Donation to a public-service corporation constitutes grounds for suspending the deferment of the transfer income tax of this case.

Article 38-2 (3) and (2) of the Restriction of Special Taxation Act only provides that "the case of a donation to a holding company or a converted holding company's stocks", and does not limit the donation to a lineal ascendant or descendant, and does not violate the legislative intent of the above provision by failing to limit the interpretation thereof."

2013Guhap63568 Revocation of Disposition of Imposing capital gains tax

Gangwon A

Head of Yongsan Tax Office

May 30, 2014

July 4, 2014

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The imposition of the capital gains tax on the Plaintiff on September 19, 2012 by the Defendant shall be revoked.

1. Details of the disposition;

"(a) (1) The Plaintiff established BB network (trade name after the alteration: BB Holdings; hereinafter referred to as BB Holdings) on July 2, 2001 to convert BB Group into a holding company system. The Plaintiff was granted taxation deferment pursuant to Article 38-2(1) of the Restriction of Special Taxation Act (amended by Act No. 6762, Dec. 11, 2002; hereinafter the same shall apply) against BB Holdings, 3,827,262 shares of BB (hereinafter referred to as “BB”), 15,00 shares of CCC Planning (hereinafter referred to as “CC Planning”), and 2,862,861 shares of BB Holdings from BB Holdings (hereinafter referred to as “OO”).

Contribution in kind

Issuance of New Stocks

Number of stocks (cover value per stock)

Amount of investment

Acquisition Value

Transfer Margin

(Amount of deferred taxation)

Number of stocks (cover value per stock)

Issuance Price

BB

3,827,262 Notes (OOO)

OOOE

OOOE

OOOE

2,854,740 Shares

(OOOO)

OOOE

CC Planning

15,000 Shares

(OOOO)

OOOE

OOOE

OOOE

8,121 note

(OOOO)

OOOE

Total

OOOE

OOOE

OOOE

OOOE

B. (1) On May 8, 2009, the Plaintiff donated 70,000 shares of BB lines to DD Cultural Foundation, a public interest foundation, the president of which is the Plaintiff (former trade name: EEE Foundation; hereinafter “EE Foundation”). The said donation is not subject to gift tax by means of a contribution to the public interest foundation under Article 48(1) of the Inheritance Tax and Gift Tax Act (amended by Act No. 11130, Dec. 31, 2011); (2) The Defendant did not pay gift tax on the ground that it was rejected on the grounds that it was subject to deferred taxation of transfer income tax on the gains from investment in kind if the person who invested in kind for the establishment of the holding company contributed to the holding company in a public interest foundation, the Plaintiff was subject to taxation of transfer income tax under Article 38-2(3) of the Restriction of Special Taxation Act; and Article 35-3(3) of the Enforcement Decree of the said Act (amended by Presidential Decree No. 22181, Jun. 8, 2010). 201).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 6, and 7, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Under the principle of no taxation without law, the interpretation of tax laws shall be interpreted in accordance with the text of the law, barring special circumstances, and shall not be extensively interpreted or analogically interpreted without reasonable grounds. However, where the meaning is clearly required through mutual interpretation between the laws and regulations, the said interpretation may be made with the objective interpretation taking into account the legislative intent and purpose to the extent that it does not undermine legal stability and predictability (see Supreme Court Decision 2007Du1781, Jul. 9, 2009).

Therefore, Article 38-2 (2) of the Restriction of Special Taxation Act provides for the establishment of a holding company, conversion support and corporate restructuring promotion by permitting the deferment of taxation of capital gains tax on the transfer margin accruing from the investment in kind in the holding company. Paragraph (3) is a provision that imposes capital gains tax on the company to regulate the side effects of deferred taxation regardless of the public interest in the case of donation to its families, such as lineal ascendants and descendants, or transfer of its stocks through inheritance. If the donation of stocks is excluded from taxable objects, maintaining the deferred taxation on the existing deferred portion is a harmonious interpretation taking into account the legislative purpose. Article 38-2 (3) of the Restriction of Special Taxation Act provides that the taxation of capital gains tax shall be imposed on the existing deferred portion as of the time of disposal of stocks after taxation deferment, and the taxation of capital gains tax shall be imposed only on the company after the investment in the holding company is contrary to the principle of equality. Since the conversion of the holding company at the time is against the principle of equality, the Plaintiff is merely a policy for the public interest corporation and the Plaintiff is faithfully obligated to do so.

It is as shown in the attached Table related statutes.

C. Determination

(1) The interpretation of tax laws and regulations shall be interpreted in accordance with the legal text, barring any special circumstances, by denying the requirements for taxation or the requirements for non-taxation or the requirements for tax exemption under the principle of no taxation without the law, and it shall not be permitted to expand or analogically interpret the said provisions without any reasonable grounds. In particular, it accords with the principle of equity in taxation (see, e.g., Supreme Court Decision 201Du14524, Mar. 15, 2012).

(2) The instant disposition is lawful since the transfer income tax deferred may be imposed, considering the health stand and the following circumstances.

① The purport of Article 38-2(1) and (2) of the Restriction of Special Taxation Act provides for the taxation deferment system for transfer margin accruing from the transfer of stocks by a national to establish a holding company or convert a holding company into a holding company. This is the purpose of securing transparency in corporate governance and facilitating corporate restructuring by inducing simple corporate governance centered on the holding company by granting temporary and exceptional taxation benefits on the establishment of a holding company or the conversion into a holding company (Article 38-2(4) of the Restriction of Special Taxation Act). Article 38-2(3)2 of the Restriction of Special Taxation Act provides that a resident whose taxation of transfer income tax is deferred shall pay the transfer income tax deferred if he/she donates the stocks of the holding company or a converted company acquired through an investment in kind or treasury stock exchange or if such stocks are transferred to the holding company or the stocks are converted into a holding company, the taxation deferment system shall not be deemed to be equivalent to the Plaintiff’s assertion that the purpose of facilitating corporate restructuring is lost.

② Interpretation of the language and text: Article 38-2(3) and (2) of the Restriction of Special Taxation Act provides that “Where stocks of a holding company or a converted holding company have been donated, it does not limit the freedom of contribution to a public-service corporation.” (3) Whether the Plaintiff infringed upon the freedom of contribution to a public-service corporation: The Plaintiff invested stocks owned by BB Holdings on its own economic basis by taking into account deferred taxation, transparency in management through the establishment of holding company, facilitation of restructuring, etc., so it is difficult to exempt the Plaintiff from liability for establishing the holding company solely on the ground that government policies that encourage the establishment and conversion of the holding company were implemented. Such preferential taxation measures such as deferred taxation are against the principle of equality, and it is not desirable to expand the scope thereof. Therefore, it is not desirable to take into account the fact that the establishment of the holding company is extremely limited to the case where there is no change in the form of contribution to a public-service corporation, and thus, it cannot be deemed that the transfer income tax should be imposed only after the change in the form of contribution to the holding company.

(5) Retroactive application of the amended Act: Article 38-2(3) of the Restriction of Special Taxation Act (amended by Act No. 10406, Dec. 27, 2010) stipulates that "where a resident who has been subject to the deferred taxation of transfer income tax donates the stocks of a holding company or a company converted into a holding company acquired through an investment in kind or treasury stock exchange or succeeds to such stocks (Article 35-4(2) of the Enforcement Decree related thereto)" shall be deleted (Article 35-4(2) of the Enforcement Decree related thereto), and "where a shareholder prescribed by Presidential Decree disposes of the stocks acquired through an investment in kind, etc." (Article 4). In other words, the former donation and inheritance shall be changed to "shareholders and disposal prescribed by Presidential Decree" and Article 35-3(3) of the Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 22583, Dec. 30, 2010) shall be limited to shareholders of the corporation that issued the stocks subject to the investment in kind, etc.

6. Profits from donation: The plaintiff is the president of the Cultural Foundation, and it is indirectly owned and controlled the shares of BB Holdings through the Cultural Foundation. Therefore, there is a benefit from stock donation.

3. Conclusion

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