Cho-2015-Divisions-1075 (Law No. 16, 28 March 2016)

Since the fact of stock title trust is recognized and there is the purpose of tax avoidance, it constitutes the legal fiction of donation of title trust property.

There is no evidence to prove that the stock trust agreement was acquired by the unilateral act of the real owner regardless of the intent of the nominal owner. Since there is a possibility that the company may not be held liable for secondary liability for tax payment due to the company’s tax liability due to the company’s default on tax liability by lowering the shares in the shares issued by the company, it falls under the agenda for donation of title trust property.

The legal fiction of donation of title trust property under Article 45-2 of the former Inheritance Tax and Gift Tax Act; evaluation of non-listed stocks under Article 54 of the former Enforcement Decree of the Inheritance Tax

2016Guhap5796 Revocation of Disposition of Imposition of Gift Tax

Maximum 00

000 director of the tax office

December 15, 2016

January 12, 2017

1. The plaintiff's claim is dismissed.

2. The costs of litigation shall be borne by the plaintiff.

Cheong-gu Office

The Defendant’s taxation disposition of KRW 00,000,000, which was imposed on the Plaintiff on November 1, 2014 (see, e.g., Supreme Court Decision 2000,000,000,000, the gift tax of KRW 00,000,000, the gift tax of KRW 200,000, the gift tax of KRW 200,000,00, which was reverted to the year 2010, is revoked.

1. Details of the disposition;

A. On February 28, 2001, the Plaintiff, a non-listed corporation, was appointed as a director for ○ Company (hereinafter “non-listed corporation”) and worked for the non-party company from that time.

B. On June 23, 2010, the rightA, the representative director of the non-party company, transferred 00,000 shares of the non-party company in its name to the Plaintiff. On July 12, 2010, the transfer income tax was reported by stating the transfer value of KRW 00,000,000,000. The director of the △△△△ Regional Tax Office assessed the value of the above shares as KRW 00,000 per share by supplementary assessment methods under the Inheritance Tax and Gift Tax Act. On May 7, 2014, the Plaintiff imposed gift tax of KRW 00,000 per share on the Plaintiff.

C. Accordingly, according to the results of the re-audit conducted by the Defendant with the head of △△ Regional Tax Office after filing an objection, the fact was confirmed that the Plaintiff purchased 0,000 shares from the wife B of the European District Court on December 20, 2004 (hereinafter referred to as "first acquisition"), acquired 0,000 shares with capital increase with consideration on January 24, 2006 (hereinafter referred to as "second acquisition"), and purchased 00,000 shares from the TitleA (hereinafter referred to as "third acquisition") on June 23, 2010, and each of the above shares (hereinafter referred to as "the shares in this case").

D. The defendant determined that the actual owner of the shares of this case, as the representative director of the non-party company, held the title trust of the shares of this case through the acquisition of title No. 1 to 3 acquired the above shares of this case, and held that the actual owner of the shares of this case was 1 and 2 acquired under Article 45-2(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; 10% at the time of appraisal of shares pursuant to Article 63(3)); for the third acquisition, before the amendment by Act No. 11130, Dec. 31, 201; hereinafter the above provisions of the former Inheritance Tax and Gift Tax Act (amended by Act No. 11130, Dec. 31, 201; hereinafter referred to as "former Inheritance Tax and Gift Tax Act"), each of the above shares was 00 won for each of the above shares acquired as a supplementary gift under the former Inheritance Tax and Gift Tax Act; 0000 won for each of 100 years (5000 million won).

E. The Plaintiff appealed against the Defendant, but the Defendant dismissed the Plaintiff’s objection on December 24, 2014. The Plaintiff filed an appeal with the Tax Tribunal, but the Tax Tribunal dismissed the Plaintiff’s appeal on March 28, 2016.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1, 2, 10, Eul evidence Nos. 1, 2, 3, 7 through 10 (including serial number, hereinafter the same shall apply) and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) Non-existence of title trust agreement

The plaintiff was not involved in the first and second acquisition, and was not aware of the fact that shares were transferred or shares issued.

2) Non-existence of tax avoidance purpose

The plaintiff, as an employee of the non-party company, could not refuse the request of the competent AA, which is an employer, and thereby acquired the third party in form. The third acquisition purpose was to divide the shares in order to obtain good reputation from the upper contracting authority in the external credit assessment of the non-party company, and there was no purpose of tax avoidance.

(iii) an excessive appraisal of stock value;

In the accounts of the non-party company, there is no substance that does not include any item created under the pretext of a window dressing accounting, and in fact the non-party company loans money to the IC to the IC, or to the IC.

It does not have a claim for provisional payments. Furthermore, since the ICE does not have a self-sufficiency and thus it is impossible to recover the above provisional payments, it should not evaluate the item of provisional payments as included in the assets of the non-party company.

Nevertheless, in calculating the stock value of the non-party company, the defendant did not exclude the provisional payment of the rightA in the calculation of the stock value of the non-party company and assessed the share value excessively.

4) Violation of 10% of 10% of 1 acquisition

Article 63 (3) of the former Inheritance Tax and Gift Tax Act provides that when the controlling shareholder donates shares, the management premium should be reflected in the value of shares. Since the first acquisition is irrelevant to the acquisition of the management right, it is illegal to apply the above provision.

5) The illegality on which the donor imposed taxes on the third acquisition by adding up the first and second acquisitions on the third acquisition.

Of the instant disposition, the tax portion on the third acquisition among the instant disposition was imposed by applying the tax rate of the first, second and third acquisition by applying the premium of the second donation to be applied to the case of donation made by the same donor. Since the first, second and third acquisitions are different from the donor, it is unlawful to apply the provisions on the premium of the second donation to cumulative taxation by applying the tax rate

B. Relevant statutes

It is as shown in the attached Form.

C. Facts of recognition

1) Status of holding the shares of the non-party company

(Omission of List)

The rightCC is the dynamics of the AA, and the BB is both the wife of the AA and all the relatives of the AA.

2) The defendant assessed the net value per share of the non-party company and the net asset value per share of the non-party company on the basis of the standard balance sheet of the non-party company for three years prior to each acquisition, and calculated the appraised value and market value per share of the stocks of this case on the basis of these values. The specific contents are as follows.

(Omission of List)

3) The financial status of the non-party company and the competent AA

On March 19, 2015, the non-party company was decided to commence the rehabilitation procedure by the △ District Court (000 Mahap0000) and was decided to discontinue the rehabilitation procedure on July 5, 2016.

From the date of the first disposition to the date of the third disposition, the competent AAE owns 00 00 - 00 - 000 - 000 - 000 - 00 - 00 - 00 - 00 - 00 - 000 - 000 - 000 - 000 - 000 -000 -00 -000 - 0000 - 000 - 000 - 000 - 000 - 000 - 000 - 000 -

[Reasons for Recognition] Facts without a partial dispute, Gap's evidence 10, 13 through 17, Eul's evidence 7 to 10, the witness rightA's testimony, and the purport of the whole pleadings

D. Determination

1) Judgment on the non-existence of a title trust agreement

The provision on deemed donation under Article 45-2 (1) of the former Inheritance Tax and Gift Tax Act shall apply in cases where the actual owner and the nominal owner register in the future of the nominal owner under an agreement or communication with respect to property requiring a registration, etc. for the transfer or exercise of rights. Therefore, in cases where the tax authority unilaterally registers such property in the name of the nominal owner, regardless of the intent of the nominal owner, it may not apply. In such cases, if it proves that the actual owner is different from the nominal owner, the tax authority must prove that the registration, etc., in the name of the nominal owner was made in the unilateral act of the actual owner regardless of the intent of the nominal owner (see, e.g., Supreme Court Decision 200

In light of the following facts: (a) the title holder of the instant shares was the Plaintiff, but the actual owner did not raise any objection to the Plaintiff or the competent authorityA prior to the appeal of the instant case against the fact that the shares were held in title by way of the Plaintiff; (b) the competent authorityA testified that the shares were transferred to the Plaintiff upon request from the Plaintiff with respect to the first acquisition; (c) the Plaintiff appears to allow the use of his name by issuing a seal imprint certificate and a certificate of personal seal impression at the request of the competent authorityA during the non-party company’s employment; and (d) there was no accusation filed by the Plaintiff due to forgery of the authorityA; (b) on the other hand, there is no evidence to prove that the shares held in the Plaintiff’s name were acquired by the unilateral act of the competent authorityA regardless of the Plaintiff’s intent. Therefore, it is reasonable to deem that the shares held in the Plaintiff’s name were held in title trust to the Plaintiff.

Therefore, the plaintiff's above assertion is without merit.

2) Determination on the non-existence of the purpose of tax avoidance

The legislative purport of Article 45-2(1) of the former Inheritance Tax and Gift Tax Act is to recognize an exception to the substance over form principle in the purport of effectively preventing the act of tax avoidance using the title trust system and realizing the tax justice. Thus, the application of the proviso of the same Article is possible only if the purpose of tax avoidance is not included in the purpose of the title trust, and in such a case, the burden of proving that there was no purpose of tax avoidance can be proven by means of proving that there was a purpose other than the purpose of tax avoidance. Therefore, the nominal owner who bears the burden of proving that there was no purpose of tax avoidance may prove that there was a purpose other than the purpose of tax avoidance. However, the nominal owner who bears the burden of proving the burden of proof has obvious objective and unrelated to the tax avoidance to the extent that there was no purpose of tax avoidance in the title trust, and that there was no tax avoidance at the time of the title trust or in the future, based on objective and conclusive evidence, to the extent that it does not have any doubt (see, e.g.,

In this case, it is not sufficient to acknowledge that the authorityA had a clear other purpose than the tax avoidance in title trust of the shares of this case with the testimony of the witness 4 and 5 Eul alone, and there is no other evidence to acknowledge otherwise. ① The shares of the authorityA and relatives are 00,000 shares in total and 53% of the total number of shares issued by the non-party company (hereinafter the same shall apply), which are 00,000 shares in the non-party company as of the end of 2004, and the shares of the non-party company and relatives are 45% of the total number of shares issued by the non-party company since the first acquisition is merely 0,50 shares in total, which are 0,000 shares in the non-party company's 20,000 shares in the non-party company as of the end of 206, the total number of shares issued by the non-party company is 60% of the total number of shares held by the non-party company.

3) Determination as to the assertion of excess appraisal of stock value

A) Article 60(1) of the former Inheritance Tax and Gift Tax Act provides that the value of the property on which the gift tax is levied shall be based on the market price as of the date of donation (hereinafter referred to as the “date of appraisal”), and Article 60(3) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that where it is difficult to calculate the market price in the application of the above paragraph(1), the value assessed by the methods prescribed in Articles 61 through 65 shall be considered as the market price in consideration of the type, size, transaction circumstances, etc. of the property in question, and where it is difficult to calculate the market price, the value calculated by the method prescribed in Article 60(1)1(c) of the former Inheritance Tax and Gift Tax Act shall be considered as the “market price prescribed in Article 60(1) of the former Inheritance Tax and Gift Tax Act” and Article 63(1)1(c) of the former Enforcement Decree of the former Inheritance Tax and Gift Tax Act shall be appraised by the method prescribed by the Presidential Decree in consideration of the assets and profits, etc. of the corporation in question.

On the other hand, in principle, the burden of proof of net asset value is on the tax authority, and in evaluating the value of unlisted stocks, which are donated property by supplementary evaluation methods, the net asset value of the relevant corporation at the time of donation, which is one of the elements of calculation, cannot be included in the net asset value of the relevant corporation at the time of donation. However, since the impossibility of collection of claims falls under exceptional grounds in the decision of the taxable amount of gift taxes, the burden of proof of such special grounds is on the taxpayer (see, e.g., Supreme Court Decision 2005Du5574, Aug. 23,

On the other hand, the issue of whether it is impossible to recover ought to be objectively determined according to social norms by comprehensively taking into account, in principle, the specific details of assessment as a general rule, the circumstances thereafter, the debtor’s asset status, and payment capacity (see, e.g., Supreme Court Decision 2009Du13160, Sept. 8,

B) First, as to the method of assessing the market price of the instant shares, since the shares of the non-party company were not listed on the Korea Exchange or the Korea Stock Exchange as of the date of acquisition from Nos. 1 to 3, the market price of the instant shares should be assessed by the supplementary assessment method as seen earlier. The Defendant calculated by dividing the weighted average amount of net profit and loss for the last three years as of the base date of appraisal by the method of calculating the weighted average amount of net profit and loss for the instant three years by a certain interest rate, referring to the standard balance sheet of the non-party company. The Defendant calculated by dividing the weighted average amount of profit and loss for the instant three years as of the base date of appraisal by the total amount of net asset value per share by the ratio of 3 to

C) The Plaintiff asserts that the item of the provisional payment amount of ICE, among the net asset value on the standard balance sheet as stated above, should be excluded from the net asset value. Thus, the Plaintiff’s content of the investigation report (Evidence A 12) prepared in the rehabilitation procedure for the non-party company, i.e., the amount of KRW 0,000,000 out of the provisional payment amount of KRW 0,000,000,000 of the ICA’s provisional payment amount of KRW 0,000,000, and there is no supporting document, but the possibility that the provisional payment amount would have been used for any purpose unrelated to the business is false. However, it is insufficient to conclude that the provisional payment claim would have been used for any purpose unrelated to the business of the non-party company, and if the ICA uses the funds for any purpose unrelated to the business of the non-party company, the above provisional payment claim would have an obligation to restore it. Thus, there is no evidence to acknowledge otherwise.

D) In addition, the Plaintiff asserts that the said provisional payment item is an unrecoverable claim on the date of donation. However, in light of the assets of the rightA at the time of the first through third acquisition of this Section, even if the rightA thereafter disposed of all the above property to the family members, it is difficult to view that the rightA was not capable of being self-sufficient as of the date of first through third disposition. Furthermore, since the rightA continues to operate the non-party company and gains profits from the non-party company, it is objectively apparent that the provisional payment against the rightA of the non-party company was impossible as of the date of donation.

E) Therefore, the Plaintiff’s above assertion is without merit.

4) Determination as to the illegality of 10% increase in stock value

According to Article 63(3) of the former Inheritance Tax and Gift Tax Act, stocks, etc. of the largest shareholder or his/her specially related shareholder shall be added to a certain ratio at the time of evaluation of stocks, etc., and according to Articles 53 and 19(2) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 18989, Aug. 5, 2005) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, where stocks, etc. of one shareholder and relatives, etc.

However, at the time of the first disposition, the fact that the ownership of the rights A and his relatives is 53% of the total shares of the non-party company and 45% of the total shares of the non-party company, excluding the shares subject to the first disposition, is the same as seen earlier. Therefore, as to the donation of shares by the rightsA, Article 63(3) of the former Inheritance Tax and Gift Tax Act shall apply, regardless of its purpose, to the donation of shares of the rightsA.

Therefore, the plaintiff's above assertion is without merit.

5) Determination as to the illegality of re-donation of re-donation

In full view of the purport of the entire argument in the testimony of the witness A, it is recognized that the authority A led the actual act of acquiring the shares Nos. 1 and 2, and ① as seen in paragraph (1) of the above Article, the nominal owner of the shares of this case, as seen in paragraph (1) of the above, appears to have not raised any objection by the plaintiff or the rightA before the appeal of this case against the fact that the shares were held in title by the rightA, and ② the plaintiff issued the certificate of seal impression and the certificate of seal impression at the request of the rightA during the non-party company, it is reasonable to view that the title truster for the first and second acquisition is the rightA, and that the plaintiff received all the shares subject to the above acquisition from the rightA in accordance with the deemed donation provision as seen earlier.

In other words, since the acquisition of property Nos. 1 through 3 is all donated by the IC, the disposition of this case is legitimate by adding the value of donated property received from the same person within 10 years prior to the relevant donation date to the taxable value of donated property. Therefore, the plaintiff's above assertion

3. Conclusion

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