Plaintiff 1 and one other (Law Firm Gyeongsung, Attorney Kim dilution-appellee, Counsel for the plaintiff-appellant)

The head of Dong-gu in Yananan-si

March 16, 2011

1. The Defendant’s imposition of acquisition tax of KRW 63,711,430 and special rural development tax of KRW 6,371,130 shall be revoked on July 6, 2009.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. The total number of shares issued at the time of establishment of January 6, 2004 by ○○ Construction Co., Ltd. (hereinafter “○○ Construction”) with Plaintiff 1 as the representative director was KRW 60,000 (per share amount of KRW 5,000). At the time of the register of shareholders, Plaintiff 1 owned KRW 30,00 (50%) and Plaintiff 2, who is the type of shares of Plaintiff 1, was the type of Plaintiff 27,000 (45%) and Nonparty 1 owned KRW 3,00 (5%, hereinafter “instant shares”).

B. However, around March 2, 2004, Nonparty 2 and Nonparty 3 acquired 30,00 shares of ○○ Construction (5,400 shares, 21,600 shares, and 50% of the total amount of shares issued) at the rate of 24,00 shares and 6,00 shares, respectively (this rate of shares owned by the Plaintiffs became 50%) by Nonparty 2 and Nonparty 3 transferred all of the shares to Plaintiff 1 (this rate of shares owned by the Plaintiffs was 100%) and the Defendant took over 30% of the total shares of ○○ Construction at the time of establishment of ○○ Construction (this rate of shares owned by the Plaintiffs was 10%) at the rate of 10,700 shares, including the total shares owned by the oligopolistic shareholders at the rate of 10,700 shares and 70% of the shares issued by the former Local Tax Act (amended by Presidential Decree No. 2780, May 27, 2007).

C. On September 29, 2009, the Plaintiffs appealed to the Tax Tribunal for the revocation of the instant disposition, but the Tax Tribunal dismissed it on August 19, 2010.

[Ground of recognition] Facts without dispute, Gap evidence 1 to 3, 8, 11 to 13, Eul evidence 1 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiffs' assertion

The plaintiffs, at the time of the establishment of ○○ Construction, paid the full amount of the share price actually, and the total amount of the shares of this case was merely a title trust by the plaintiff 1 to the non-party 1, and eventually, the plaintiffs owned 100% of the total number of shares issued from the time of its establishment. Even if a part of the shares was transferred to the non-party 2 and the non-party 3, it does not change to the ratio (100%) of the total shares owned by the plaintiffs after the transfer and transfer to the non-party 2 and the non-party 3, and therefore, the plaintiffs are not liable to pay the disposition of this case. Thus, the

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

1) Whether the instant shares were nominal trust

In full view of the overall purport of the pleadings in each statement of evidence Nos. 4 through 7 and 9 (including each number), it can be acknowledged that on January 6, 2004, at the time of the establishment of ○○ Construction, the Plaintiff 1 withdrawn KRW 300 million from the NFF’s account (Account Number omitted) and paid the full amount of the share price for 6,000 shares, which is the total number of outstanding shares of ○○○ Construction. ② On January 6, 2004, the Plaintiff 1 and Plaintiff 2 owned all the shares of this case and the shares of Plaintiff 1 and Plaintiff 2 as Plaintiff 1, and Nonparty 1 and Plaintiff 2, upon Plaintiff 1’s request, shall exercise voting rights in accordance with Plaintiff 1’s intention, and immediately returned shares and thereafter carry out transfer procedures. According to this, it is reasonable to deem that Plaintiff 1 entered into a title trust agreement only as a shareholder of this case, including the shares of this case, as a shareholder of Nonparty 1, who actually owned the shares of this case.

2) Whether the acquisition of shares constitutes “acquisition of shares” under Article 105(6) of the former Local Tax Act

Furthermore, as to whether Plaintiff 1 can be deemed to be “acquisition of shares,” which is subject to acquisition tax under Article 105(6) of the former Local Tax Act and Article 78(3) of the former Enforcement Decree of the Local Tax Act, where the name of ownership on the register of shareholders was entered and opened in the name of beneficial shareholder, the name holder who was entered in the name of ownership on the register of shareholders is merely a shareholder on the register of shareholders, and even if the name of ownership on the register of shareholders was entered in the name of ownership on the register of shareholders, it is merely the fact that the beneficial shareholder restored the name on the register of shareholders on the register of shareholders, and thus, it cannot be deemed to be “acquisition of shares,” under Article 105(6) of the former Local Tax Act (see Supreme Court Decision 98Du7619, Dec. 28, 199; Supreme Court Decision 98Du7619, Dec. 28, 199).

3) Judgment on the defendant's assertion

A) Article 45-2 of the Inheritance Tax and Gift Tax Act provides that, in the case of title trust of the property requiring registration in the transfer and exercise of the right, it shall be deemed as donation except for the case where there is no purpose of tax avoidance. In the case of the shares, it shall be presumed that there is an object of tax avoidance if the title transfer is not made in the actual owner’s name within the grace period (hereinafter “Gift.”). Thus, in the case of this case, when Nonparty 1 entered in the register of shareholders at the time of establishment of ○○ Construction, it shall be deemed that the shares were donated to Nonparty 1. Therefore, at the time of establishment of ○○ Construction, the plaintiffs owned only the remaining shares (95%) except for the shares of this case. Accordingly, the disposition of this case imposing acquisition tax on the increase of 10% on March 30, 2007 is legitimate, and thus, the defendant’s provision on deemed donation of acquisition tax and Gift Tax Act recognizes that there is no substantial exception to the taxation of acquisition tax and gift tax for oligopolistic shareholders.

B) In addition, the Defendant may oppose a third party by stating that the share certificates are the trust property in the register of shareholders and stating the fact that they are the trust property in the register of shareholders. The Plaintiffs asserted that the disposition of this case was lawful, because they did not state the fact that they were the trust property in the register of shareholders. Thus, in the case where the property rights are transferred to the trustee under the trust agreement under the Trust Act, the trust property is absolutely transferred to the trustee (see Supreme Court Decision 2007Da54276, Mar. 13, 2008). On the other hand, in the internal relationship, the title trust is generally transferred to the trustee by holding the ownership in the register of trust and making profits from the management (see Supreme Court Decision 86Meu2653, May 12, 1987), and it differs from the trust law in the trust law (see Supreme Court Decision 86Da2653, May 12, 1987). Thus, there is no room for the Defendant’s assertion that this part of the trust law is legitimate.

4) Sub-committee

Ultimately, the shares in this case were owned by Plaintiff 1, and the shares owned by the Plaintiffs, which are oligopolistic shareholders, are the same as 100% of all shares at the time of establishment of ○○ Construction and March 30, 2007, and cannot be deemed to have increased the shares owned by Plaintiff 1 by acquiring the shares in this case again on March 30, 2007. Thus, the Plaintiffs do not have a duty to pay acquisition tax under Article 105(6) of the former Local Tax Act and Article 78(3) of the former Enforcement Decree of the Local Tax Act.

Therefore, the instant disposition is unlawful.

3. Conclusion

Therefore, the plaintiffs' claim of this case is reasonable, and it is so decided as per Disposition by admitting it.

[Attachment Form 5]

Judges Maritime Affairs and Fisheries (Presiding Judge)