Dispositions to refuse to pay gift tax in kind is justifiable;

Any disposition rejecting an application for payment in kind of gift tax filed after the enforcement date of Article 73 of the Inheritance Tax and Gift Tax Act shall be justifiable, and the rejection disposition shall not be deemed to violate Article 70 (1) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act even if it is not notified within 14 days

Article 73 of the Inheritance Tax and Gift Tax Act

2018Guhap208888 Revocation of Disposition rejecting payment in kind of inheritance tax

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000 director of the tax office

June 22, 2018

July 10, 2018

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

In the first place, on February 21, 2018, the Defendant confirmed that the disposition to refuse to pay the gift tax against the Plaintiff is null and void, and the disposition to refuse to pay the gift tax in the first place is revoked.

1. Details of the disposition;

A. As indicated below, the Plaintiff received land and cash donations from AA (Death on September 14, 2013), as stated in the following table 1, and the Defendant notified the Plaintiff of KRW 1,601,418,740 on January 7, 2015.

B. The Plaintiff filed an application for annual installments pursuant to Article 71 of the Inheritance Tax and Gift Tax Act for KRW 1,369,581,780 among the total 1,601,418,740 of the gift tax notified, and the Defendant permitted the payment of KRW 273,916,350 each year from February 28, 2015 to February 28, 2019 as stated in the following Table 2:

C. On January 10, 2017, the Plaintiff filed an application with the Defendant for payment in kind (hereinafter referred to as “application for payment in kind”) of KRW 547,832,700,00 (the total amount of gift tax on annual installments: February 28, 2018 and February 28, 2019) with KRW 29-21,00,000,000,000,000 for KRW 496,000 (the appraised amount: KRW 481,120,000), and KRW 29-22,000,000,000 (the appraised amount: KRW 481,120,000).

D. On February 21, 2018, the Defendant notified on the ground that the gift tax is not subject to payment in kind pursuant to Article 73 of the Inheritance Tax and Gift Tax Act (amended by Act No. 13557, Dec. 15, 2015; hereinafter referred to as the "Inheritance Tax and Gift Tax Act") that the gift tax is not subject to payment in kind (hereinafter referred to as the "instant refusal disposition").

E. On March 2, 2018, the Plaintiff filed a request for review with the National Tax Service on March 2, 2018, but was dismissed on July 10, 2018.

[Ground of recognition] Facts without dispute, Gap evidence 1, Gap evidence 2, Eul evidence 1 to Eul evidence 4, the purport of the whole pleadings

2. Judgment on the Defendant’s main defense

A. The defendant's argument

On January 1, 2016, pursuant to Article 73 of the amended Inheritance Tax and Gift Tax Act and Article 6 of the Addenda, the Defendant excluded gift tax from the subject of application and permission for payment in kind. The Plaintiff asserts that the portion of the instant lawsuit seeking confirmation of invalidity is unlawful, since the Plaintiff did not meet the requirements for payment in kind under Article 73 of the former Inheritance Tax and Gift Tax Act (the value of real estate and securities exceeds 1/2 of the value of the relevant property) since the ratio of real estate, etc. among the donated property value is merely 24.6%.

B. Determination

On the other hand, if it is confirmed that the rejection disposition of this case is null and void, the defendant bears a legal obligation to permit the application for payment in kind of gift tax, and the plaintiff is able to pay in kind of gift tax, so the lawsuit of this case is a legal interest. Thus, the defendant's main defense of safety is without merit (whether the application for payment in kind of gift tax of this case cannot be accepted under Article 73 of the amended Inheritance Tax and Gift Tax Act and Article 6 of the Addenda or

3. Whether the instant disposition is lawful

A. The plaintiff's assertion

Since the disposition of this case has a significant and obvious defect for the following reasons, it is primarily sought confirmation of invalidity, and the preliminary revocation is sought.

1) Article 73 of the former Inheritance Tax and Gift Tax Act, which was in force at the time when the gift tax liability of this case was established, met the requirements for payment in kind. The plaintiff first received permission for annual payment in annual installments and applied for payment in kind during the implementation of this. Article 6 of the Addenda of the amended Inheritance Tax and Gift Tax Act (hereinafter referred to as the "Supplementary Clause of this case") which deprived of the plaintiff's right to selective objection or right to vested in kind at the time when the plaintiff's tax liability was established, is invalid in light of the principle of no taxation without law or the principle of property rights guarantee, and the principle of excessive prohibition

2) Article 70(3) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that permission shall be determined and notified within 14 days from the date of receipt of an application for payment in kind, and the above period may be extended only once by up to 30 days, and permission shall be deemed granted if no written application for payment in kind is sent within the said period. The Defendant did not notify the Plaintiff of whether to grant permission 14 days after receipt of the application for payment in kind on January 10, 2018. Accordingly, it shall be deemed that permission in kind was deemed granted in January 24, 2018 pursuant to the latter part of Article 70(3) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act. The Defendant was unlawful since it issued the instant disposition of refusal on February 21, 2018.

B. Relevant statutes

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

C. Determination

1) Determination on the first argument

A) Article 73 of the former Inheritance Tax and Gift Tax Act on the payment in kind is amended on December 15, 2015, and gift tax is excluded from the object of payment in kind, and Article 73 of the Inheritance Tax and Gift Tax Act as at the time of the application for payment in kind only applies to inheritance tax and inherited property. Article 73 of the same Act applies to cases where an application for payment in kind is made after January 1, 2016 pursuant to Articles 1 and 6 of the Addenda of the amended Inheritance Tax and Gift Tax Act. Thus, it is obvious that an application for payment in kind for gift tax may not be made at the time of

B) As to this, the Plaintiff asserts that the supplementary provision of this case deprived the Plaintiff of the right to selective payment or the right to vested in payment possible at the time the liability to pay the gift tax is unconstitutional. However, pursuant to Article 73(1) of the former Inheritance Tax and Gift Tax Act, where the value of real estate and securities among donated property exceeds 1/2 of the value of the relevant property and the amount of gift tax paid exceeds 20 million won, payment in kind may be permitted. According to the facts acknowledged earlier, the real estate value of KRW 2,846,614,946 of the value of the donated property provided by the Plaintiff is 701,597,50 and did not meet the requirements for payment in kind because it is merely 24.6% of the value of the donated property. As such, it is difficult to deem that the Plaintiff had any right to selective payment or the right to vested in kind at the time of the establishment of the liability to pay the gift tax, and it is difficult to deem that the said

C) Therefore, it is justifiable that the Plaintiff’s refusal of the Plaintiff’s application by applying Article 73 of the amended Inheritance Tax and Gift Tax Act as to the application for payment in kind filed on January 10, 2018, which was after the enforcement date of Article 73 of the Inheritance Tax and Gift Tax Act amended pursuant to the supplementary provision of this case, is justifiable. Therefore, this part of the Plaintiff’s assertion is without merit.

2) Determination on the second argument

A) With respect to an application for payment in kind under Article 70(1) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, Article 70(2) of the Inheritance Tax Act provides for an application for payment in kind where a person who received permission for payment in kind of inheritance tax pursuant to Article 71 of the Inheritance Tax Act intends to pay in kind, and it is reasonable to deem that it applies to inheritance tax where a taxpayer makes a lawful application for payment in kind. It does not apply to gift tax that is not subject to the permission for payment in kind. Therefore, even if the Defendant did not notify within 14 days of the application for payment in kind of gift tax of the Plaintiff who is not subject to the application for payment in kind, it cannot be deemed that the permission for payment in kind is deemed as a legal fiction under the above

B) Therefore, the defendant's rejection disposition of this case cannot be deemed to violate Article 70 (1) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act. Therefore, this part of the plaintiff'

3) Sub-decisions

As a result, the instant disposition is legitimate, and therefore, the Plaintiff’s primary claim seeking confirmation of invalidity on the premise that there is a grave and apparent defect in the instant disposition and the conjunctive claim seeking revocation thereof are without merit.

4. Conclusion

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