[1] The scope of "tax" under the proviso of Article 41-2 (1) of the former Inheritance Tax and Gift Tax Act, and the burden of proving that there was no purpose of tax avoidance in title trust (=title holder)

[2] The case holding that there was a purpose of tax avoidance in the title trust of shares

[1] The legislative intent of Article 41-2(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002) is to recognize an exception to the substance over form principle to the effect that the act of tax avoidance using the title trust system is effectively prevented, thereby realizing the tax justice. Thus, the proviso of the same Article is applicable only where the purpose of tax avoidance is not included in the purpose of the title trust, and the tax under the proviso is not limited to the gift tax, and the burden of proving that there was no purpose of tax avoidance in the title trust is against the person asserting it.

[2] The case holding that there was a purpose of tax avoidance in the title trust of shares

[1] Article 41-2 (1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002) (see current Article 45-2 (1)) / [2] Article 41-2 (1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002) (see current Article 45-2 (1))

[1] Supreme Court Decision 95Nu13555 delivered on April 12, 1996 (Gong1996Sang, 1617), Supreme Court Decision 95Nu10068 delivered on May 10, 1996 (Gong1996Ha, 1918), Supreme Court Decision 95Nu11573 delivered on May 10, 1996 (Gong1996Ha, 1921), Supreme Court Decision 95Nu9174 delivered on August 20, 196 (Gong196Ha, 2898), Supreme Court Decision 9Du2192 delivered on July 23, 199 (Gong199Ha, 1818), Supreme Court Decision 200Du31304 delivered on December 23, 2013 (Gong1999Ha, 198).

Plaintiff (Attorney Choi Jong-soo et al., Counsel for the plaintiff-appellant)

Head of Eastern Tax Office

Seoul High Court Decision 2003Nu1686 delivered on October 9, 2003

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

We examine the grounds of appeal.

1. The judgment of the court below

According to the reasoning of the judgment below, the non-party 1, who mainly runs the non-party 2's business by acquiring shares under the name of the non-party 1's company's own shares under the name of the non-party 2's own shares 28,00 shares (hereinafter "the non-party 2's shares") issued in the name of the plaintiff on February 14, 200 and transferred the shares to the non-party 5's company on May 5, 200. The court below held that the non-party 2's shares were not subject to the non-party 5's shares acquisition under the name of the non-party 1's own shares under the non-party 2's own shares for the non-party 5's own shares for the non-party 2's own shares after the non-party 5's acquisition of shares under the name of the non-party 1's own shares. The non-party 2's shares should not be subject to the non-party 2's shares acquisition of the non-party 1's shares.

2. Judgment of the Supreme Court

However, we cannot accept the above judgment of the court below for the following reasons.

The legislative purport of Article 41-2(1) of the former Inheritance Tax and Gift Tax Act is to recognize an exception to the substance over form principle in the purport that the act of tax avoidance by using the title trust system is effectively prevented, thereby realizing the tax justice. As such, the proviso of the same Article is applicable only where the purpose of tax avoidance is not included in the purpose of the title trust, and the taxes prescribed in the proviso are not limited to the gift tax, and the burden of proving that there was no purpose of tax avoidance in the title trust is against the person asserting it (see Supreme Court Decision 2004Du1421, Jun. 11, 200

In light of the record, Nonparty 1 acquired shares under the name of Nonparty 1 for 2 years from 199 to 200, a total of 2,280,93 shares issued by the EL 1,00,000, including the instant shares, on about 28 occasions. The Plaintiff, Nonparty 3, and Nonparty 4 acquired shares of approximately half of the shares under the name of 6,080, and transferred the shares to the Plaintiff by dividing them over 78 times under the name of 5,000 (in addition, the provision on deemed donation was not applicable to the acquisition of shares under the name of 14,547,50,000, which was not subject to the Plaintiff’s transfer of shares, due to the fact that Nonparty 1’s acquisition of shares under the name of 5,00,000 capital gains tax was not subject to the Plaintiff’s transfer of shares under the name of 14,007,626,500,000 capital gains tax were not subject to the Plaintiff’s tax return (the Plaintiff’s dividend income tax return).

Nevertheless, the court below's decision that Article 41-2 (1) of the former Inheritance Tax and Gift Tax Act cannot be applied to the stock title trust of this case is erroneous in the misapprehension of legal principles as to the constructive gift of title trust, or in the incomplete hearing, which affected the conclusion of the judgment. Thus, the ground of appeal pointing this out is

3. Conclusion

Therefore, the judgment of the court below is reversed and the case is remanded to the court below. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Young-ran (Presiding Justice)