Seoul High Court Decision 2013 Deputy 4863

The disposition imposing the gift tax by deeming that the shares at issue are acquired at a low price shall be deemed legitimate.

Although the disposal agency claims that there is no gift benefit due to a fall in the value of shares, it is not erroneous in the disposal of this case which the disposal agency assessed the value of the shares at the market price on the evaluation base date (donation date

Article 39 of the Inheritance Tax and Gift Tax Act

2014Guhap1940 Revocation of Disposition of Imposition of Gift Tax

The AA

00. Head of tax office

April 9, 2015

May 7, 2014

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The Defendant’s disposition of imposing gift tax of KRW 00,000,000 (including penalty tax) against the Plaintiff on October 0, 000 shall be revoked.

1. Details of the disposition;

(a) Paid-in capital increase by A○;

1) On October 0, 000, AO○ Co., Ltd., a listed corporation, intended to take over an amount equivalent to 24% of the shares of the limited liability company ○○○○○○, a Russia, in order to enter into development projects, including genetic exploration and extraction, and publicly announced capital increase with a view to raising the acquisition fund.

(2) After October 0, 200 to October 00, 200, AOO made a public notice of the decision to issue new shares more than nine times. On October 0, 200, a third party to the Financial Supervisory Commission's allocation to a third party is merely 49 persons and thus, it was finally cancelled on August 3, 2007, Article 2 (3) of the former Securities and Exchange Act (amended by Presidential Decree No. 20947 of July 29, 2008) and Article 2-4 (1) and (3) of the former Enforcement Decree of the Securities and Exchange Act (amended by Presidential Decree No. 20947 of July 29, 200; hereinafter referred to as "former Enforcement Decree of the Securities and Exchange Act") and the Plaintiff's offering of new shares does not fall under the method of offering new shares pursuant to Article 2-4 (4) or the deemed offering of new shares. After that, the OOO finally withdrawn the Plaintiff's offering of new shares and its shares.

(1) After examining the change of shares from October 0, 200 to October 0, 200, the Director of the Regional Tax Office: (a) the Defendant was not a public offering of new shares; (b) the Plaintiff received 00% of the total amount of 00 won per share of 00,000 won per share of 00,000 won per share of 00,000 won per share of 10,000,000 won per share of 10,000,000 won per share of 1,00,000 won per share of 1,00,000 won per share of 1,00,000 won per share of 1,00,000 won per share of 1,00,00 won per share of 1,00,000 won per share of 30,000 won per share of 1,000 won per share of 1,000.

3) On October 0, 000, the Plaintiff appealed against the instant disposition, and filed a lawsuit of this case on October 0, 000 with the Tax Tribunal, but the decision of dismissal was made on October 00, 00, and on October 0, 000.

[Reasons for Recognition] Unsatisfy, Gap evidence 1 to 3, Eul evidence 1 and 2 (including each number),

(9) The purport of the whole pleading

2. Relevant statutes;

It is as shown in the attached Form.

3. Facts of recognition;

(a) The details and documents to be disclosed to the electronic disclosure system of the Financial Supervisory Service for AO○ persons who have raised the reasons for the award are as follows:

B. On October 0, 000, the Financial Supervisory Commission submitted a withdrawal statement of the securities registration statement stating that "The Party shall hold a board of directors on October 0, 000 with respect to the decision of capital increase with new stocks publicly announced on October 0, 000 and decided to accept the entire number of stocks allocated to the Korea Securities Depository for one year. Accordingly, it shall withdraw the submission of the securities registration statement."

C. The attached third party allotment method states that "the number of persons to be assigned" is 00 persons or more, but the number of persons to be assigned shall be excluded from the number of allotted persons, including DoD, the largest E, NaF, the formerG, the person in a special relationship, H and all Section II."

D. The leJ, which participated in the issue of new shares increase and received shares allocated, on October 0, 000.

In the examination, the following statements were made:

E. Attorneys Choi K-soo, who participated in the issue of this case’s offering of new stocks, on October 0, 000 as follows:

The certificate was submitted.

(f) The particulars of public announcement on the par value split of a h○ share are as follows:

G. The following are the details of the change in the market price before issuing new shares to the Korea Exchange.

H. The ○○’s share price was formed in the line of approximately KRW 0,000 for one year after the date of the instant capital increase increase, and around October, 000, it was urgent for the Prosecutor’s office to make a public announcement of the commencement of an investigation into the previous DD, and was formed between KRW 0,000 and KRW 0,000, which is the date of the cancellation of the honorable deposit.

4. Determination on the legitimacy of the instant disposition

(a) Evaluation of donated benefits on the basis of the time when stocks can be disposed of after the lapse of the period of safekeeping;

whether it is necessary or not

1) The plaintiff's assertion

Although the time when the Plaintiff acquired the instant shares was set on October 00, 00, and since the period of the instant shares was set for one year, the Plaintiff could dispose of the instant shares only after the lapse of the period of the said period of the instant shares. Therefore, as of October 00, 000, when the said period of the instant shares was exceeded, the Plaintiff should calculate the value of the instant shares as of October 00, when the said period of the instant shares was exceeded, and determine whether to impose gift tax according to the gains actually acquired by the Plaintiff. As such, it is unreasonable to impose gift tax on the Plaintiff, since the Plaintiff did not have any profit even after disposing of the instant shares as of October 0, 000 because the value of the instant shares reduced as of October 0, 00.

2) Determination

With respect to the shares of this case, the period of safekeeping was set for one year from October 0, 000 to October 00, 000, and the fact that the price of the shares of this case fell due to the Domination of the period of safekeeping and the immediately preceding prosecutor's office's announcement of the commencement of investigation into the whole DD, etc. is as seen earlier.

However, the following circumstances revealed in light of the contents of the relevant laws and regulations and the above facts, i.e., Article 29(4) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act explicitly provides that "the calculation of profits under paragraph (3) of the same Article shall be based on the payment date of the share price," and Article 423 of the Commercial Act provides that "the underwriter of new shares shall have the rights and obligations of shareholders from the day following the due date of payment when he/she performs the payment or the contribution in kind." Thus, the plaintiff becomes a shareholder of ASEAN before the due date of the share price payment and also acquired the right to receive dividends, the right to receive residual assets at the time of liquidation, etc., as well as the right to receive dividends, and (3) even if the period set for protection of the shares acquired by the plaintiff was limited to the restriction on the disposal of new shares under an agreement between the plaintiff and ASEAN, and the effect of the acquisition of shares is derived from the payment of the share price." Even if the plaintiff did not actually obtain any benefits from the disposition of this case after the decline of the shares.

Therefore, the plaintiff's above assertion is not accepted.

B. As to the method of calculating gift tax

1) The plaintiff's assertion

The following errors are made in the calculation method of the Defendant’s gift tax.

(1) The date of determination of share price and the date of payment of share price shall be determined strictly at different times.

The share price to be paid by the Plaintiff is determined prior to the payment date of the share price, and the Plaintiff cannot be expected to pay the share price as of the payment date of the share price. Nevertheless, it is unreasonable for the Defendant to regard the payment date of the share price as the donation date and impose tax on the basis of

② Under Articles 39(1), 60, and 63 of the former Inheritance Tax and Gift Tax Act, in order to calculate the gift tax following the increase of capital, the average per share price shall be calculated on the basis of the date of donation by averaging the changes in stock prices before and after the date of donation, and the tax base shall be calculated by multiplying the donated shares. However, the Defendant arbitrarily calculated the average share price on the basis of the value on the day before the payment date of share capital.

③ At the time of the issuance of the instant shares to the Plaintiff, ○○ issued the instant shares at a discount of 9.94% from the standard market price, which is within a reasonable scope, as the amount of KRW 91,00,000 below the market price. Therefore, it does not constitute “the case where the instant shares are issued at a price lower than the market price under Article 39(1)1

2) Determination

A) Article 29(4) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act explicitly provides that the calculation of profits arising from the increase in the capital under Article 39(1) of the former Inheritance Tax and Gift Tax Act shall be based on the "payment date of the share price", and the said provision shall not be deemed null and void against the Constitution and the mother law.

B) Meanwhile, Article 39(1)1 (c) of the former Inheritance Tax and Gift Tax Act provides that "in case where a corporation issues new stocks at a price lower than the market price, a person who is not the shareholder of the relevant corporation obtains a benefit by directly receiving the allocation of new stocks from the relevant corporation, the amount equivalent to such benefit shall be deemed to have been donated." Article 29(3)1 and (4) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that the benefit is calculated on the basis of the payment date of the purchase price of stocks [the appraised value per share before the capital increase 】 (the appraised value per share before the capital increase x the total number of new stocks issued x the number of stocks increased by the capital increase + the number of new stocks increased by the capital increase)] ± (the value calculated on the basis of the formula of "the total number of issued stocks before the capital increase ＋ the acquisition price per new stocks)" calculated on the basis of the

However, Article 63 (1) 1 (a) of the former Inheritance Tax and Gift Tax Act provides that the method of appraisal of stocks of listed corporations shall be the average of the closing price of the Korea Exchange every two months before and after the evaluation base date, and that the method of appraisal of stocks of listed corporations shall be the average market price of securities from the date two months before and after the evaluation base date if it is inappropriate to be based on the average amount due to a cause such as capital increase or merger, etc. during two months before and after the evaluation base date, the average amount of the period calculated as prescribed by the Presidential Decree during the two months before and after the evaluation base date, and Article 52-2 (2) 2 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that where a cause such as capital increase or merger occurs after the evaluation base date, the average amount of the period shall be deemed the market price of securities from the date two months before and after the evaluation base date until the date preceding the evaluation base date if a cause such as capital increase, merger, etc. occurs after the evaluation base date.

In the event of a capital increase or merger after the appraisal base date, the assessment price of listed stocks should be calculated differently based on the appraisal base date, considering the fact that there is a change in the price of new stocks when new stocks are issued due to such reasons as capital increase or merger, and that the reasons such as capital increase or merger have a significant impact on the formation of the future stock price.

In this case, the "amount split" refers to the increase of the total number of outstanding shares by dividing the existing shares at a certain rate without any increase or decrease in the capital. The par value split means the increase of the total number of outstanding shares without any increase or decrease in the capital. In this case, it is conducted when the market price of a certain shares is so high that a transaction of shares is low or it is difficult to issue new shares. In such a case, it is possible to promote the transaction of shares by lowering the price per share through par value split, and if it is done normally, the actual increase in the share price would result in the increase. ② The proviso of Article 63 (1) 1 (a) of the former Inheritance Tax and Gift Tax Act is to promote a balance in the evaluation due to the price fluctuation of shares, and it is not appropriate to regard the same price after the split as above. ③ According to the General Rule of the Inheritance Tax and Gift Tax Act (63-02), it is reasonable to interpret the proviso of Article 63 (1) of the former Inheritance Tax and Gift Tax Act, including the increase or decrease of shares.

Therefore, given that the issue of this case’s capital increase or merger occurred after the date of capital increase, the appraised value per share before the capital increase shall be calculated from October 0, 000, which is the first transaction day after the capital increase (the base date of appraisal under Article 29(4) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act) to the day immediately before the payment date of the share capital, by applying Article 52-2 subparag. 3 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act. However, since the day immediately before October 00, 00, which is the payment date of share capital, is a legal holiday ( October 00, 190), it is reasonable to view that the payment date of share capital to be calculated as the assessed amount per share before the capital increase, which is the closing date of the Korea Exchange on October 00, 00, and ultimately, it is reasonable to deem that the issue of this case’s capital increase is a case lower than the market value before the capital increase.

C) However, the instant disposition is calculated by the same method as seen in the relevant laws and regulations, and it cannot be deemed that there was any illegality in calculating the gift tax, and thus, the Plaintiff’s above assertion is rejected.

C. Whether the offering of new shares constitutes a public offering of new shares

1) The plaintiff's assertion

The securities registration statement attempted to be issued cannot be deemed as a gift tax assessment standard for the subscription at the time of the instant offering of new shares (the claim is based on the method of offering new shares, and thus the gift tax shall not be imposed pursuant to Article 39(1) of the former Inheritance Tax and Gift Tax Act).

2) Determination

A) Article 39(1) of the former Inheritance Tax and Gift Tax Act provides that gift tax shall not be levied on capital increase issued by issuing new shares to a third party under Article 2(3) of the Securities and Exchange Act.

In light of the fact that a listed corporation issues new shares in accordance with the method of public offering of new shares under the Securities and Exchange Act, the issuance price should be determined at a close price to the price formed on the securities market, etc. In addition, considering the fact that it is inevitable for the listed corporation to raise funds through public offering of new shares on the securities market, etc., there is no exception to imposing gift tax on the new shares even if the purchaser gains profits by issuing new shares in accordance with the method of public offering of new shares under the Securities and Exchange Act.

However, there is no difference from the general public offering stipulated in Article 2-4 (1) of the former Enforcement Decree of the Securities and Exchange Act in that deemed public offering under Article 2-4 (4) of the former Enforcement Decree of the Securities and Exchange Act is subject to various regulations on the procedures for issuing new shares and the issue price thereof. In addition, in light of the language and contents, structure, etc. of Article 2(3) of the former Securities and Exchange Act and Article 2-4 of the former Enforcement Decree of the Securities and Exchange Act, Article 2-4 of the former Enforcement Decree of the Securities and Exchange Act can be interpreted as a provision for deemed public offering

In full view of these points, the term "public offering method of securities" under the General Securities and Exchange Act includes the deemed public offering method under Article 2-4 (4) of the former Enforcement Decree of the Securities and Exchange Act (see Supreme Court Decision 2012Du25712, Feb. 27, 2014).

Meanwhile, Article 8 (1) of the former Securities and Exchange Act provides that where the total amount of public offering or sale of securities exceeds a certain amount, a public offering or sale of securities shall not be made unless an issuer files a report with the Financial Supervisory Commission about the securities in question, and Article 10 (1) of the former Securities and Exchange Act provides that the issuer, seller, and his agent shall not accept the offer in case of an offering to acquire or purchase securities for which the registration of securities has not taken effect.

B) We review the instant case: (a) ○○ was released from the securities registration statement for public offering; (b) it appears that the method of public offering was abolished; (c) ○○ was subject to the measures of public offering; (d) there was no sanction for failing to comply with the obligation to report on public offering by the Financial Supervisory Commission; and (c) it is possible to invite subscription through public offering only after submitting a securities registration statement and accepting it by the Financial Supervisory Commission; (d) in order to constitute a public offering method, the solicitation of public offering cannot be deemed as an offering of new shares by means of public offering; and (d) in order to constitute a distribution through public offering method, it is necessary to inform or inform a specific person of the fact that it issued or sold securities by means of newspapers, broadcasting, magazines, or electronic communications, etc.; (e) there was no evidence that ○○ implemented the above procedures; and (e) there was no reason to view that ○○’s participation in the public offering of new shares in the public offering of new shares in the first place in the public offering of new shares.

C) Therefore, we cannot accept the Plaintiff’s above assertion.

D. Whether the imposition of additional tax is justifiable

1) The plaintiff's assertion

Since the Plaintiff cannot be deemed to have any cause attributable to the Plaintiff regarding the failure to pay gift tax on the shares of this case, imposing penalty tax is unreasonable.

2) Determination

In order to facilitate the exercise of taxation rights and the realization of tax claims under the tax law, penalty taxes are administrative sanctions imposed by a taxpayer who violates the reporting and tax liability prescribed by the Act without justifiable grounds, and the taxpayer’s intent and negligence is not considered, and the land or mistake of the statute does not constitute justifiable grounds (see, e.g., Supreme Court Decision 2013Du1829, May 23, 2013).

In light of the following: (a) the Plaintiff is deemed to have been donated by acquiring the instant shares; (b) the Plaintiff is obligated to report and pay gift tax; (c) Article 29(4) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act explicitly prescribes the standard date of appraisal as the payment date of shares with respect to the donation of profits arising from the increase in capital; and (c) shareholder changes can be easily confirmed as data for the public disclosure system of the Financial Supervisory Service and can not be seen as impeding the Plaintiff’s performance of tax liability; (d) in this case, it cannot be deemed objectively unreasonable to expect the Plaintiff to fulfill his obligation to report and pay gift tax; and (e) the Plaintiff’s failure to perform his obligation to report and pay gift tax is merely due to the fact that it is merely a site or mistake under the relevant Act and subordinate statutes, and thus,

Therefore, the plaintiff's above assertion cannot be accepted.

6. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit. It is so ordered as per Disposition.

shall be ruled.