Examination Donation 2009-0066 (Law No. 23, 2009)

Gift tax following the low-price transfer of unlisted stocks;

Where non-listed stocks are acquired at a low price by an unrelated party, and the difference between the market price and the price is 30 or more, the balance remaining after 300 million won is deducted from such marginal profits shall be deemed donations

The contents of the decision shall be the same as attached.

Park ○

head of Sung Dong Tax Office

1. The plaintiff's claim is dismissed.

2. The plaintiff shall bear the litigation costs.

The Defendant’s disposition of imposition of gift tax of KRW 295,689,00 against the Plaintiff on November 25, 2008 shall be revoked.

1. Circumstances of dispositions;

A. On December 23, 197, 197, the △△△ Co., Ltd. (hereinafter referred to as the "non-party company") acquired 25,000 shares of the non-party company (hereinafter referred to as the "the shares of this case") 125,00,000 shares of the non-party company (hereinafter referred to as the "the shares of this case") from the △ on May 31, 2004, the plaintiff acquired 125,000 shares of the non-party company (hereinafter referred to as the "sale of this case").

B. However, at the time that the Plaintiff acquired the shares of this case from Jung, ParkB, the father of the Plaintiff, was the largest shareholder of the non-party company, and the representative director, 51,000 shares issued by the non-party company, which were 51% of the 100,000 shares issued by the non-party company, 25,00 shares, and 24,00 shares, 24% of the 24% of the 24,00 shares, respectively, but the Plaintiff did not own the shares of the non-party company before acquiring the shares of this case.

C. From September 19, 2008 to October 29 of the same year, the director of the Seoul Regional Tax Office assessed the non-party company's non-listed stocks with the result of the appraisal of the non-listed stocks, pursuant to Articles 60 (1), (3), 63 (1) 1 (c), and (3) of the Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter referred to as the "Gift Tax Act"), and Article 54 (1) and (2) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 18989, Aug. 5, 2005; hereinafter the same), the court determined that the non-party company's shares were disposed of at least KRW 1,216,650,000 (one hundred and sixty (48,666 won per week; hereinafter the plaintiff's shares were disposed of at least KRW 300,500,1600.5

D. The Plaintiff filed an objection against the Defendant on February 25, 2009 against the instant disposition, but was dismissed, and the Plaintiff filed a request for examination with the Commissioner of the National Tax Service on June 29 of the same year but was dismissed on September 24 of the same year.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

For the following reasons, the instant disposition should be revoked as it is unlawful since the grounds for the disposition do not exist.

1) At the time of the acquisition of the instant shares, the Plaintiff did not have a special relationship under Article 35(2) of the AA and Articles 26(4)1, 19(2)1, and 26(2)2 of the Enforcement Decree of the AA at the time of the acquisition of the instant shares. In light of the following, although the Plaintiff purchased KRW 5,00 per share, which is a normal transaction value reflected in the objective exchange value, the Plaintiff assessed the instant shares by supplementary assessment method, and disposed of the instant shares, the Plaintiff’s acquisition of the instant shares is unlawful. Accordingly, the instant shares do not fall under the case where the Plaintiff acquired the instant shares at a price significantly lower than the market price without any justifiable reason under Article 35(2) of the A and 35(2) of the BB of the A and the Plaintiff’s father, the Plaintiff’s father, owned the instant shares at 25% of the total number of issued shares.

2) Even if the Plaintiff had a special relationship, as seen earlier, the Plaintiff purchased the instant shares from the Plaintiff at a normal price, and thus does not constitute a low-price acquisition under Article 35(1) of the Inheritance Tax and Gift Tax Act.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

1) As to the first argument

A) As to whether the plaintiff and the regular AA had a special relationship

(1)The meaning of "transferr or transferee" under Article 26 (4) of the Enforcement Decree of the Gift Tax Act is that the transferor and transferee are in a special relationship if they take over at a low price under Article 35 (1) 1 of the Gift Tax Act; that is, in the case of a high-priced transfer under Article 35 (1) 2 of the Gift Tax Act, a person in a special relationship with the transferor; that is, in the case of a high-priced transfer under Article 35 (1) 2 of the Gift Tax Act, a transaction between the transferor and the person in a special relationship under subparagraphs 1 and 2 of the above Article 19 (2) of the Enforcement Decree of the Gift Tax Act is not the same.

In addition, Article 19 (2) 2 of the Enforcement Decree of the Gift Tax Act includes "employee of a corporation under control by investment", and Article 19 (2) of the Enforcement Decree of the same Act provides that "major shareholder or largest investor as prescribed by the Presidential Decree" refers to the stockholder, etc. in case where the total number of stocks held by a shareholder or an investor and a person with a relationship falling under any of the following subparagraphs is the largest number of stocks held by such shareholder, etc., the transferor or transferee can be recognized as a special relationship under the above provision

(2) However, according to the facts acknowledged above, since the plaintiff was only a child of ParkB, who was the representative director of the non-party company at the time of acquiring the shares of this case from Jeong, and was not the principal director or investor of the non-party company, the plaintiff cannot be deemed to control the non-party company by the investment of the non-party company merely because he was the relative of the largest shareholder of the non-party company. Thus, even though Jung is the vice president of the non-party company, Jung cannot be deemed to be an employee of the non-party company controlled by the plaintiff's investment, and the plaintiff cannot be deemed to be an employee of the non-party company. On the contrary, the plaintiff cannot be deemed to be an employee of the non-party company, and there is no other evidence to prove that Jung was a relative of the plaintiff and Jung, and there is no other evidence to prove that Jung is an employee of the plaintiff or the plaintiff's living with the plaintiff's property at the time of the sale of this case.

b)whether the custodian is the assignee;

Comprehensively taking account of the purport of the entire arguments in Evidence Nos. 1, 2, and 2, 3, the Plaintiff did not trade the shares of the non-party company until acquiring the shares of this case, and there was no appraisal price for them. The sales of the non-party company had not been submitted any data on the appraisal of the shares of this case at the time of the sales of this case. The sales of the non-party company 2002 are KRW 31,938,000,000, total assets amounting to KRW 10,486,000,000, total assets amounting to KRW 2,034,000,000, and the sales of 2,034,000,0000, total assets amounting to KRW 35,453,00,000,000, total assets amounting to KRW 10,591,000,000,000,000,000.

In addition, the plaintiff acquired the shares of this case at 5,00 per share, but the market price of the shares of this case calculated according to the supplementary evaluation methods stipulated in Article 63 of the Gift Tax Act and Articles 54 through 56 of the Enforcement Decree of the same Act shall be 48,66 per share, as seen above. According to the above recognition facts, the facts constituting the 48,666 per share, which is the market price of the shares of this case, are as seen above. According to the above recognition facts, the above facts are as follows. According to the above facts, 48,666 won per share, which is the market price of the shares of this case, and 5,00 won per share, which is 30/100 of the market price of the shares of this case, is 14,59 won per share, and 43,666 won per share, which is 30/100 of the market price. Thus, the plaintiff's above assertion is without merit.

(ii)As to the second argument:

As seen earlier, the Plaintiff did not have a special relationship with the regularA at the time of the instant sales. Therefore, the Plaintiff’s above assertion is without merit without further review.

3.In conclusion

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