title trust with the purpose of tax avoidance, which may avoid the application of the gift tax progressive rate;

It is possible to omit the return of capital gains tax by selling and selling another person's name, and it seems that the actual amount of capital gains tax has not been reported and paid, and where the stocks held in title trust are distributed and donated to a person with a special relationship by pretending to trade, the title trust with the purpose of tax avoidance may avoid the application of the gift tax progressive rate

2012Guhap25583 Revocation, etc. of Disposition of Imposition of Gift Tax

IsaA

Head of Nowon Tax Office

September 13, 2013

October 29, 2013

1. The Defendant’s imposition of the gift tax on the Plaintiff on January 10, 2012 exceeds the OOO personnel among the imposition of the gift tax on the Plaintiff on January 10, 2012 and the imposition of the penalty tax on December 6, 2012 exceeding the OOO personnel is revoked.

2. The plaintiff's remaining claims are dismissed.

3. 9/10 of the costs of lawsuit shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

Cheong-gu Office

The imposition of gift tax on the Plaintiff on January 10, 2012 and the penalty tax on the gift tax on December 6, 2012 by the Defendant shall be revoked.

1. Details of the disposition;

(a) Paid-in capital increase process of BBB;

(1) On July 16, 2004, KimCC acquired 6,000,000 listed stocks of EE, a listed corporation, from the yellowF, the former owner, and changed the trade name into BB of the Co., Ltd. on March 28, 2005. On June 1, 2005, the non-listed corporation entered into an all-inclusive share swap contract with GG bioscience Co., Ltd., Ltd., a non-listed corporation on July 20, 2005, and changed its trade name into “GG Bioio” (hereinafter referred to as the “corporation of this case without distinguishing the previous change”) upon approval of the temporary general shareholders’ meeting on July 20, 2005.

(2) On March 3, 2004, the instant corporation resolved to issue new shares with a common share of 7,905,000 common shares at the board of directors under the third party allocation method. As indicated in the table 1, the corporation was built in the electronic construction system of the Financial Supervisory Service, and reported correction on January 24, 2005.

Public notice on March 3, 2004

Items

Correction

After Correction

Class and Number of New Shares

common shares 7,905,000

common shares 7,905,000

Method of Capital increase

Third Party Allocation (Public Offering Method)

Allocation by third party (private placement method)

Date of payment for shares;

Subsequent Final Judgment

January 26, 2005

(3) On January 14, 2005, the corporation of this case decided on the board of directors on March 14, 2005 that "the subscription date for new shares shall be March 14, 2005; the subscription date for new shares shall be 100,000,000 common shares by the method of shareholders allotment; however, the forfeited shares and fractional shares shall be subject to a subsequent resolution of the board of directors; on the same day, the corporation constructed the electronic public disclosure system of the Financial Supervisory Service (hereinafter "the subscription date for new shares")

(4) On March 12, 2005, the instant corporation decided to allocate forfeited stocks related to capital increase with rights issued on January 14, 2005 to third parties, and on the same day, publicly announced the electronic publication system of the Financial Supervisory Service.

B. Title trust of KimCC

The KimCC acquired the shares of the instant legal entity in the name of 16 persons including the Plaintiff, as indicated in Table 2, through a borrowed account opened through Dong Jae H Kim H (former name Kim HH). In other words, KimCC acquired the total of 4,417,076 shares until February 11, 2005, including the acquisition of 430,00 shares in the name of white II on September 15, 2004 (hereinafter referred to as "non-highland transfer shares"), acquired 15,058,912 shares with the allocation of shareholders (hereinafter referred to as "non-highland shares"), acquired shares with the allocation of 15,058,912 shares with the allocation of shareholders on January 14, 205 (hereinafter referred to as "non-highland shares"), acquired shares under the name of 30,300 shares with the allocation of forfeited shares, and acquired shares under the name of 30,000 shares (hereinafter referred to as "non-highland shares").

Table 2. The current status of title trust shares

No.

title trustee

Transfer Date

Number of shares (number of shares)

Value per share of assessment;

Jinay

Original Disposition

Correction Disposition

1

Park JJ

March 15, 2005

2,500,000

OOO

Third Party Allocation

2

Song KK

March 15, 2005

1,500,000

OOO

Third Party Allocation

3

AL

March 15, 2005

1,500,000

OOO

Third Party Allocation

4

조QQ

December 31, 2004

2,757,576

OOO

OOO

Change of Transfer

March 15, 2005

5,000,000

OOO

OOO

Initial Stockholders

March 15, 2005

180,768

OOO

OOO

Change of Transfer

5

YellowM

December 16, 2005

2,000,000

OOO

Third Party Allocation

6

NN

March 15, 2005

180,000

OOO

OOO

Change of Transfer

December 31, 2004

796,484

OOO

OOO

Initial Stockholders

7

PP

March 15, 2005

20,000

OOO

Change of Transfer

December 31, 2004

1,460,222

OOO

Initial Stockholders

8

Plaintiff (AA)

March 15, 2005

2,100,000

OOO

Third Party Allocation

9

RR

March 15, 2005

2,500,000

OOO

Third Party Allocation

10

S

March 15, 2005

1,500,000

OOO

Third Party Allocation

11

MaximumT

March 15, 2005

2,700,000

OOO

Third Party Allocation

12

eU

December 31, 2004

323,000

OOO

OOO

Change of Transfer

March 15, 2005

2,123,959

OOO

OOO

Initial Stockholders

13

V

December 31, 2004

311,500

OOO

OOO

Change of Transfer

March 15, 2005

2,190,33

OOO

OOO

Initial Stockholders

14

W

March 15, 2005

2,000,000

OOO

Third Party Allocation

15

XX

December 31, 2004

85,000

OOO

OOO

Change of Transfer

March 15, 2005

1,227,914

OOO

OOO

Initial Stockholders

16

Y

September 15, 2004

430,000

OOO

Change of Transfer

February 11, 2005

10,000

OOO

Change of Transfer

March 15, 2005

2,260,000

OOO

OOO

Initial Stockholders

Total

37,956,756

C. Taxation, etc.

(1) The director of the Seoul Regional Tax Office, from July 21, 2011 to December 23, 2011, conducted an investigation of the integration of personal and property tax with respect to KimCC, notified the head of the competent tax office to impose gift tax on the title trust of the instant shares.

(2) Accordingly, the defendant imposed an OO (including additional OOO) of gift tax based on the provision on deemed donation of title trust property under Article 45-2 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter the same shall apply). In calculating the above amount of tax, the defendant, as in the case of the plaintiff among the title trust as of March 15, 2005, deemed that the shares allocated to a third party as of January 14, 2005, which was the date of resolution by the board of directors, should be deemed as the "date on which a cause such as a person increase, etc., occurred", and calculated the amount per share during the given period from January 17, 2005 (the holidays from January 15, 2005 and January 16, 2005) to May 15, 2005, applying the assessed amount per share for the given period of one O.

(3) The Plaintiff dissatisfied with the above disposition and filed an appeal with the Tax Tribunal on April 2, 2012, but the said claim was dismissed on June 29, 2012.

(4) Meanwhile, on December 6, 2012, the Defendant revoked ex officio the imposition of the above additional tax during the instant lawsuit, and imposed and notified the same amount of additional tax by clarifying the type of the penalty tax and the grounds for calculation thereof (hereinafter “the imposition of the gift tax (principal tax) as of January 10, 2012 and the imposition of additional tax as of December 6, 2012”), respectively.

Facts that there is no dispute over the basis of recognition, Gap evidence 1 through 5, 13, Eul evidence 1 (including evidence 1) and the purport of the whole pleadings

2. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

(1) The non-existence of tax avoidance purpose

Even if KimCC acquired the instant stocks under its own name, it does not constitute an oligopolistic shareholder of the instant corporation. As such, it cannot be deemed that the instant stocks were left out of the position of oligopolistic shareholder liable for secondary tax liability due to title trust, and there was no lack of dividend received from the instant corporation, and thus, there was no avoidance from the progressive tax rate pursuant to global income tax on dividend income. The transfer income tax and securities transaction tax are faithfully paid for part of the transfer income by transferring the instant stocks in a short period, and the possibility that KimCC may avoid the transfer income tax beyond the requirement of a major shareholder is merely the result of tax reduction likely to occur after the title trust. As such, it cannot be the basis for determining whether there was a tax avoidance purpose at the time of the title trust. Article 200-2 (1) of the former Securities and Exchange Act (repealed by Act No. 8635, Aug. 3, 2007; hereinafter the same) provides for the Financial Services Commission and the Exchange to freely dispose of the instant stocks for the purpose of title trust and the Exchange.

Even if KimCC’s shares were to be transferred outside the major shareholder’s requirements through title trust, if they were to be transferred outside the company’s name, they constitute subject to capital gains tax [Article 94(1)3 of the former Income Tax Act (amended by Act No. 7837 of Dec. 31, 2005)]. The KimCC planned to sell shares held in title by some members including the Plaintiff, in the case of 14,300,00 shares held in title trust, which are the shares held in title trust, to be sold outside the company at the time of title trust, so at least the above shares were not avoided capital gains tax, and the capital gains tax and securities transaction tax were paid after actual transfer of the above shares. In this regard, each disposition of this case is unlawful.

(2) Illegal assertion of the method of calculating the gift value

Article 63(1) of the former Inheritance Tax and Gift Tax Act and Article 52-2 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 20621, Feb. 22, 2008; hereinafter referred to as the "former Enforcement Decree of the Inheritance Tax and Gift Tax Act"), if any cause such as capital increase or merger occurs within two months before or after the evaluation base date, the evaluation method varies. In this case, the prior meaning of the capital increase is that the capital increase is to increase the company's capital by issuing shares. Thus, the concept that is close to the capital increase is the date of the increase of the company's capital increase. In full view of the fact that the date of the occurrence of the capital increase is the date of the payment of the stock price, the date of the capital increase is the date of the increase.

Even if the date of payment of shares cannot be considered as the date of capital increase, as in the instant case, in cases where capital increase occurs after a shareholder allocation method but the forfeited shares occurred, and the board of directors adopted a resolution to allocate forfeited shares through a third party, it is the same as the resolution to newly increase the reasons. Therefore, it is reasonable to view the date of resolution by the board of directors on disposal of forfeited shares (in this case, March 12, 2005) as the date of capital increase as the date of occurrence.

Therefore, each of the dispositions of this case made on different premise is unlawful.

(3) Claim on additional tax

(A) Claim of defective assessment and notice

The Defendant imposed an additional tax on the Plaintiff without notifying the Plaintiff of the type and basis of calculation of the additional tax, and thus, the imposition of the additional tax is unlawful.

(B) Justifiable assertion of existence

Since KimCC paid capital gains tax and securities transaction tax on the above 14,300,000 shares sold outside the country, it is reasonable to deem that there was a justifiable reason that the Plaintiff did not report and pay gift tax on the above shares, in full view of the following: (a) KimCC did not have any tax avoidance; (b) the right to dispose of the above shares was exercised by KimCC; and (c) the transfer price was reverted to KimCC; and (d) there was no perception that the above shares were donated to the same title truster as the Plaintiff; (b) it is reasonable to deem that there was a justifiable reason that KimCC did not report and pay gift tax on the above shares; (b) the Plaintiff did not have any right to dispose of the shares; and (c) the Plaintiff was transferred to another person regardless of his/her will and could not have known that there was no duty to report and pay gift tax on the shares; and therefore, (d) there was a justifiable reason that the Plaintiff did not report and pay gift tax on the above shares. Therefore, penalty

B. Relevant statutes

It is as shown in the attached Form.

C. Determination as to whether the purpose of tax avoidance exists

(1) Relevant legal principles

The legislative intent 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 with the purport of effectively preventing the act of tax avoidance by using the title trust system and realizing the tax justice. Thus, the application of the proviso to Article 45-2 is possible only if the purpose of tax avoidance is not included in the purpose of title trust, and in this case, the burden of proving that there was no purpose of tax avoidance can be proved 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 can be proved by means of proving that there was a purpose other than the purpose of tax avoidance. However, the nominal owner who bears the burden of proof has a clear purpose irrelevant to the tax avoidance to the degree that there was no purpose of tax avoidance in the title trust, and has to prove that there was no tax avoidance at the time of the title trust or in the future, based on objective and supporting evidence (see Supreme Court Decision 2004Du11220

(2) Facts of recognition

The following facts are not disputed between the parties, or acknowledged in full view of the whole purport of the pleadings in the above evidence and the statements in Gap evidence 6 to 17.

(A) The instant corporation promoted capital increase with January 14, 2005 in order to resolve the total capital erosion as an OO member in the year 2005.

(B) The KimCC purchased and sold the shares of the instant legal entity as indicated in the table 3 below, and the share ratio of the instant legal entity to the instant legal entity, including the shares held in title by 16 persons including the Plaintiff and those in the name of KimCC, is as listed below.

Details of purchase and sale of shares of the corporation in this case.

Classification

Period of sale

Number of shares (number of shares)

Amount (won)

Purchase

Within the Chapter

From August 26, 2004 to August 12, 2005

2,031,200

OOO

Paid-in capital

March 14, 2005

37,058,912

OOO

Sub-committees

39,090,112

OOO

Sale

Within the Chapter

From September 17, 2004 to September 14, 2005

18,425,910

OOO

The airspace outside the territory (ZZ)

June 1, 2005, July 20, 2005

16,000,000

OOO

Theft

March 31, 2005

4,300,000

Sub-committees

20,300,000

OOO

Profit Profit Profit

OOO

Details of shares of KimCC (including borrowed-name shares)

Reference Date

Number of shares owned (States)

Total issued shares (States)

Equity ratio (%)

December 31, 2004

Total Stocks

4,400,876

15,066,200

29

name of principal

40,010

2.92

December 31, 2005

name of principal

1,012,768

62,140,740

1.62

(C) The KimCC reported and paid capital gains tax and securities transaction tax on the shares sold outside the country without going through the securities market as shown in the following Table 5:

Details of return and payment of transfer income tax on Table 5.

title trustee

Number of shares (number of shares)

Transfer Income Tax (including local income tax)

Securities Transaction Tax (won)

Date of Payment

Amount (won)

Date of Payment

Amount (won)

MaximumT

2,700,000

November 8, 2005

OOO

August 10, 2005

OOO

Song KK

1,500,000

November 30, 2005

OOO

OOO

RR

2,500,000

November 28, 2005

OOO

OOO

이QQ

2,100,000

November 18, 2005

OOO

OOO

W

2,000,000

November 25, 2005

OOO

OOO

AL

1,500,000

November 30, 2005

OOO

OOO

YellowM

2,000,000

November 10, 2005

OOO

OOO

Total

14,300,000

OOO

OOO

(D) In relation to the shares of this case, the omission of transfer income tax for the year 2005 shall be as follows:

Details of omission in filing a return on the transfer income tax.

Title holder

Number of shares (number of shares)

Transfer Value

Acquisition Value

Necessary expenses

Capital gains (won)

The amount paid at a fixed rate;

CC Kim

4,995,500

OOO

OOO

OOO

OOO

XX

1,412,914

OOO

OOO

OOO

OOO

S

1,500,000

OOO

OOO

OOO

OOO

개지 Kim

2,700,000

OOO

OOO

OOO

OOO

NN

1,272,074

OOO

OOO

OOO

OOO

PP

1,733,292

OOO

OOO

OOO

OOO

eU

2,514,590

OOO

OOO

OOO

OOO

V

2,529,963

OOO

OOO

OOO

OOO

Park JJ

1,765,957

OOO

OOO

OOO

OOO

Y

2,797,130

OOO

OOO

OOO

OOO

SongK and 5 others

14,300,000

OOO

OOO

OOO

OOO

OOO

조◆◆

2,245,952

OOO

OOO

OOO

OOO

OOO

Total

39,767,372

OOO

OOO

OOO

OOO

OOO

(3) Determination

(3) In light of the above facts, even if the Plaintiff did not have the right to dispose of the shares of the stock-listed corporation under the name of the Financial Investment Services and Capital Markets Act (amended by Act No. 8635, Aug. 3, 2007; hereinafter “Capital Markets Act”) and Article 147(1) of the current Capital Markets Act provide that if the Plaintiff held 5% or more of the shares of the stock-listed corporation at the Korea Exchange, it is difficult to believe the Plaintiff’s assertion that the Plaintiff would have held the above shares for the purpose of freely disposing of the shares of this case, and that the Plaintiff would not have the right to dispose of the shares of this case, even if it did not have the right to dispose of the shares of this case, since the Plaintiff did not have the right to dispose of the shares of this case for the purpose of 20% or more of the shares of this case, it is difficult to recognize that the Plaintiff would not have the right to dispose of the shares of this case under the name of 20% or more of the shares of this case.

Therefore, regarding the title trust of the instant shares, it cannot be deemed that there was no tax avoidance purpose as alleged by the Plaintiff.

D. Determination on the illegality of the method of calculating the gift value

(1) Article 60 of the former Inheritance Tax and Gift Tax Act provides that "the market price corresponding to the value of the property on which the gift tax is assessed according to the method of appraisal under Article 63 (1) 1 (a) and (b) of the former Inheritance Tax and Gift Tax Act." Article 63 (1) 1 (a) of the former Inheritance Tax and Gift Tax Act provides that the amount of stocks and equity shares traded with the Korea Stock Exchange shall be the average market price of the Korea Stock Exchange every two months before and after the evaluation base date, respectively. However, in cases where it is inappropriate to determine the average amount on the relevant average amount due to the occurrence of reasons such as capital increase or merger during two months before and after the evaluation base date, it shall be based on the average amount of the period calculated under the conditions as prescribed by the Presidential Decree among two months before and after the evaluation base date, and Article 52-2 (1) 1 and 2 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act shall be the same as the average market price before and after the two months before the evaluation base date.

(2) However, there are various stages of capital increase through the issuance of new shares, such as the shareholder allocation and the third party allocation, public announcement of the resolution of the board of directors on capital increase, the issuance of new shares and the public announcement of the base date, the resolution of the board of directors on the third party allocation, the payment of stock price, the registration of capital increase, etc., and the period of evaluation vary depending on which the amount of

(A) In the case of the issuance of shares first, the party who trades shares when there is a public announcement of the increase in the capital. As such, in principle, the public announcement of the increase in the capital has a considerable impact on the formation of the stock price. However, in the case of the method of allocating shares, there is a right to participate in the allotment of shares on the basic date, and to hold shares on the basic date. Meanwhile, in principle, a listed company has a right to participate in the allotment of shares by acquiring the ownership of the relevant purchased shares until two days before the basic date, and the value of shares per day before the basic date is lower than the value of shares per two days before the basic date because it is the purchase of shares even if there is no right to participate in the issuance of shares on the basic date, and the price of shares per day before and after the date of the public announcement of the increase in the capital has been determined within a certain period of time on the basis of the closing price preceding the basic date (i.e., the 9th day immediately preceding the date of the initial sale of shares).

(B) Next, in the case of issuing new shares by the corporation of this case where a third party is allocated only for forfeited shares, such as the facts cited prior to the time of capital increase by the method of a shareholder allocation, the public announcement of capital increase has already been publicly announced and the number of new shares and the capital increase related to the capital increase has already been made. Since the stock price is newly formed due to the measure of stock increase by the method of a shareholder allocation, the resolution of the board of directors for a third party allocation is deemed not to have a special effect on the already formed stock price. Therefore, even in that case, it is reasonable to view the "the date of stock increase" as the "date after the cause, such as the capital increase, occurred."

(C) Furthermore, the purport of the Supreme Court Decision 2007Du7949 Decided August 20, 209, arguing that the former Inheritance Tax and Gift Tax should be assessed on the basis of the calculation of the value of the gift in the event of a cause such as a capital increase, is to take account of the fact that such cause has been significantly affected the formation of the future stock price. The first issue price and the number of shares issued have already been changed before the payment of stock price was made, and the actual payment of stock price did not result in a significant change in the stock price. Therefore, in general, it is judged that the correlation between the payment of stock price and the increase in stock price is not high, and ② The Supreme Court Decision 2007Du7949 Decided August 20, 209, arguing that the Plaintiff should be considered as the date of the increase in stock price, and that the above 3rd share price should not be considered as the 3rd share price increase due to the reasons for the issuance of new shares after the issuance of new shares.

(3) Based on the foregoing determination, the period for which the value of the donated property on the instant shares is assessed and the corresponding value per share is determined as follows.

In other words, the capital increase by the initial shareholder and the third party allocation method with respect to the stocks held in title on March 15, 2005 was all the date of the cancellation of rights on February 7, 2005, which was the base date of appraisal before March 15, 2005 (as seen in the above, the new stocks allocation date is February 11, 2005 and it is a legal holiday from February 8, 2005 to February 10, 2005) and the date following the date of the occurrence of the cause of the capital increase, etc. As such, the period of appraisal is from February 7, 2005 to May 15, 2005, and according to the evidence mentioned above, the assessment value per share during the above period can be recognized as the "OOO won."

Nevertheless, the Defendant, as in the case of the Plaintiff on March 15, 2005, deemed that the shares allocated to a third party, as in the case of the Plaintiff, shall be deemed to be “the date on which a cause, such as the capital increase, etc., occurred” on January 14, 2005, which was the date of the resolution of the board of directors, unlike the initial allotment to the original shareholders,” and calculated the value of shares allocated to the third party as the gift amount per share during the above period from January 17, 2005 (one day after January 15, 2005 and January 16, 2005) to May 15, 2005, which was the following day, as the assessment period. Thus, it is unlawful.

E. Determination on the assertion related to additional tax

(1) As to the assertion of defect in assessment and notice

Since the Defendant revoked ex officio the initial imposition disposition of additional tax during the proceeding of the instant lawsuit, and re- imposed and notified the same amount of additional tax by stating the type of and the basis for calculation of additional tax, the Plaintiff’s assertion on this part is without merit.

(2) As to the assertion that justifiable grounds exist

(A) In order to facilitate the exercise of taxation rights and the realization of tax claims, additional tax under tax law is an administrative sanction imposed pursuant to the law in cases where a taxpayer violates a return, tax liability, etc. as prescribed by the law without justifiable grounds, and the taxpayer’s intentional or negligent act does not constitute a justifiable cause (see Supreme Court Decision 2013Du1829, May 23, 2013).

(B) As long as the Plaintiff, a nominal owner, pursuant to Article 45-2 of the former Inheritance Tax and Gift Tax Act, is deemed to have donated stocks of the instant corporation by acquiring the corporation’s shares under the name of the Plaintiff, the Plaintiff is obligated to report and pay gift tax. The circumstance alleged by the Plaintiff constitutes either an act related to KimCC, which does not bear a duty to report and pay gift tax, or an act on the land or mistake of the Plaintiff’s laws and regulations, and thus, the Plaintiff’s failure to report and pay gift tax does not constitute justifiable grounds. Accordingly, the Plaintiff’

F. Justifiable tax amount and scope of cancellation

If a reasonable tax amount is calculated by calculating the gift amount as an OOO per share for the plaintiff, the principal tax of the gift tax is OOO or additional tax (=OOO or additional tax + OO or additional tax for unfaithful payment). Therefore, the portion exceeding the above amount among each of the dispositions in this case should be revoked as unlawful.

The detailed statement of tax amount calculation in accordance with the table7

Classification

Decisions

Details of calculation

Amount of gift tax

OOOE

2,100,000 note 】 OOO

Tax Base

OOOE

calculated tax amount

OOOE

OOOwon + (OOOwon - OOO) x 20%

Additional Tax on negligent tax returns

OOOE

OO x 20%

Additional Dues

OOOE

OOO members ¡¿ 3/1000 ¡¿ 240 days;

3. Conclusion

Therefore, the plaintiff's claim of this case is justified within the scope of the above recognition, and the remaining claim is dismissed as it is without merit. It is so decided as per Disposition.