[1] The meaning of “inevitable reason” under Article 16(1) of the former Inheritance Tax and Gift Tax Act and whether the legal relation entrusting only the implementation of the procedure to another person constitutes a trust for public interest under Article 17(1) of the former Inheritance Tax and Gift Tax Act (negative)

[2] Where some of the persons liable for tax payment of inheritance tax imposes the total amount of inheritance tax on some of the persons liable for tax payment of inheritance tax, whether some of the persons liable for tax payment is legitimate (negative)

[3] Standard for determining whether an additional term is a condition or an indefinite term in a juristic act attached thereto, and in a case where an indefinite term is attached to a certain juristic act, whether it is merely a delay of the due date or the due date (affirmative in principle)

[4] The purport of Articles 1(1) and 3(1) of the former Inheritance Tax and Gift Tax Act, which are a special provision on donated property in a case where a donor died during the performance of a given donated obligation, and the meaning of “the pertinent donated property in case where a donor died during the performance of a donated obligation” under Article 1(1) of the former Inheritance Tax and Gift Tax Act

[1] “Inevitable reason” under Article 16(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010; hereinafter “former Inheritance Tax Act”) means the reason why the contribution is delayed due to statutory or administrative obstacles, etc. that are not attributable to a public corporation, etc., even though it intended to contribute property to a public corporation, etc., and the reason why the contribution is not attributable to it, and the mere fact that the heir was unable to make the contribution within the contribution due to the lack of knowledge of the existence of inherited property itself cannot be deemed as constituting such circumstance. Moreover, since the public trust under Article 17(1) of the former Inheritance Tax and Gift Tax Act is premised on the legal relationship under the Trust Act in which the truster, trustee, and beneficiary exists, the donation of property does not constitute a legal relationship entrusting

[2] Since several persons liable to pay inheritance tax are liable to pay inheritance tax calculated on the whole inherited property within a certain scope, if the tax authority imposes the entire amount of inheritance tax only on some persons liable to pay inheritance tax without imposing inheritance tax, the part of those persons liable to pay inheritance tax is unlawful.

[3] In cases where it is reasonable to view that, with respect to a juristic act to which an additional officer attached, the obligation should not be performed unless the facts indicated in the additional officer have occurred, it should be deemed as a condition. In a case where it is reasonable to deem that the obligation should be performed not only when the indicated facts have occurred, but also when it has become final and conclusive even when the objection has not occurred, it shall be deemed that the existence of the indicated facts has become final and conclusive. Therefore, barring any special circumstance, in a case where a certain juristic act requires an additional period of time to be performed, the obligation arising from the juristic act has already occurred

[4] The legislative intent of Article 1(1) and Article 3(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010; hereinafter “former Inheritance Tax Act”) with respect to the pertinent donated property in cases where a donor died during the performance of a donated obligation is the means to avoid the progressive effect of inheritance tax. As such, the donated property under Article 14(1)3 of the former Inheritance Tax and Gift Tax Act may be a means to avoid the progressive effect of inheritance tax, it shall not be deducted from the value of inherited property. However, even if the pertinent donated property falls under the property subject to inheritance at the time of commencement of inheritance, since the heir is to transfer the donated property to the donee due to the donated obligation, the donee is a person liable to pay inheritance tax on behalf of the donee. Considering the legislative purport of the above legislation, where there was no special act between the completion of performance of the donated obligation and the performance of the donated property, the pertinent donated property should be deemed as having been established before the performance of the donated obligation.

[1] Articles 16(1) and 17(1) of the former Inheritance Tax and Gift Tax Act (Amended by Act No. 9916, Jan. 1, 2010) / [2] Articles 1(1), 3(1), and 14(1)3 of the former Inheritance Tax and Gift Tax Act (Amended by Act No. 9916, Jan. 1, 2010) / [3] Articles 147 and 152 of the Civil Act / [4] Articles 1(1), 3(1), and 14(1)3 of the former Inheritance Tax and Gift Tax Act (Amended by Act No. 9916, Jan. 1, 2010)

[2] Supreme Court Decision 83Nu710 decided Mar. 27, 1984 (Gong1984, 829) / [3] Supreme Court Decision 2003Da24215 decided Aug. 19, 2003 (Gong2003Ha, 1870)

Plaintiff 1 and three others (Law Firm Dawon, Attorney Park Jong-soo, Counsel for the plaintiff-appellant)

Head of Seocho Tax Office

Seoul High Court Decision 2012Nu8801 decided August 31, 2012

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

The grounds of appeal are examined.

1. As to the grounds of appeal on whether “property contributed for public interest” constitutes “property contributed for public interest”

A. Article 16(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010; hereinafter “Inheritance Tax Act”) provides that, among inherited property, property contributed to an ancestor or a person who runs a business for religious, charity, academic or other public interest (hereinafter “public interest corporation, etc.”) by such ancestor or heir shall not be included in the taxable value of inherited property within the deadline for reporting the tax base of inherited property under Article 67 of the Inheritance Tax and Gift Tax Act (where a public interest corporation, etc. is established by contributing inherited property, referring to 6 months from the end of the month to which the date on which the cause ceases to exist, in extenuating circumstances exist). In addition, Article 16(4) of the former Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 22042, Feb. 18, 2010; hereinafter “the Enforcement Decree of the Inheritance Tax and Gift Tax Act”) provides that where property is donated due to administrative reasons such as delay in the establishment or transfer of property (hereinafter “property”).

Meanwhile, Article 17(1) of the Inheritance and Gift Tax Act provides that the value of an inherited property, among inherited property, shall not be included in the taxable value of inherited property in cases of property contributed to a public corporation through a trust for religion, charity, academic purpose, or other public interest (hereinafter “public trust”), which is a public trust under Article 65 of the Trust Act. Article 65 of the former Trust Act (wholly amended by Act No. 10924, Jul. 25, 201; hereinafter the same) provides that “a trust for academic, religious, religious, religious, charity, charity, art, or other public interest purpose shall be deemed a public trust, and its supervision shall be subject to the provisions of Article 7 of the following subparagraphs.” Article 66 provides that “A trustee shall obtain permission from the competent authority in accepting a public trust.”

B. The court below acknowledged the following facts: (a) the non-party requested the ○○ Association to contribute 370,318 shares of Axex (hereinafter “Ax”) owned by the non-party to contribute to the ○○○ Association (hereinafter “the shares of this case”); (b) the non-party died on April 22, 2009; and (c) the non-party reported the value of the shares of this case on October 28, 2009 without including the value of the shares in the inheritance tax in the inheritance tax value; and (d) the defendant imposed the contributions of this case on the ○○ Association upon the above request on February 27, 2010 by adding the value of the shares of this case to the taxable value of the inheritance tax of this case (hereinafter “the shares of this case”); and (d) the defendant calculated the value of shares of this case to the ○○ Association on March 4, 2003 and the taxable value of the shares of this case to the plaintiffs on March 13, 2010.

Furthermore, the court below rejected the plaintiffs' assertion that the shares of this case are not included in the taxable value of inherited property because the plaintiffs' knowledge of the existence of the shares of this case cannot be viewed as an inevitable reason under Article 16 (1) of the Inheritance Tax and Gift Tax Act and Article 13 (1) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, and since the shares of this case contributed after the deadline for filing the plaintiff's inheritance tax base does not constitute the property contributed to a public corporation under Article 16 (1) of the Inheritance Tax and Gift Tax Act, and there is no evidence to deem that Acax acquired a public trust with the permission of the competent authority, and therefore, the shares of this case are not included in the taxable value of inherited property for public interest under Article 17

C. “Inevitable reason” under Article 16(1) of the Inheritance and Gift Tax Act means the reason why the contribution is delayed due to statutory or administrative obstacles, etc. that are not attributable to himself, even though he intended to contribute property to a public-service corporation, etc., and the reason why the contribution is not due to the existence of the inherited property itself cannot be deemed to fall under the circumstance that the heir was unable to make the contribution within the due date. Furthermore, since the public-service trust under Article 17(1) of the Inheritance and Gift Tax Act assumes legal relations under the Trust Act where the truster, trustee, and beneficiary exists, the donation of the property is based on the premise that only the implementation of the procedure is entrusted to another person, as the gift of the property does not fall under such legal relations. In light of these points, the lower court’s determination rejecting the above plaintiffs’ assertion is justifiable, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the scope of “a unavoidable reason” under Article 16(1) of the Inheritance and Gift

2. As to the ground of appeal on whether ○○ school also constitutes a taxpayer of inheritance tax with the Plaintiffs

A. Article 1(1) of the Inheritance and Gift Tax Act provides that property subject to inheritance tax (including inherited property bequeathed by the decedent and donated property becoming effective due to the death of the decedent) shall be inherited property (including property bequeathed by the decedent and donated property becoming effective due to the death of the decedent) subject to the gift tax, which is a donation becoming effective due to inheritance, testamentary gift, or the death of the donor (including where the donor died during the performance of the donation obligation pursuant to Article 14(1)3), and Article 3(1) of the Inheritance and Gift Tax Act provides that a successor, a person to whom the testamentary gift takes effect (including a person who acquires property due to the death of the decedent) shall be a person liable to pay inheritance tax at a certain rate based on the inherited property either received or to be received by the heir, among inherited property. Meanwhile, Article 14(1)3 of the Inheritance and Gift Tax Act provides that a decedent’s obligation of donation, etc. to a person other

Since several persons liable to pay inheritance tax are liable to pay inheritance tax calculated on the whole inherited property within a certain scope, if the tax authority imposes the whole amount of inheritance tax only on some persons liable to pay inheritance tax without imposing inheritance tax, the part of those persons liable to pay inheritance tax is unlawful (see Supreme Court Decision 83Nu710, Mar. 27, 1984, etc.).

B. The lower court acknowledged that: (a) the Nonparty, upon requesting the implementation of the procedures for donation of the instant shares, submitted the instant shares, including the securities transaction card and seal, stating that “I will make the instant shares and all property rights thereto to the ○○○ branch located in the securities market or the KOSDAQ; and (b) I will submit a certificate of donation; (c) on September 29, 2009, I reported securities for the purpose of corporate disclosure; and (d) on January 22, 2010, upon the registration to the KOSDAQ, on the ground of the Nonparty’s securities transaction card and seal, the Nonparty’s implementation of the procedures for donation on February 27, 2010 by entering the instant shares into the securities account of the ○○○ church’s securities transaction account; and (d) determined that the Nonparty’s donation declaration pursuant to the instant certificate of donation was lawful on the ground that I would not have the right to claim for registration of the gift property in the securities market or the KOSDAQ; and thus, (e) the Nonparty’s execution of the instant certificate of donation was not legitimate.

C. However, we cannot agree with the judgment of the court below for the following reasons.

(1) In the case of a juristic act to which an additional officer attached, if there is considerable reason to view that the fact indicated in the additional officer does not occur, it shall be deemed as a condition to refuse the performance of the obligation. In a case where it is reasonable to view that the obligation should be performed even when not only when the indicated fact occurred but also when it becomes final and conclusive that the objection does not occur, it shall be deemed that the existence of the indicated fact has become final and conclusive (see, e.g., Supreme Court Decision 2003Da24215, Aug. 19, 2003). Therefore, in a case where a certain juristic act bears an additional term, barring any special circumstance, the obligation arising from the juristic act has already occurred and the indefinite term is merely a delay

Meanwhile, the purport of Article 1(1) and Article 3(1) of the Inheritance Tax and Gift Tax Act with respect to the pertinent donated property in cases where a donor dies during the performance of a specific donated obligation is that the donated property under Article 14(1)3 of the Inheritance Tax and Gift Tax Act may not be deducted from the value of inherited property, since the donated obligation under Article 14(1)3 of the Inheritance Tax and Gift Tax Act may be a means to avoid the progressive effect of inheritance tax. However, even if the donated property falls under an inherited property at the time of commencement of inheritance, the heir is obligated to transfer the donated property to the donee due to the donated obligation, and thus, the donee is a person liable to pay inheritance tax on behalf of the inheritor. In addition, the legislative intent of the above Article 1(1) of the Inheritance Tax and Gift Tax Act shows that no special act is involved between the completion of the performance of the donated obligation after the occurrence of the donated obligation, the pertinent donated property “where a donor dies during the performance of the donated obligation” refers to the donated property for the purpose of donation obligation where the donor dies dies before the completion of the performance.

(2) Examining the language and text of the instant share donation certificate as indicated in the reasoning of the judgment below, and the receipt of securities transaction cards and seals necessary for share transfer upon delegation of the donation, and the process of conclusion and implementation of the donation contract, etc., the Nonparty may be deemed to have had the intent to donate the instant shares to ○○○○ Association, even if the listing of the donation contract becomes final and conclusive, not only when the listing of the donation contract is finalized but also when it is not listed. Thus, the listing of the instant shares constitutes an indefinite term of deferment of the performance of the donation obligation, rather than a condition of suspension. Since the contract on the donation of the instant shares was already established at the time of the Non-Party’s death and became effective, ○○○ Association, which is the other party, acquired the rights corresponding thereto. Thus, even if the non-party’s non-party’s non-party’s death did not have a fixed period of time, the instant shares constitute “ donated property where the donor died during the performance of the donation obligation” under Article 1(1) of the Inheritance Tax and Gift Tax Act. Accordingly, the Plaintiffs are obligated to pay the entire amount of the Plaintiffs and the entire shares.

Nevertheless, the lower court determined otherwise that the instant shares did not constitute “the pertinent donated property in the event that a donor died during the performance of a gift obligation” under Article 1(1) of the Inheritance and Gift Tax Act, and that the instant disposition was lawful by deeming that the Nonparty, contrary to the foregoing, expressed an indication of a donor regarding the instant shares on the condition of suspending the listing of ABT. In so doing, the lower court erred by misapprehending the legal doctrine on the meaning of “the pertinent donated property in the event that a donor died during the performance of a gift obligation” under Article 1(1) of the Inheritance and Gift Tax Act, thereby adversely affecting the conclusion of the judgment.

3. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices

Justices Ko Young-han (Presiding Justice)