Seoul High Court 2010Nu4305 (Law No. 15, 2011)

Cho High Court Decision 2010Du056 (2010.04.07)

If there was an intention of tax avoidance as well as other main purpose, the gift tax is legitimate.

In light of the legislative intent of the provision on deemed donation of title trust, it is impossible to apply the proviso only when the purpose of title trust is not included in the purpose of tax avoidance, and thus, it cannot be deemed that there was an intention of tax avoidance in addition to the other main purpose.

2011Du15794 Revocation of Disposition of Gift Tax Imposition

United StatesA

Samsung Head of Samsung Tax Office

Seoul High Court Decision 2010Nu43305 Decided June 15, 2011

May 9, 2012

All appeals are dismissed.

The costs of appeal are assessed against the plaintiffs.

The grounds of appeal are examined.

The legislative intent of Article 43(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 5582 of Dec. 28, 1998) is to recognize an exception to the substance over form principle in the purport that the act of tax avoidance using the title trust system is effectively prevented, thereby realizing the tax justice. Thus, if the title trust was recognized as having been conducted for any reason other than the purpose of tax avoidance, and it is only a minor reduction of tax incidental to the said title trust, it cannot be readily concluded that there was a "tax avoidance purpose" in such title trust. However, in light of the above legislative intent, it cannot be said that there was no purpose of tax avoidance if the purpose of the title trust is not included in the purpose of tax avoidance. In addition, the burden of proving that there was no purpose of tax avoidance does not exist any intent of tax avoidance. In light of the legal principles as to the deemed donation of stocks and the records of the judgment below, the court below did not err in the misapprehension of legal principles as alleged in the ground for appeal.