2017Nu20651 Revocation of Disposition of Imposition of Gift Tax

A

Law Firm U.S., Attorney Park Ho-dae, Counsel for the plaintiff-appellant-appellant

Attorney Kim Yong-ri, Counsel for the defendant-appellant

Head of Namyang District Tax Office

Busan District Court Decision 2016Guhap24008 Decided February 3, 2017

November 2017, 24

January 12, 2018

1. Of the judgment of the first instance, the part of the judgment that exceeds KRW 141,100,932 among the imposition disposition of KRW 159,138,50 (including additional tax) of the gift tax on September 2, 2011 shall be revoked.

2. The plaintiff's remaining appeal is dismissed.

3. 9/10 of the total litigation costs is assessed against the Plaintiff, and the remainder is assessed against the Defendant, respectively.

The judgment of the first instance is revoked. Each imposition of KRW 870,69,560 (including additional taxes) on the Plaintiff on October 6, 2015 and KRW 159,138,50 (including additional taxes) on the gift tax on September 2, 201, which was made by the Defendant against the Plaintiff on October 6, 201, shall be revoked.

1. Details of the disposition;

The reasoning for this part of this Court is as stated in Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act, since the reasoning for this part is the same as that of the judgment of the court of first instance.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The reasoning for this part is that the court is unlawful as a re-audit that is conducted even if the tax investigation of the shares of this case does not fall under the exceptional reasons under Article 81-4(2) of the Framework Act on National Taxes (amended by Act No. 13552, Dec. 15, 2015; hereinafter referred to as "the Framework Act on National Taxes"), and the tax investigation of shares of this case does not fall under the object of tax investigation under Article 81-6(3) of the Framework Act on National Taxes and is illegal as a tax investigation that fails to notify the extension of the scope of tax investigation under Article 81-9 of the Framework Act on National Taxes under Article 81-6(3) of the Framework Act on National Taxes under Chapter 4, Chapter 4, Chapter 4, Section 8, Section 4, Section 4 of the judgment of the court of first instance, which applies the provision on deemed donation of title trust property for transfer of shares of this case and imposes an unfair non-declaration tax return even after applying the provision on deemed donation of the shares of this case.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Determination as to the first proposal

The reasoning for this part is as follows, except for the addition of the judgment below to the 6th sentence of the judgment of the court of first instance, the corresponding part of the judgment of the court of first instance is identical to the corresponding part of the judgment of the court of first instance (No. 4, No. 13, No. 6, No. 12 of the judgment of the court of first instance). Thus, this part is cited as it is in accordance with Article 8

The respective statements in Gap evidence Nos. 2 through 8, Gap evidence Nos. 11, 12, 13, 14, 16, 17, and 18, and testimony by the witness of the court at the trial alone are insufficient to recognize that there was a clear purpose to divide the shares in appearance with respect to the list on the B KOSDAQ in the title trust of the stocks of this case to the extent that the purpose of tax avoidance was not found in the title trust of the stocks of this case, and that there was no tax to be avoided at the time of the title trust or in the future, or that there was no other evidence to prove otherwise.

Rather, in light of the following circumstances, each of the above evidence, Gap evidence Nos. 2, 15, Eul evidence Nos. 2, 3, and 4, and the purport of the entire pleadings, it is difficult to deem that the title trust of the first and second shares of this case aims to adjust the shares of related companies for listing on the KOSDAQ, or there was no tax to be avoided in the future at the time of the title trust.

① On the premise that related companies are directly traded with B, most of the related sales depend on B, and that B is likely to cause losses and benefits with B, such as holding concurrent offices by related officers, the resolution of transaction problems between related officers, merger between related companies, liquidation, and incorporation is presented as advisory opinions on the improvement of governance structure through holding concurrent offices by related officers, the related companies, and the incorporation.

② Even when the requirement for share distribution is met at the time of filing a request for review on KOSDAQ-listed registration, and even when E and F have to divide shares into shares to a third party, it is difficult for E and F to find a special reason for the title trust to adjust the shares of the Plaintiff, which is merely a related company’s shares, to the Plaintiff, which is a son of F, which is a son of E’s own shares. The title trust act of the first and second shares in this case goes against the purport of the requirement for share distribution for listing on KOSDAQ, and it is difficult to view it as an inevitable option to meet such requirement.

(3) Although there are the purpose of adjusting the shares of related companies for listing B on KOSDAQ, E and F did not adjust the shares in their names with respect to K and L, which are related companies in B.

④ If there were such purposes, it is difficult to explain the timing to prepare the report on the actual inspection of G Co., Ltd. and the timing to transfer each of the instant 1 and 2 shares.

⑤ In the end of the business year 2009, B distributed 2 billion won at the dividend rate of 50 billion won, even though cash 9 billion won and short-term 21.6 billion won in the financial statements, C distributed dividends of 200 billion won at the dividend rate of 2010, 2011, and 2012 each amount of dividend income of 3.2 billion won, 3.5 billion won, and 2 billion won, respectively, could have been avoided the progressive income tax on dividend income. Since C et al. was preparing to list B’s KOSDAQ, E et al. also avoided global income tax (dividend income) 148 billion as a title trust with a third party. The purpose of the six tax avoidance is not to determine not only as at the time of title trust but also as at the time of actual evasion of tax evasion. Moreover, the actual owner is not entitled to avoid the application of the provision on gift to himself/herself as long as there is no objective of tax avoidance by the nominal owner.

Even if E and F entrusted the Plaintiff with the instant shares Nos. 1 and 2 for the purpose of listing them on the KOSDAQ, in light of the fact that C and D’s related companies will also enjoy anti-private interests, such as expansion of business scale, etc., due to the listing on the KOSDAQ of B, it is difficult to conclude that E and F did not have any tax avoidance purpose, such as making a convenient advance donation and reducing the burden of global income tax, other than for listing on the KOSDAQ, for the purpose of title trust with the instant shares Nos. 1 and 2.

Ultimately, in light of the fact that there is no objective and objective evidence to acknowledge that the title trust of the instant shares Nos. 1 and 2 was made by a clear purpose, other than the purpose of tax avoidance, and there is no evidence as to the absence of tax avoidance at the time of the title trust, and the relationship between the Plaintiff, E, and F, etc., it is difficult to readily conclude that E and F did not have any purpose of tax avoidance, such as a convenient prior donation while title trust of the instant shares Nos. 1 and 2 with the intention of reducing disadvantages or the burden of global income tax, which is one of the oligopolistic shareholders, under tax law, and there is no other evidence to

2) Determination on the second proposal

(A) Determination as to the illegality of tax investigation on the transfer of 1 shares of this case

According to the facts stated in Gap 2, 10, 11, 15, and Eul evidence No. 2, 3, and 4, the head of Mapo Tax Office confirmed the documents on the change of shares to C, and notified the defendant that the transfer of shares of this case constitutes donation of profits arising from low-price transfer between related parties under the Inheritance Tax and Gift Tax Act (amended by Act No. 11130, Dec. 31, 201). Accordingly, the defendant imposed KRW 45,924,290 on September 9, 2013 on the ground that the transfer of shares of this case constitutes donation of profits arising from low-price transfer between related parties, and thus, it is difficult to view that the pertinent investigation was conducted by the Director of the Tax Tribunal based on the plaintiff's request for tax review on the above taxation disposition, and that it constitutes an investigation of transfer of shares of this case based on the confirmation of the facts that the transfer of shares was conducted by the plaintiff 1 and the plaintiff 1 was subject to the investigation of transfer of shares of this case.

Meanwhile, the reason for the selection of a person subject to tax investigation under Article 81-6 (3) 4 of the Framework Act on National Taxes refers to the case where there is clear evidence to acknowledge the suspicion of omission or error in the contents of the report. The above purport of the judgment is that the fact confirmation by J, E and the plaintiff's factual confirmation, the statement of the same purport, and the judgment by the Tax Tribunal that the transfer of shares No. 1 of this case constitutes title trust is a case where the possibility of omission or error is recognized to a considerable extent based on material supporting objectivity and rationality. Thus, there is no illegality in the Plaintiff's selection of a person subject to tax investigation.

The plaintiff's above assertion is without merit.

(B) Determination as to the illegality of tax investigation on the transfer of 2 shares of this case

Article 81-6(3) of the Framework Act on National Taxes provides that "tax officials may conduct a tax investigation in any of the following cases, and subparagraph 4 provides that "where there are evident data to prove a suspicion of omission or error in the details of a return," subparagraph 4 provides that "where there are evident data to prove a suspicion of omission or error in the details of a return," the term "where there are evident data to prove a suspicion of omission or error in the details of a return," refers to cases where a report is recognized to a considerable extent of probability based on data to support objectivity and rationality (see Supreme Court Decisions 2008Du10461, Dec. 23, 2010; 2010Du19294, Nov. 29, 2012; 2016Du34387, Jul. 7, 2016).

As seen earlier, in light of the fact confirmation by J, E and the Plaintiff’s factual confirmation, and the statement of the same purport, the relationship between C and D, the relationship between the Plaintiff, E and F, the Plaintiff’s age at the time, wage and salary income status, occupation, etc. as a result of the inquiry by the Tax Tribunal that the transfer of the instant 1 shares constitutes title trust, the instant 2 shares under the Plaintiff’s name is highly likely to constitute title trust. As such, it is difficult to deem that there is any illegality in the selection of a person subject to tax investigation, since there is a considerable probability of omission or error in the report to the extent that it is recognized based on material supporting objectivity and rationality.

On the other hand, gift tax is a tax item that is determined by the investigation by the tax authority, and is subject to the investigation under Article 81-6 (4) of the Framework Act on National Taxes, and according to Article 81-6 (1) of the evidence No. 10-1 of the same Act, the head of Busan Regional Tax Office did not notify the Plaintiff of the tax investigation

The plaintiff's above assertion is without merit.

3) Determination as to the third proposal

The reasoning for this part of the judgment of the court of first instance is the same as that of the corresponding part of the judgment of the court of first instance (Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

4) Determination as to Section 4

The legislative intent of Articles 47-2(2)1 and 47-3(2)1 of the former Framework Act on National Taxes and Article 27(2)6 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 23592, Feb. 2, 2012; hereinafter the same shall apply) is to impose heavy sanctions on taxpayers who violate their duty to report tax base or tax amount by unlawful means, inasmuch as it is difficult for the tax authorities to discover facts that constitute the basis for calculating national tax base or tax amount or to exercise their rights of imposition, and thus, it is difficult for them to impose heavy sanctions on taxpayers who violate their duty to report tax base or tax amount by unlawful means. Therefore, “any other fraudulent act” refers to a fraudulent act that makes it impossible or considerably difficult to impose and collect taxes, or a false act that leads to a false representation in the name of taxpayers, or a false representation in the name of taxpayers or other fraudulent act that does not constitute a false representation in the name of tax evasion or reporting.

In relation to the title trust of shares No. 1 in this case, the facts acknowledged in accordance with the purport of each entry and all pleadings as stated in the evidence No. 2 and 15 in the above facts and the purport of the whole pleadings, and E, in the process of transferring the shares No. 1 in the Plaintiff’s name, made the Plaintiff open a new passbook in the name of the Plaintiff, and deposited the transfer price in cash on the date on which the passbook is opened, but transferred the transfer price at several minutes at a certain intervals. In light of the fact that the transfer price of shares was prepared according to the external appearance of the title trust and submitted a copy at the time of reporting the transfer income tax and securities transaction tax of E, the title trust of shares No. 1 in this case exceeding the acts incidental to the title trust act, thereby concealing and inducing the fact that E and the Plaintiff were unable to impose and collect gift tax pursuant to the deemed donation

Therefore, the title trust of the 1st stock was derived from a simple prior donation, the purpose of avoiding the burden of global income tax, which is disadvantageous or progressive under the tax law as an oligopolistic shareholder, and furthermore, the tax base was not reported through active acts, such as the preparation of a false contract and the false payment of the price, and the subsequent tax return. Therefore, the imposition of unfair non-declaration penalty tax on this portion is lawful.

The plaintiff's assertion on this is without merit.

Meanwhile, in relation to the title trust of shares No. 2, No. 2, 15, and No. 2, 3, and 4 of the instant case, there is insufficient evidence to acknowledge the special circumstances that the Plaintiff committed active acts, such as the Plaintiff’s preparation of a false contract and false payment of the price, false tax return to the tax authority, false registration and registration, and preparation and keeping of a false account book, in addition to the acts accompanying the title trust and the title trust of shares No. 2, and there is no other evidence to acknowledge the same. Furthermore, in imposing gift tax on the title trust of shares No. 2 in the instant case on the gift tax related to the title trust of shares No. 2 in the instant case, the legitimate tax amount calculated by applying the rate of ordinary non-declaration penalty tax (20%) to the Plaintiff is as follows.

(unit: Won)

A person shall be appointed.

The plaintiff's above assertion is justified within the scope of recognition, and the remainder is without merit.

3. Conclusion

Therefore, the plaintiff's claim of this case is accepted within the scope of the above recognition, and the remaining claims are dismissed as without merit. Since the judgment of the court of first instance partially differs from this conclusion, the plaintiff's appeal is accepted in part, and the part of the judgment of the court of first instance against the plaintiff, which exceeds 141,100,932 won among the disposition of imposition of gift tax of September 2, 201, the defendant in the judgment of first instance (including additional tax) of KRW 159,138,50 (including additional tax) of gift tax of September 2, 2011, shall be revoked, and

Judges of the presiding judge, Gimcheoncheon

Judges Yang Sung-won

Judges Cho Sung-sung