Cho High 201-Gu2505 ( November 14, 2011)

Gift tax is legitimate for the purpose of tax avoidance, including global income tax.

It is argued that stocks have been entrusted for convenience in the performance of construction work, and it does not submit evidence on what kind of matters are helpful in the performance of the business as a result of holding stocks, and the gift tax imposed on title trust for the purpose of tax avoidance, such as global income tax based on dividends, is legitimate.

2012Guhap371 Revocation of Disposition of Imposition of Gift Tax

XX Doz

Head of Namgu Tax Office

June 13, 2012

July 13, 2012

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposing gift tax of KRW 000 on the Plaintiff on December 8, 2010 shall be revoked.

1. Details of the disposition;

A. The head XX, as the representative director of the non-party company, established for the purpose of new construction, sale and lease of apartment units, held title trust of 5,000 shares of the non-party company to the head of the ASEAN around 2003, but on February 19, 2008, the above title trust was terminated and 2,500 shares out of 5,00 shares of the above shares (hereinafter “the shares of this case”) were under the name of the plaintiff, who is an employee of the non-party company, and the remaining 2,50 shares were fraudulent and under the name of the headCC, who is an employee of the non-party company.

(B) As a result of the tax investigation with respect to the non-party company, the defendant independently owned 100% of the shares issued by the non-party company by paying 100% of the non-party company's capital, and applied the legal fiction of donation under Article 45-2 (1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010; hereinafter referred to as the "former Inheritance Tax and Gift Tax Act") by deeming that the non-party company held the title trust of the shares of this case for the purpose of tax avoidance, the defendant imposed and notified 00 won on the plaintiff on December 8, 201 (hereinafter referred to as the "disposition of this case"). The plaintiff filed an appeal with the Tax Tribunal on June 29, 201, but was dismissed on November 14, 2011.

[Reasons for Recognition] Facts without dispute, Gap evidence 1, Eul evidence 2-2, Eul evidence 1-2, Eul evidence 2-1 to 3, the purport of the whole pleadings

2. The plaintiff's assertion is as follows.

It is true that the Plaintiff received the title trust of the instant shares, but it is merely a trust received by the Plaintiff for convenience in carrying out the construction business of the non-party company, and it is unlawful to apply the provision on the constructive gift under Article 45-2(1) of the Inheritance Tax and Gift Tax Act as

3. Related statutes;

Attachment 'Related Acts and subordinate statutes' shall be as shown.

4. Determination

(a) In cases of property (excluding land and buildings) requiring a registration, etc. for the transfer or exercise of rights under Article 45-2 (1) of the former Inheritance Tax and Gift Tax Act, if the actual owner and the nominal owner are different, the value of such property shall be deemed to have been donated by the actual owner on the date when the actual owner and the nominal owner are registered, etc. as the nominal owner: Provided, That this shall not apply to cases where the property is registered, etc. in another person’s name,

The legislative purport 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 in order to effectively prevent the act of tax avoidance using the title trust system and realize the tax justice. Thus, the proviso of the same Article is applicable only where the purpose of tax avoidance is not included in the title trust, and the taxes provided for in the proviso are not limited to the gift tax (see Supreme Court Decision 2004Du1421, Jun. 11, 2004). The burden of proving that there was no purpose of tax avoidance in the title trust is against the person claiming it (see Supreme Court Decision 2004Du1421, Jun. 11, 2004). The nominal owner, who is responsible for the burden of proof, has a clear and obvious purpose of tax avoidance to the extent that there was no objective of tax avoidance in the title trust or in the future, and there was no objective and evidence supporting that there was no tax avoidance at the time of the title trust (see, e.g., Supreme Court Decision 2000Du96484.

B. In light of the following circumstances, it is not sufficient to recognize that the entries of evidence Nos. 2-1 through 3, evidence Nos. 2-1 through 3, and evidence Nos. 3 through 7 were not the purpose of tax avoidance in the title trust of the instant shares solely with the descriptions of evidence Nos. 2-1 through 6-3, and there is no other evidence to acknowledge it. Thus, the Plaintiff’s assertion is without merit.

(1) The Plaintiff asserts that the instant shares were received as a trustee for convenience in the performance of construction works of the non-party company. The Plaintiff did not submit evidence as to what kind of help the Plaintiff would be in the performance of its duties as the Plaintiff owned the instant shares.

(2) Since it is reasonable to deem that the title trust of the instant shares was a separate title trust from that of the previous title trust against the beneficiaryB, whether the title trust of the instant shares was made for the purpose of tax avoidance should be determined at the time of the title trust of the instant shares.

(3) Around 2007, the situation where the financial status of the company was aggravated due to the unsold apartment unsold in lots. At the time of the corporate tax return for the business year 2007, the non-party company filed a return of approximately KRW 2.3 billion on the last inventory of the unsold apartment, reflecting it as the construction cost, and reported the reduced amount of income, and was discovered, and accordingly, the Defendant was subject to the disposition of corporate tax, etc. equivalent to KRW 00 in the business year 2007. The head of the non-party company, the representative director of the non-party company, as of February 19, 2008, was subject to the disposition of imposition of corporate tax, etc. equivalent to KRW 00 in the business year 200.33% to KRW 13.67% as of February 19, 208, the title trust ratio of the company and the headCC with the company

(4) Under the current income tax system, the dividend income of unlisted stocks is subject to global income tax, and the progressive tax rate is applied. As such, the head XX may avoid the progressive tax rate of global income tax on itself by title trusting the instant stocks to the Plaintiff, whose tax base of global income tax is written.

5. Conclusion

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