Suwon District Court 2008Guhap9769 ( October 24, 2009)

Early High Court Decision 2008J0322 (Law No. 24, 2008)

It cannot be deemed that the gift tax imposed on a trustee violates property rights or equality rights.

Even if the purpose of tax avoidance is recognized, the gift tax shall be imposed, and it shall not be deemed that the property right of the donee is infringed in violation of the principle of proportionality.

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

1. All appeals filed by the plaintiffs are dismissed.

2. The appeal costs are assessed against the plaintiffs.

The judgment of the first instance shall be revoked, and each disposition imposing gift tax in the attached Form 1 against the plaintiffs shall be revoked.

1. Advice for a judgment of the court of first instance;

The reasons for this decision are as stated in the reasoning of the judgment of the court of first instance, except for adding the judgment of the plaintiffs as to the plaintiffs' claims under Paragraph (2) below, and therefore, they are cited by Article 8 (2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

2. Additional determination

A. The plaintiff's assertion

Article 45-2(1) of the Inheritance Tax and Gift Tax Act (amended by Act No. 8828 of Dec. 31, 2007) which is the basis of the instant disposition (hereinafter referred to as the “instant legal provision”) violates the principle of proportionality in that it imposes gift tax on the property under title trust even if it is deemed that there is a purpose of evading other taxes, not the gift tax, and it infringes on the donee’s property right in violation of the principle of proportionality in that it imposes gift tax on the property under title trust, and it also infringes on the donee’s right to equality in that it causes arbitrary disadvantage to the trustee by imposing gift tax on the person who actually donated the property without acquiring the substantial rights or interests to the property under title trust without acquiring the substantive rights or interests to the property under title trust. Accordingly, the disposition of this case based on the unconstitutional legal provision is unlawful and thus should be revoked.

B. Determination

The legislative purpose of the instant legal provision is to block, in principle, the tax avoidance or tax evasion using such title trust in order to prevent abuse of the title trust system as a means of tax avoidance in light of the reality of Korean tax administration, even if it sacrifices the principle of substantial taxation, which is the large principle under the tax law, in order to prevent such abuse of the title trust system as a means of tax avoidance. However, in the exercise of the right to impose taxes, the State has a wide range of discretion to choose the items of taxation and the method of taxation for the purpose of suppressing tax avoidance or evasion. Thus, as long as it cannot be deemed to clearly exceed the scope of discretion, it cannot be readily concluded that this is unconstitutional, and in most cases, the purpose of the instant legal provision is to evade gift tax. In light of the fact that the instant legal provision is intended to avoid tax avoidance through a title trust, it cannot be deemed as infringing the property right of the donee in violation

In addition, even if the title trustee is merely a title trustee who has not actually gained any specific benefits, when considering the responsibility that the title trustee would have made it possible for the title truster to commit the act of title trust, the issue of whether to impose the primary liability on either the title truster or the title trustee shall also belong to the legislative discretion. Although the liability of the title trustee is merely a degree of aiding and abetting the title trustee, it cannot be deemed that the title trustee treated the same as the actual recipient of the gift and arbitrarily treated it, and thus, it cannot be deemed that the title trustee arbitrarily treated it.

Therefore, the plaintiffs' above assertion is not accepted.

3. Conclusion

Therefore, the plaintiffs' claim of this case against the defendants shall be dismissed in its entirety as it is without merit, and the judgment of the court of first instance is just in its conclusion, and the plaintiffs' appeal against the defendants is dismissed in its entirety as it is without merit. It is so decided as per Disposition.