Plaintiff 1 and three others (Law Firm LLC, Attorneys Kang Han-hun et al., Counsel for the plaintiff-appellant)

Head of the branch tax office and three others (Law Firm Sam-ju, Attorneys Kim Jong-sung et al., Counsel for the plaintiff-appellant)

September 21, 2016

Seoul Administrative Court Decision 2014Guhap68355 decided May 1, 2015

1. All appeals by the Defendants are dismissed.

2. The costs of appeal are assessed against the Defendants.

1. Purport of claim

The Defendants’ imposition of gift tax (including additional tax) of each corresponding amount stated in the tax amount column against each corresponding Plaintiff on each corresponding date listed in the attached list disposal date shall be revoked.

2. Purport of appeal

The judgment of the first instance is revoked, and all plaintiffs' claims are dismissed.

1. Quotation of judgment of the first instance;

The reasoning of this court's judgment is as follows, except for adding the pertinent matters among the judgments of the court of first instance as follows, and adding the following judgments, and thus, it is consistent with Article 8 (2) of the Administrative Litigation Act and the main text of Article 420 of the Civil Procedure Act.

○ 7 pages 14 deleted “Article 41-5(4) of the Inheritance and Gift Tax Act” and 10 pages 3 “Paragraph 2”.

○ 12 pages 12 through 14 shall be deleted, and the following shall be added to 14 pages 1:

In light of the fact that Article 41-3 (6) of the Inheritance and Gift Tax Act includes new stocks acquired from a corporation on the basis of the application of Paragraph (1) of Article 41-3 of the Inheritance and Gift Tax Act, it can be seen that new stocks acquired from a corporation on the basis of new stocks acquired from a corporation or property donated to a corporation from the largest shareholder, etc. or property acquired from the corporation on the basis of the stocks donated to the largest shareholder, etc. or acquired from the corporation from the largest shareholder, etc., are subject to Article 41-3 of the Inheritance and Gift Tax Act, but it cannot be deemed that the above provision is subject to Article 41-3 (6) of the Inheritance and Gift Tax Act unless it falls under the above case. It is amended by Act No. 13557, Dec. 15, 2015; "in the application of Paragraph (2), new stocks are transferred to the corporation upon donation or acquisition of stocks, etc., and then the corporation issues new stocks to increase its capital."

2. Additional determination

The Defendants asserts that Article 2(3) of the Inheritance Tax and Gift Tax Act applies to the listed profits arising from the merger of shares of this case in this court.

However, in a case where an individual value calculation rule regulates a specific type of transaction or act, which is limited to only a certain transaction or act as subject to gift tax, and the scope of taxation is limited, thereby establishing the scope and limit of gift tax imposition, even if the transaction or act excluded from the subject or scope of gift tax among the transaction or act regulated by the individual value calculation rule satisfies the concept of gift under Article 2(3) of the Inheritance Tax and Gift Tax Act, gift tax cannot be imposed thereon (see Supreme Court Decision 2013Du13266, Oct. 15, 2015).

Article 41-5 of the Inheritance and Gift Tax Act provides for a type of transaction and act in which a person with a special relationship with the largest shareholder, etc. receives benefits, such as listing, from the largest shareholder, etc. as a donation of benefits from the acquisition of new shares, and limits the acquisition of new shares to the subject of its application. Thus, barring any special circumstance, it may be deemed that there has been a limit for not imposing taxes on the acquisition of new shares, such as those of this case, which do not fall under any of the above cases. Therefore, the aforementioned assertion by the Defendants is not reasonable.

3. Conclusion

The judgment of the first instance is justifiable. All appeals by the Defendants are dismissed.

[Attachment]

Judges Kim Yong-open (Presiding Justice)