relationship with the relevant contributor in excess of 5/100 of the total number of outstanding stocks, etc. of the relevant corporation,” it can be deemed that the contributor intended to escape Article 48(1) of the Act, which is subject to Article 48(111) of the Act. If the non-taxation requirement is met, gift tax should be levied as a matter of course. However, if it can be deemed that the contribution did not meet the initial non-taxation requirement, and if it can be seen that the contribution did not go beyond the scope of Article 48(1) of the Act, it should be interpreted as one of the following grounds: (i) whether the contribution was made in advance and its new special-service relationship should not be interpreted.

(6) In short, the point of time for determining the existence of a special relationship as prescribed by the law shall be interpreted from the text of the law and its legislative intent. It shall not be possible to choose a method of interpretation going from the Enforcement Decree provision to the law, with the focus on the text and purport of the law.

D. As a requirement for the special relationship between the contributor and the public interest corporation, the “non-profit corporation that established the property by contributing the property” under Article 19(2)4 of the Enforcement Decree shall be deemed to mean the nonprofit corporation that led to the establishment by the contributor by contributing the property.

(1) It is reasonable to regard the contributor as a specially related person of a foundation if the foundation made the contribution of property to be established.

As the Majority Opinion states that “the establishment of a property by contribution” under Article 19(2)4 of the Enforcement Decree is “the case where it is recognized that an act of contribution and exercise dominant influence over the establishment of a public-service corporation in the process of preparing its articles of incorporation, appointing its first director, and registering its establishment.” The meaning of “contribution established by contribution” under the above Enforcement Decree should be found in the fact that it focuses on the contribution to determine the existence of a special relationship with an emphasis on the contribution, and if the contributor is a “corporation which results in the establishment by contribution of property,” it should be deemed that the said

A public-service corporation that receives property contribution shall be a substitute foundation, and if an incorporated association, it shall be governed by whether the contributor constitutes a non-profit corporation that accounts for a majority of directors. As such, “non-profit corporation that has been established with the contribution of property” is mainly an incorporated foundation. Since an incorporated foundation is not a human combination, such as an incorporated association, but an incorporated foundation is an aggregate of property for the purpose determined by the founder, the contribution of property is the most important and important factor for the establishment. The purpose of establishment to be realized by an incorporated foundation is to be reflected in the intent of the incorporated foundation by contributing property. In the context of establishment to be realized, the intent of the incorporated foundation is to be reflected in the establishment of the incorporated foundation. A person who has contributed property in the process of the establishment is much long as it does not intervene in the specific act of establishment. Therefore, if the incorporated foundation is established

(2) The Majority Opinion argues that whether a person who has contributed to shares exercises a dominant influence over the establishment of a public-service corporation is not necessarily limited to the case where the contributor participates in the preparation of the articles of incorporation, etc. as promoters, etc., but it should be based on the substance such as the degree of involvement in the contributor. However, even according to such substance, it is not reasonable to interpret that the contributor is not involved in the preparation of the articles of incorporation or the first appointment of directors at the time of the establishment of a public-service corporation. There is no room to control the public-service corporation at all times on the grounds that the contributor was not involved in the preparation of the articles of incorporation or the first appointment of directors. It is sufficiently possible for the contributor to control the public-service corporation by taking account of the position of the president or director of the public-service corporation already established pursuant to the relevant statutes, such as the Civil Act, and in reality, the transfer of control over such public-service corporation is considerably possible. In such a

In this case, if Nonparty 1 directly participated in the Plaintiff’s establishment process, it may not be deemed as subject to gift tax even based on the logic of the Majority Opinion. This Majority Opinion is a normative view that is difficult to accept on the sole basis of the reason that the person who contributed to the whole or considerable portion of the property for the establishment of a public-service corporation was involved in the process of preparing the articles of association, appointing the first director, and registering the establishment, etc.

Furthermore, even based on the standard of “the exercise of dominant influence” presented by the Majority Opinion, in order to deem that Nonparty 1, etc. did not exercise dominant influence during the Plaintiff’s establishment process, it is necessary to present specific criteria for determining whether the exercise of dominant influence is recognized or not.

E. The Majority Opinion appears to be starting from the standpoint that the instant taxation disposition ought to be revoked, but it is difficult to agree with this point.

(1) Prior to the amendment on December 31, 2007, the Act does not stipulate at all as to whether a contributor is deemed to be in control of a public-service corporation in any case. Article 48(1) of the Act appears to take into account only the fact that the contributor is the largest contributor of a public-service corporation when a public-service corporation has contributed to the amount of stocks to have control over a company, and that the maximum contributor has control over the public-service corporation. Accordingly, there is controversy over whether it is subject to gift tax even if it is difficult for the contributor to be deemed to be in control over a public-service corporation. The Majority Opinion appears to take into account the requirements of “special relationship between the contributor and a non-profit corporation” under Article 19(2)4 of the Enforcement Decree. However, the Majority Opinion appears to be in line with the scope of remedying the Plaintiff in this case, but it is difficult to criticize that the interpretation for operating Article 48 of the Act is reasonable.

(2) Under the legislative theory, even if the contributor is deemed to have control over a public-service corporation, gift tax is exempted at the contribution stage, but later, when the contributor or his specially related person is realizing the control over a public-service corporation by means of a director or chief director of a public-service corporation, etc. However, in order to cope with indirect succession to a public-service corporation, it is within the legislative discretion to choose any of the methods of prior control and post-management, and it cannot be readily concluded that the legislation was made by means of prior control.

In this case, it cannot be deemed that there have been fundamental problems in the establishment of the Plaintiff, a foundation. In light of the developments leading up to the establishment of the Plaintiff, Nonparty 1, the largest shareholder of the Suwon University, proposed a plan to establish a public-service corporation in lieu of receiving shares directly from the Plaintiff’s University in order to contribute the said shares to the Asia University. On October 17, 2002, at the time of the Plaintiff’s establishment, the total donated property was KRW 310 million in cash, and Nonparty 1 contributed KRW 24.65 million in cash and KRW 17,535 million in number to the Plaintiff. Nonparty 1 was working as the representative director of the Suwon University from February 1, 2003. Nonparty 1 was established by the Plaintiff and around KRW 40 months following the date of the establishment of the Plaintiff, Nonparty 1, the total number of shares issued and sold to Nonparty 1, the total number of shares owned by Nonparty 2, the number of shares owned by Nonparty 600,006.

Non-party 1 and his specially related parties, were the largest shareholders holding all the shares issued in the intersection at the time of contributing to the shares of the intersection. Among them, 90% of them were contributed to the Plaintiff, and the Plaintiff became subject to control over the intersection. If the Plaintiff is a corporation established by the intent to contribute shares in the intersection of the non-party 1, and includes not only the initial property but also the shares of the intersection of which was made in accordance with the scheduled plan at the time of its establishment, the property contributed by the non-party 1 accounts for an absolute proportion, and the non-party 1 actually takes the position of the Plaintiff’s president after its establishment, and thus, it cannot be deemed that the non-party 1 does not have control over the Plaintiff. As such, the non-party 1 continued to maintain the control over the intersection of the intersection of the Plaintiff through the Plaintiff, and in this case, the non-party 1 or his specially related parties are not subject to an additional taxation even if the Plaintiff’s director or the chief director were to be exempted from gift tax.

(3) 이 사건 과세처분은 공익사업을 위하여 개인 재산을 내놓은 출연자를 대상으로 한 것이 아니라, 무상으로 주식을 출연받은 수증자를 대상으로 증여세를 과세한 것이다. 법이 정한 증여세율은 최고 50%의 누진세 구조이므로 원초적으로 증여세 본세액은 수증재산가액의 절반을 넘지 못하도록 되어 있다. 이 사건 과세처분의 과세범위 또한 본세를 놓고 보면 수증자인 원고가 무상으로 받은 수원교차로 주식 중 법 제48조 제1항 단서가 정한 주식 출연 한도인 발행주식 총수의 5%를 초과하는 부분만을 과세표준으로 하여 법이 정한 세율을 적용하여 이루어진 것이고, 여기에 원고가 제때 본세를 납부하지 않은 탓에 부과된 가산세를 더하더라도 무상으로 받은 재산의 가액을 넘어서지 아니한다. 다만 원고가 부과세액을 먼저 납부하고 불복절차에 임하는 대신에 미납상태로 쟁송에 이른 결과 가산금과 중가산금까지 보태어져 부담이 가중된 상태이지, 일부 항간에 잘못 알려진 바와 같이 ‘선의의 출연자를 상대로 하여 출연재산을 훌쩍 넘는 세금폭탄이 부과’된 사안은 아닌 것이다. 또한 이 사건 과세처분으로 인하여 당장 원고가 재산 전부를 빼앗기고 파산하는 상황이 초래될 것으로도 보이지 아니한다.

The instant taxation does not lead to a major obstacle to encouraging the culture of contribution in good faith due to the instant taxation. The contribution of property other than shares to a public-service corporation is entirely exempt from taxation pursuant to the main sentence of Article 48(1) of the Act. Thus, if a person holding only shares intends to contribute to pure contribution intent, he/she may achieve the purpose of contribution without causing any burden of gift tax to the public-service corporation by realizing shares and contributing money. In the process of realizing shares, capital gains tax, etc. may occur in the process, but it cannot be concluded that some of the contributions to the public-service corporation are attributed to the State in the form of capital gains tax, because some of them belong to the closing party that contributes his/her own shares in the form of capital gains tax.In order to encourage the contribution culture, the method of reducing tax burden other than the above procedural prosperity and gift tax is not only the interpretation of Article 48(1) of the majority opinion and the legislative transition in the complete post management method

F. In conclusion, the existence of a special relationship between the contributor and a domestic corporation as prescribed by the law, i.e., “shareholders requirements” and “large shareholder requirements,” should be deemed as at the time when the contributor contributes shares, and the existence of a special relationship between the contributor and the public-service corporation should be determined as at the time of contribution of the contributor’s property to determine whether

Therefore, the instant disposition on which the Plaintiff imposed gift tax by deeming that the Plaintiff’s receiving the contribution of the shares of the class of the class of the class of the class of the class of the class of the class of the class of the class of the class of the class of the class of the class of the class of the class of the class of the class of the class of the class of the class of the class of the class of the class of the class of the class is lawful

For the foregoing reasons, I oppose the Majority Opinion.

7. Concurrence with the Majority by Justice Kim Chang-suk

A. The first issue of this case is whether the subject of regulation on stock contribution to a public-service corporation is the contribution of a person who was the largest shareholder of a domestic corporation or a person who becomes the largest shareholder of a domestic corporation. There seems to be no dissenting opinion regarding the legislative intent of the proviso of Article 48(1) of the Act to prevent control over a domestic corporation through a public-service corporation after stock contribution. To achieve this, the Majority Opinion argues that the legislators intended to regulate a person who becomes the largest shareholder of a domestic corporation after the contribution, and that the legislators intended to regulate a person who was the largest shareholder of the domestic corporation before the contribution.

Second, the issue is whether the number of shares is determined by the largest shareholder includes the number of shares held by a person having a special relationship with the contributor and the scope of the person having a special relationship with the contributor. In any case, it is a matter of whether it can be deemed that the shares contributor, etc. constitutes a public-service corporation established with the contribution. The Majority Opinion argues that the fact that the shares contributor, etc. contributed to the public-service corporation faithfully in the language and text of the law alone is insufficient and that it actually exercises a dominant influence during the establishment process, and it is sufficient to make a contribution to the public-service and it is unnecessary to consider the degree of involvement during

The interpretation that a person who was the largest shareholder may be deemed to have been established by contributing to a public-service corporation solely by means of an interpretation that prevents the contribution of shares to the public-service corporation, or a contribution to the public-service corporation, is in violation of the principle of no taxation without law, or goes against the legislative intent as well as beyond the bounds of constitutional interpretation. In addition, the interpretation that reasonably realizes the legislative intent without giving rise to such a result is the legal doctrine of the majority opinion. Accordingly, the Dissenting Opinion’s main arguments are examined as to whether it is reasonable.

B. (1) The Dissenting Opinion starts with the premise that, in a case where a person who was the largest shareholder of a domestic corporation prior to the contribution has contributed stocks of the domestic corporation to the public-service corporation, the said stocks may exercise a dominant influence over the public-service corporation to which the contribution was made after the contribution. Accordingly, the Dissenting Opinion argues that the gift tax should be levied whenever it is necessary to consider the circumstances after the contribution with respect to the public-service corporation

However, there is no ground to conclude that a person who was the largest shareholder of a domestic corporation has a governing power over the public-service corporation as a matter of course by making contributions to the public-service corporation. Rather, Article 19(2)4 of the Enforcement Decree provides that when a stock contributor, etc. forms a majority of the directors of the public-service corporation or forms a public-service corporation by making contributions to the property, the stock contributor, etc. shall be deemed to have a special relationship between the contributor and the public-service corporation by deeming that he/she can exercise a dominant influence over the public-service corporation. Article 19(2)4 of the Enforcement Decree provides that where the contributor, etc. exceeds 1/5 of the current number of directors of the public-service corporation, the person may exercise influence over the public-service corporation may be excluded from taxation

In addition, the Dissenting Opinion argues that even in cases where the statutory requirements recognized by the legislators as the symbol of influence are not satisfied, gift tax shall be imposed on the public-service corporation by means of exercising dominant influence over the contributor by means of representing the position of the president of the public-service corporation. This is nothing more than the assertion that whenever the contributor who was the largest shareholder contributes shares to the public-service corporation, the public-service corporation may be abused as a means of controlling the domestic corporation by the contributor, and that there is no possibility of not doing so, making the largest shareholder contribute shares to the public-service corporation at all times. Such interpretation goes against the legislative decision without any basis to restrict the contribution of shares by the largest shareholder, thereby infringing the principle of no taxation without law and goes beyond the bounds of constitutional interpretation of law.

(2) According to the Dissenting Opinion, when the largest shareholder of a domestic corporation contributes more than 5/100 of stocks of the domestic corporation, gift tax shall be paid to the public-service corporation. However, if the contributed stocks are unlisted stocks, it may be difficult for the public-service corporation to pay gift tax by disposing of some of them. Furthermore, according to Article 73(1) of the Inheritance Tax and Gift Tax Act (amended by Act No. 8828 of Dec. 31, 2007) of the Inheritance Tax and Gift Tax Act (amended by Act No. 8828 of Dec. 31, 2007), unlisted stocks donated are excluded from the subject of payment in kind and paid-in in kind are not allowed to pay gift tax in kind with the contributed stocks. Therefore, if a public-service corporation does not have any property other than the contributed stocks, gift tax shall be in arrears. Furthermore, if a donee becomes incapable of paying gift tax due to a decline in the value of unlisted stocks after the contribution, the donor may not expect to contribute stocks to the public-service corporation until the time of contribution.

C. The text of the proviso of Article 16(2) of the Act cannot serve as the basis for supporting the Dissenting Opinion.

The Dissenting Opinion argues that the Majority Opinion is an interpretation that can be understood by stating the phrase “a case where shares of a domestic corporation that is not in a special relationship with a contributor” under the proviso of Article 16(2) of the Act are contributed to a “case where shares of a contributor and a domestic corporation that is not in a special relationship immediately after the contribution are made,” and that it goes beyond the legal text.

According to such assertion, the Dissenting Opinion criticizes the same interpretation that can be derived from understanding the same language by deeming the same as “a case where the shares of a domestic corporation that had not been in a special relationship with the contributor are contributed.” However, the phrase “not in a special relationship” itself is neutrally described in the state in which no special relationship exists. Therefore, it cannot be readily concluded that only regulating only the past state in a special relationship or regulating only the future state in a “in a special relationship”. Rather, interpretation in line with the legislative intent and regulatory purpose of the individual tax law provisions governing a special relationship is necessary.

For example, it is reasonable to determine whether an actor and the other party are specially related when applying the provision on the denial of wrongful calculation under the Corporate Tax Act. This is because the status of a person with a special relationship that had existed in the past between the parties to the transaction has a significant impact on the decision-making on the transaction, which may bring about an economic rationality.

On the other hand, although the contributor contributed more than 5/100 of the shares of a domestic corporation to a public-service corporation, whether the contribution constitutes “stocks of a domestic corporation not related to the contributor,” which cannot be deemed subject to taxation because it is irrelevant to the control of the domestic corporation should be examined whether the contributor still has influence on the decision-making process of the domestic corporation after the contribution of shares. Specifically, it is reasonable to determine the existence of special relationship between the contributor and the domestic corporation, and specifically based on the circumstances after the contribution of shares as the largest shareholder

Therefore, the Dissenting Opinion’s argument that it is faithful to the language and text of the proviso of Article 16(2) of the Act is unreasonable, and rather, the Dissenting Opinion emphasizes that the legislative intent and purpose of the provisions of individual tax law should be considered in determining the special relationship.

D. It is reasonable to determine whether the shares of a domestic corporation with a special relationship with the contributor should be determined on the basis of the time when the public-service corporation becomes holding the shares by receiving a contribution of the shares, as well as on the basis of the time after the contribution was made, rather than on the basis of the time when the shares were made after being contributed, as in the case of “largest Shareholder Requirements”.

(1) A person who contributed to a public-service corporation’s shares may not explain the reasons prescribed in the “requirements for Shareholder” at the time prior to the contribution. This is because the person who contributed to a public-service corporation’s shares meets the requirements for shareholder by reason of the fact that he/she was a shareholder of the relevant domestic corporation before the contribution. Moreover, the rationale behind the “requirements for Shareholder” as well as the “person in a special relationship” cannot be explained. Likewise, the reason behind the provision of the “person in a special relationship” within the scope of “person in a special relationship” cannot be explained. Likewise, the meaning of the “requirements for Shareholder” can be explained only when determining the “requirements” as of the time when the shares were contributed to a public-service corporation. In cases where the contributor’s shares owned by the public-service corporation are contributed to a public-service corporation, even if there is a special relationship between the contributor and the public-service corporation, the said public-service corporation could not satisfy the “requirements for shareholder”. In other cases, the legislators’ intent to exclude gift tax from the subject of imposition is clearly revealed.

(2) Article 13(4)1 of the Enforcement Decree does not exclude “the pertinent public-service corporation” from the scope of a person having a special relationship with the contributor in relation to the requirement of the largest shareholder while excluding “the pertinent public-service corporation.” As such, the scope of a person having a special relationship with the contributor in “the requirement of the shareholder” and “the largest shareholder requirement” differs from the scope of a person having a special relationship with the contributor. If the contributor and the person having a special relationship lose the status of a shareholder because he/she did not hold the stocks of the domestic corporation that issued the shares by contributing all of his/her shares to the pertinent public-service corporation, and if the contributor or the person having a special relationship with him/her does not exceed 1/5 of the current number of the executives of the domestic corporation that issued the shares, the contributor shall no longer affect the public-service corporation based on control over the domestic corporation, even if the largest shareholder of the relevant public-service corporation is recognized, it is intended to exclude the shares subject to taxation by recognizing the exceptions of stockholding limit from the public-service corporation by directly controlling the public-service corporation. This provision is based on “the requirement”

Ultimately, Article 13(4)1 of the Enforcement Decree of the Act provides that “The requirements of shareholders” are differently treated in cases where a contributor, etc. can directly participate in the decision-making process of a domestic corporation by exercising voting rights at a general meeting of stockholders or the board of directors of a domestic corporation as a shareholder or an executive officer, and where the contributor, etc. is unable to directly participate in the decision-making process of a domestic corporation because he/she is not in such position. The requirements are treated differently depending on

(3) In this regard, the Dissenting Opinion argues that, inasmuch as a person who was the largest shareholder of a domestic corporation prior to the contribution of shares contributes all of the shares owned to a public-service corporation with a special relationship, it still holds control over the domestic corporation through the public-service corporation, the application of the proviso of Article 16(2) of the Act is inconsistent with the legislative intent.

However, such a result is caused by the exclusion of “the pertinent public corporation” from the scope of a person having a special relationship with the “shareholders’ requirements. This is, insofar as the contributor is no longer capable of directly controlling the domestic corporation as a result of the contribution of the contributor to the entire shares owned by him/her, it shall not affect the public corporation based on the control over the domestic corporation. However, the contributor is only likely to control the domestic corporation using the public corporation by directly controlling the public corporation. This problem is not more than 1/5 of the current number of directors of the public corporation, which is the other non-taxation requirement, but not more than 1/5 of the current number of directors of the public corporation, and (2) the public corporation is not in a special relationship with the enterprise group subject to the restriction on mutual investment under Article 9 of the Monopoly Regulation and Fair Trade Act, and (3) it is sufficient by the competent Minister to regulate the contribution of shares by means

E. (1) The Dissenting Opinion argues that determining whether the proviso to Article 48(1) of the Act exceeds 5/100 of the shares of a domestic corporation by aggregating the shares contributed by a public-service corporation and shares other than those contributed by the public-service corporation is merely a matter that is established after the contribution of gift tax liability, and that whether the shares when the contribution exceeds the contribution limit constitutes “stocks of a domestic corporation which is not in a special relationship with the contributor.”

However, the limit of stock contribution of 5/100 of stocks of a domestic corporation is a taxation requirement, and the largest shareholder requirement is the criteria to determine whether to impose gift tax in response to non-taxation. The proviso of Article 48(1) of the Act provides that not only the stocks contributed by the contributor to the relevant public-service corporation but also the stocks (Article 48(1)1 of the Act) of the same domestic corporation that was held by the public-service corporation at the time of contribution shall be determined by aggregating the stocks (Article 1) and the stocks (Article 2) of the same domestic corporation that contributed to another public-service corporation. The stocks held by the relevant public-service corporation as added by subparagraph 1 are not necessarily limited to the stocks contributed by the contributor. Thus, the stocks acquired by the relevant public-service corporation regardless of the contributor are included in the stocks acquired by the relevant public-service corporation, and

As above, adding up the shares contributed to a public-service corporation not only based on the limit of contribution but also on the shares with a certain relationship with the contributor under Article 16(2)1 of the Enforcement Decree delegated by the proviso of Article 13(4)1 of the Act refers to determining the largest shareholder by summing up all the shares held by the contributor and his/her specially related person (including the pertinent public-service corporation). In other words, the above provision does not only take into account the situation where the contributor, who was the largest shareholder, contributes to the shares to a specific public-service corporation, but also takes into account whether the public-service corporation can abuse the shares contributed after the contribution of shares as a means of domestic corporation’s control.

(2) Although the contributor et al. was not the largest shareholder before the contribution, it becomes the largest shareholder if the shares held by the public-service corporation were combined. In the event that the shares contributor et al. were related to the public-service corporation by taking account of the majority of the directors of the public-service corporation, the majority shareholder is determined at the time before the contribution was made. As to the pointed out by the majority opinion that there was an unfair result that no gift tax is levied on the public-service corporation even though the largest shareholder was made after the contribution, the dissenting opinion argues that the dissenting opinion erred by misapprehending the purport of the dissenting opinion. Therefore, it

(1) Where a resolution is made by a contributor, etc. to appoint a majority of directors as a stock contributor, etc. on the following day after the contribution is made, ② a resolution to appoint a majority of directors as a stock contributor, etc. is made and made on the following day:

According to the Majority Opinion, only the contributor, etc. is deemed liable to pay taxes at the time when both the act of contribution and the resolution on appointment of a majority of directors are met. As such, the liability to pay taxes is established upon the largest shareholder. (1) The date when the resolution on appointment of directors is made in the case of ① the date when the resolution on appointment of directors is made in the case of ② the date when the contribution is made in the case

In any case, only the contributor et al. becomes the largest shareholder in a special relationship with the public-service corporation and was not the largest shareholder before making the contribution. Accordingly, according to the Dissenting Opinion, succession of control over a domestic corporation or succession of an indirect company is not made. Therefore, gift tax shall not be imposed on a public-service corporation. This conclusion accords with the purport of the proviso of Article 48(1) of the Act emphasizing the Dissenting Opinion. The Majority Opinion points out this point.

Nevertheless, the Dissenting Opinion argues that, based on the point of time when contribution is made, taxation ought to be made pursuant to the proviso of Article 48(1) of the Act or Article 48(11) of the Act, based on the determination of whether there is a special relationship as at the time when contribution is made. This argument is fundamentally denying the Dissent’s argument. This is because it is the starting point of the Dissenting Opinion that regulating the contribution of the person who was the largest shareholder rather than the contribution of the person who becomes the largest shareholder is the legislative purport

Even if it is based on such contradictory argument, it is believed that the tax liability is established pursuant to the proviso of Article 48(1) of the Act or Article 48(11) of the Act on the date when a resolution to appoint directors is adopted in cases of ①, ② pursuant to the proviso of Article 48(1) of the Act on the date when a resolution to appoint directors is made, ③ pursuant to the proviso of Article 48(1) of the Act on the date when a contribution is made, and ③ pursuant to the proviso of Article 48(1) of the Act or Article 48(11) of the Act on the date when a contribution is made. While the proviso of Article 48(1) of the Act on the imposition of gift tax at the time of contribution applies to the imposition of gift tax at the time of contribution, it is inevitable to apply Article 48(11) of the Act on

(3) In addition, the Dissenting Opinion argues that, in a case where the contributor et al. was the largest shareholder of a domestic corporation before the contribution but there is no special relationship between the contributor et al. and the public-service corporation at the time of contribution, gift tax is imposed by establishing tax liability pursuant to the proviso of Article 48(1) of the Act at the time of contribution, even if the situation where the contributor et al. accounts for a majority of the directors of the public-service corporation, the establishment of tax liability pursuant to Article 48(11)

However, the argument of the majority opinion points out the illegality of the dissenting opinion that recognizes the establishment of tax liability at the time of contribution and imposes gift tax where the largest shareholder becomes the largest shareholder, although Article 48(11) of the Act was not at the time of contribution but at the time of contribution. Even if tax requirements are met accurately, it is inevitable to deny taxation at this time, and even if the largest shareholder was not at the time of contribution, it is recognized that the establishment of tax liability is established and the taxation is affirmed. In accordance with the dissenting opinion, if the tax authority imposes gift tax by recognizing the establishment of tax liability under Article 48(11) of the Act at the time of the largest shareholder as at the time of becoming the largest shareholder, it should be revoked, and if the tax authority imposes gift tax after recognizing the establishment of tax liability under Article 48(11) of the Act as at the time of contribution, it may not be imposed even after the lapse of the statutory period for imposition of tax liability under Article 48(11) of the Act.

F. As seen earlier, “a person who has established a nonprofit corporation by contributing property” shall be deemed to mean a person who contributes property to establish a nonprofit corporation and exercises a dominant influence over the establishment of the nonprofit corporation in the process of preparing the articles of incorporation and appointing directors. If it is sufficient to make a contribution to a nonprofit corporation and it is deemed unnecessary to consider the degree of involvement in the process of establishment, it is unreasonable as it violates the principle of no taxation without law by making a private culture (private culture).

Article 2 of the Enforcement Decree of the instant case provides that “Where a share contributor, etc. forms a majority of the directors of a nonprofit corporation” and a share contributor, etc. may exercise dominant influence over a nonprofit corporation. Therefore, the requirement shall be satisfied in cases where the share contributor, etc. controls a nonprofit corporation by exercising influence in the process of the establishment of a nonprofit corporation to the same extent as “where the share contributor, etc. forms a majority of the directors of a nonprofit corporation.” As such, the requirement that “in cases of a nonprofit corporation that has been established by contributing property,” the requirement that the share contributor, etc. is deemed as a non-profit corporation should be met. The legislative history of the instant case can be deemed as holding the standard of interpretation within the provision of the Enforcement Decree. The legislative history of the instant case also supports such interpretation. The Dissent’

According to the interpretation of the Dissenting Opinion, a person who contributed shares at the time of the establishment of a non-profit corporation, but did not participate in the process of the establishment, and thereafter, contributed shares in addition without involvement in the operation of a non-profit corporation, is in a special relationship with a non-profit corporation without exception. In particular, even if a person who contributed shares contributed a small amount at the time of the establishment of a non-profit

As above, I express my concurrence with the Majority Opinion.

8. Concurrence with the Dissenting Opinion by Justice Kim Yong-deok

A. (1) Under the principle of no taxation without law, the tax law should be reasonably interpreted in accordance with the language and text of the law. To reasonably interpret the language and text of the tax law, first of all, the meaning of the language and text should be derived from the prior meaning of the language and text so that it does not deviate from the bounds of the language and text expressed in the preceding and following contexts, and furthermore, it should be examined whether the outcome derived from such interpretation is inconsistent with the structure of the relevant provision, and whether it conforms with the legislative intent and concrete validity of the relevant provision.

(2) The proviso to Article 48(1) of the Act provides that the sum of shares contributed and shares prescribed in each subparagraph, namely, ① shares of the same domestic corporation held by the relevant public-service corporation at the time of contribution by the contributor (hereinafter “stocks in subparagraph 1”) and ② shares of the same domestic corporation that contributed to the relevant public-service corporation other than the pertinent public-service corporation (hereinafter “stocks in subparagraph 2”) exceeds 5/100 of the total number of outstanding voting shares of the relevant domestic corporation may be included in the taxable value subject to gift tax.

(A) The above provision covers a case where the “contributed stocks” are more than 5/100 of the total number of issued voting stocks of the relevant domestic corporation. As to whether it exceeds 5/100 of the total number of issued voting stocks of the relevant domestic corporation, not only “stocks owned by the relevant contributor,” but also “stocks of the same domestic corporation owned by the relevant public interest corporation” and “stocks of the same domestic corporation contributed by the contributor and a person with a special relationship with him/her to another public interest corporation other than the pertinent public interest corporation.” However, as to the stocks referred to in subparagraph 1, it is clear as at the time of contribution by the contributor. In addition, as to the stocks referred to in subparagraph 2, it is also deemed that the “stocks contributed by the contributor and a person with a special relationship with him/her to another public interest corporation” are “stocks contributed by the contributor and a person with a special relationship to another public interest corporation” as at the time

(B) Meanwhile, the foregoing provision, as an exception to this, provides that “the cases falling under the proviso of Article 16(2) shall be excluded.” This is the case where shares exceeding 5/100 are contributed by inheritance, and the relevant provision concerning inheritance tax has been invoked in order to recognize the same exception as an exception to the exclusion from inheritance tax assessment, in cases where shares exceeding 5/100 are contributed by inheritance.

However, the proviso of Article 16(2) provides, “The same shall not apply to cases prescribed by Presidential Decree where a public-service corporation that falls under the proviso of Article 49(1) and does not have a special relationship with an enterprise group subject to the restriction on mutual investment under Article 9 of the Monopoly Regulation and Fair Trade Act contributes stocks, etc. of a domestic corporation which is not in a special relationship with the contributor of the relevant public-service

The proviso of Article 49(1) provides that "the same shall not apply to public interest corporations meeting the standards prescribed by Presidential Decree in consideration of the actual usage results of direct public interest projects and the degree of public interest contribution by the State and local governments, and public interest corporations corresponding thereto, which are established by the State and local governments, and which are prescribed by Presidential Decree." Thus, the part "public interest corporations which fall under the proviso of Article 49(1) with the exception of each subparagraph and are not in a special relationship with the enterprise group subject to the restriction on mutual investment under Article 9 of the Monopoly Regulation and Fair Trade Act" provides "requirements for public interest corporations with which stocks are contributed." It is clear that the relevant public interest corporation satisfies the requirements at the

In addition, in order to constitute an exception to taxable objects, “a case prescribed by Presidential Decree where stocks, etc. of a domestic corporation which is not in a special relationship with a contributor are contributed.” This is determined as “requirements for stocks subject to contribution” under the language and text thereof, and thus, the time of determining the special relationship should be determined at the time of “contribution” and, therefore, it is natural to interpret that the relevant domestic corporation is not in a special relationship with the contributor at the time of contribution. If the said provision intends to take the subject of non-special relationship between the contributor and the domestic corporation as the result of contribution, it is expressed as “a domestic corporation which is not in a special relationship with the contributor” or “a domestic corporation which is not in a special relationship with the contributor.” Rather, the proviso of Article 16(2) of the amended Act on January 1, 2010 provides that “a case where stocks, etc. of a domestic corporation which is not in a special relationship with the contributor” should be determined at the time of contribution and its special relationship between the contributor and the domestic corporation.”

(C) Ultimately, the proviso of Article 48(1) of the Act and the overall title thereof provide for the requirements as to whether stocks are subject to taxation or exception thereof based on the stocks subject to contribution. Moreover, the requirements are based on the special relationship with the contributor’s domestic corporation. As to whether the contents and special relation of the stocks subject to contribution are subject to taxation, all of the elements are determined as at the time of contribution in the language and text. In particular, even though the said provision used the same language and text as to whether the stocks are subject to taxation or exceptions thereto, it cannot be interpreted that the said provision determined as at the time of contribution as to whether the stocks are subject to taxation, unlike the language and text thereof, and as to whether

Therefore, the part as prescribed by the Presidential Decree concerning the requirements for shares subject to contribution as an exception to such taxable objects, i.e., Article 13(4) of the Enforcement Decree, as well as the specific contents thereof on the premise thereof. Thus, it shall be interpreted as at the time of contribution as well as at the time of contribution, as well as at the same time, and there is no reason to view otherwise, since the specific text of the above Enforcement Decree also

(3) Furthermore, the interpretation of this Act must be made in accordance with the language and text of the Act and the legislative intent. It cannot be different for the reason that the provision of Article 48(1) of the Act is enacted and its interpretation is based on the subordinate provision of Article 13(4) of the Enforcement Decree. If the provision of the Enforcement Decree is based on the interpretation of the Act or if it is interpreted differently from the language and text of the Act, it would be inconsistent with the principle

In addition, Article 13(4)1 of the Enforcement Decree provides for inclusion of property subject to inheritance tax on the property contributed to a public-service corporation in relation to the inclusion of the property subject to inheritance tax. As such, the meaning of the requirement is that “the contributor (in cases where the contributor is dead, referring to his/her heir) or a person with a special relationship with him/her is a domestic corporation, such as a shareholder, etc., and the heir is deemed the contributor in cases where the decedent contributes the shares of a public-service corporation by will, etc. In other words, the heir is deemed the heir in cases where the decedent contributes the shares of the public-service corporation. As such, the heir is not entitled to succeed the shares contributed to the public-service corporation, unless the heir holds the shares of the same domestic corporation separately at the time of the contribution, even if the shares were contributed, the requirement of the shareholder may not be deemed to have been met. Accordingly, such circumstance may be considered to have been taken into account. Accordingly, given that it was always a shareholder at the time prior to the contribution, it cannot be concluded that the requirements for shareholder separately stipulated in Article 13(4)1.

(4) In addition, the term “special relation” is used in various laws including the law, and is used not only in several provisions but also in the law and the enforcement decree but also in Article 49 of the Act and the enforcement decree of the Act, which invokes the proviso of Article 48(1) of the Act and their overall protection.

The issue of whether an actor and the other party have a special relationship shall be determined in accordance with the content and purport of the pertinent provision. However, the Supreme Court has determined whether a special relationship existed as of the time of the act at issue in both cases of the provision on the denial of unfair act under the Corporate Tax Act (see, e.g., Supreme Court Decision 2010Du1484, May 27, 2010). In cases of a transfer at a low price and an elevated transfer under the Inheritance Tax and Gift Tax Act, donation of profits from capital reduction, listing of stocks, etc. (see, e.g., Supreme Court Decisions 90Nu837, Apr. 10, 1990; 2012Du1430, Sept. 27, 2012; 2010Du1559, May 10, 2012).

In particular, in cases of inheritance tax and gift tax, the “legal principles of taxation principles, such as substantial taxation or fair taxation,” based on the basis thereof, and if the handling of tax laws differs depending on the existence of a special relationship, it is desirable for a taxpayer to choose by taking into account the existence of such special relationship at the time of the act at which the person liable for tax payment is in question. In addition, it is reasonable to deem that the taxation requirements or non-taxation requirements for a certain transaction can be applied only when it is met at the time of the transaction. In addition, it is reasonable to see that the interest rate on whether the requirements for taxation or non-taxation are satisfied based on the results of the transaction falls under

Nevertheless, unlike such general interpretation based on the language and text of the Act, if it is intended to regard the special relationship as a provision that is based on the result of the act in question immediately after the act, that is, the same purpose should be clearly indicated in light of the language and structure thereof. Notwithstanding the use of the same term “special relationship,” if it is interpreted differently in that the result that may arise when the term is applied as it is, not only would undermine consistency and objectivity in the interpretation and application of the provisions related to the tax law, but also would cause substantial confusion in practice, and there may be concerns over getting pointed out that the term “interpresive interpretation” that takes into account only the special case.

(5) (A) According to the Dissenting Opinion, a special relationship between a contributor and a domestic corporation is established when the contributor is the largest shareholder, and the result of the contribution is unnecessary. The proviso to Article 48(1) of the Act provides that a person who contributes shares exceeding 5/100 of the total number of outstanding voting shares of a domestic corporation shall be subject to taxation if the invested shares exceed 5/100 of the total number of outstanding voting shares of the domestic corporation, and further, Article 13(4)1 of the Enforcement Decree of the Act provides that where the number of shares subject to the contribution forms de facto control of the domestic corporation with the centering on the contributor, it shall be subject to taxation, as a matter of course, if the number of shares subject to the contribution forms de facto control of the domestic corporation. In other words, if the invested shares practically forming control of the domestic corporation

(B) However, according to the Majority Opinion, only after determining “the largest requirement for a special relationship between a contributor and a domestic corporation” as of the date of contribution, it can be seen that a public-service corporation is subject to taxation by allowing the contributor and a public-service corporation to use a public-service corporation as a means of controlling a domestic corporation by affecting the domestic corporation that becomes the largest shareholder of the domestic corporation based on control over the contributor and the public-service corporation. As a result of stock contribution, there is a case where the contributor loses the status of a shareholder as to the number of shares contributed, and thus loses the status of the largest shareholder, the relationship between the contributor and the public-service corporation should be further determined in order to determine whether to aggregate shares held as a result of the contribution of shares. In other words, the meaning of the share contribution, namely, the transfer of shares that form the control right, should be deemed to be subject to taxation only where the contributor continues to exercise control over the domestic corporation after the contribution by the contributor and the public-service corporation.

However, it is difficult to recognize under the Company Act that a company, which is a domestic corporation, exercises influence over a public-service corporation, which is its shareholder or uses it as a means of controlling such shareholder. “Indirect influence” on a public-service corporation based on the control over a domestic corporation is also ambiguous and unclear as well as that revealed in Dissent. It is sufficient to determine whether the influence over a public-service corporation itself exists. In fact, the Majority Opinion’s interpretation of Article 16(2) and Article 13(3)2 of the Enforcement Decree of the Act, amended by Act No. 8828, Feb. 22, 2008, which is the requirement of “the largest shareholder of the public-service corporation,” which is a special-service corporation, requires that the contributor or its specially-related person meet the requirements of “the requirement of “the requirement of “the requirement of “the requirement of “the requirement of “the requirement of the special-service corporation,” which is the requirement of “the requirement of “the requirement of “the requirement of “the requirement of the special-service corporation,” and “the requirement of “the requirement of stock contribution” should not be met.

In addition, Article 48(8) of the Act, one of the provisions on follow-up management for a public-service corporation, provides that the contributor becomes a director or an executive or employee in excess of 1/5 of the current number of directors of the public-service corporation. However, in light of the fact that only the amount equivalent to the relevant expenses should be imposed, not the principal gift tax, the governing power over the public-service corporation is not the basis for determining the non-existence of a special relationship between the contributor and the domestic corporation,

Ultimately, in light of the amended Act and subordinate statutes after December 31, 2007, the requirement of “domestic corporation which is not in a special relationship with the contributor” is interpreted as a provision regulating the special relationship existing between the contributor and the pertinent domestic corporation at the time of contribution, without considering the control relationship after the contribution between the contributor and the pertinent public-service corporation.

(6) We examine the logical and empirical cases of the Majority Opinion before and after the amendment of December 31, 2007.

If it is assumed that a person holding 100% of the shares of a domestic corporation contributes less than 50% of the shares to a public-service corporation established and operated by another person, there is no room for recognition of special relationship between the contributor and the public-service corporation. On the other hand, even if based on the “after the contribution,” the contributor still serves as a shareholder at the same time, and thus, is subject to gift tax. In this regard, the Dissenting Opinion considers it as a case where the contributor transfers the shares forming the control right at the time of contribution, and thus becomes subject to taxation. However, the Majority Opinion argues that the “indirect control” on the shares of the domestic corporation is based on a special relationship between the contributor and the public-service corporation and the “indirect control” on the shares of the domestic corporation. However, in

This shows that the interpretation of the majority opinion, which determines whether the requirements of the largest shareholder are met at the time after stock was contributed, does not harmonize with the discipline system and legislative intent of Article 48(1) of the Act.

(7) In full view of the language and text of the Act as seen earlier, the legislative purport of the relevant provision, and the specific feasibility, etc., Article 48(1) of the Act provides that where all or part of the shares forming de facto control are transferred by contributing shares held by the contributor in relation to a specific domestic corporation that had already been controlled at the time of contribution, it is reasonable to interpret the special relationship between the contributor and the domestic corporation as at the time of contribution as at the time of contribution, and otherwise, it shall not be determined with the result after contribution.

B. The Majority Opinion considers the meaning of “contributed and established by contribution” under Article 19(2)4 of the Enforcement Decree, which is the requirement of a special relationship between the contributor and the public interest corporation, as the case where property was contributed to establishing a public interest corporation and, furthermore, its establishment was “exercise of substantial influence” in the process of establishing the articles of association, appointment of directors, registration of incorporation, etc., and decides on the special relationship with the contributor and the public interest corporation that received the contribution based thereon. However, Article 19(2)4 of the Enforcement Decree does not apply only to the contribution of shares to the public interest corporation under Article 48 of the Act, but also to the requirement that the non-profit corporation falls under the scope of Article 48 of the Act. Thus

As seen earlier, the tax provisions ought to be strictly interpreted in accordance with the language and text thereof. Therefore, inasmuch as there is no clear provision on a special relationship between the contributors and non-profit corporations, it cannot be understood as a ambiguous and uncertain concept, such as whether to exercise substantial influence.

Generally, when a person with a special relationship is a separate person, such as a relative or employee, but is subject to regulation, it is a provision stipulating that a certain scope of persons who can be deemed to be able to make a decision or act like a person with a same personality in light of social norms or economic interests. As long as they fall under the category of a person with a special relationship prescribed by the Act, in principle, individual and specific circumstances, such as in fact they are in conflict or not good one, should be excluded from the subject of consideration. If they deviate from such category, they should not be regarded as a person with a special relationship even if they are personally or economically in close relationship. Supreme Court en banc Decision 2008Du150 Decided July 21, 201, Supreme Court en banc Decision 2008Du150 Decided July 21, 201, held that a person with a special relationship with a taxpayer prescribed by the regulations on the rejection of unfair calculation under the former Corporate Tax Act should be based on the person liable for tax

If it is necessary to determine whether a special relationship itself is a “actual” and “controlling”, each case should be considered individually and specifically by comprehensively taking into account all the circumstances. However, even if a taxpayer and a tax authority make a final judgment by a court, it makes it difficult to faithfully pay taxes and pay taxes until it comes to fall under a special relationship. Of the regulations on a special relationship, there are cases where a somewhat uncertain concept is used in light of legislative techniques or purport, but it is not desirable to draw the uncertain concept of “in the process of preparing articles of incorporation, appointing directors, and registering incorporation, etc.,” which does not include any special relationship between the contributor and a non-profit corporation, in light of the Majority Opinion’s objective and uniform standard. Article 13(2)2 of the Enforcement Decree of the Inheritance Tax Act, as one of the non-taxation requirements for donated property of a public-profit corporation, does not have the authority to determine whether a director exercises control over a public-service corporation as prescribed in Article 13(2)2 of the Enforcement Decree of the Public-service Corporations Act.

Therefore, whether a “non-profit corporation established by contributing property” under Article 19(2)4 of the Enforcement Decree constitutes “non-profit corporation” ought to be objectively construed based on contribution rather than on “actual control,” rather than on the language and text thereof. In other words, it shall be deemed that a provision is applicable to cases where a non-profit corporation is established by making contributions to a considerable scale of property, which is a property foundation that can be performed as a non-profit corporation, and Article 19(2)6 and 7 of the Enforcement Decree provides that “not less than 30/100 of the total number of issued and outstanding shares” or “not less than 50/100 of the total number of issued and outstanding shares” under Article 19(2)4 of the Enforcement Decree, which provides for the scope of a profit-making corporation corresponding to a person with a special relationship, and in light of the absence of special circumstances where a profit-making corporation and a non-profit corporation should be treated differently with respect to the standards for contribution and formation of property. In this context, the establishment

In particular, as seen earlier, the amended Act of December 31, 2007 strengthens the requirements of “a bona fide public-service corporation” and excludes the contributor and his specially related person from being exempt from non-taxation under Article 48 of the Act. Therefore, in relation to Article 48(1) of the Act that prescribes whether a contribution to a public-service corporation is subject to gift tax, whether the contributor exercises a substantial influence in the process of establishing the relevant public-service corporation’s establishment, such as preparing the articles of incorporation, appointing directors, and registering the establishment thereof, is a separate provision on “requirements for public-service corporations to which stocks are contributed,” and it does not appear to be an appropriate matter to be considered in determining the special relationship under Article 19(2)4 of the Enforcement Decree with respect to “requirements for stocks subject to contribution.”

C. In conclusion, “stocks of a domestic corporation which is not in a special relationship with a contributor” under Article 48(1) of the Act shall be determined at the time of contribution. Meanwhile, the meaning of “contribution established by contribution” under Article 19(2)4 of the Enforcement Decree in relation to whether a public-service corporation is a contributor’s specially related person should be interpreted in accordance with objective and specific standards, such as where a contribution was made by 30% or more of the property of a public-service corporation resulting in establishment.

As above, I express my concurrence with the Dissenting Opinion.

Justices Yang Sung-tae (Presiding Justice)