Busan District Court-2014-Gu 22183 (Law No. 17, 2015)

Cho Jae-2014-Divisions-88 (Law No. 26, 2014)

The gift presumption provision is applied to the actual owner of shares with the purpose of tax avoidance.

It is insufficient to recognize that there was no tax to avoid at the time of stock title trust or in the future, and to avoid the application of the presumption of gift solely on the ground that the nominal owner has no purpose of tax avoidance.

Donation of title trust property under Article 45-2 of the Inheritance Tax and Gift Tax Act

2015Nu21155 Revocation of Disposition of Imposition of Gift Tax

AA

○ Head of tax office

Busan District Court Decision 2014Guhap22183 Decided April 17, 2015

July 3, 2015

July 24, 2015

1. All appeals filed by the plaintiffs are dismissed.

2. The costs of appeal are assessed against the Plaintiffs.

The judgment of the first instance court shall be revoked. The imposition of the gift tax on October 31, 2007 by Defendant ○○○○○○○○○ on the gift of Plaintiff BB and AA on October 10, 2013 by Defendant ○○○○○○○○ on the gift of December 31, 2007, and the imposition of the gift tax on Plaintiff CCC and AA on October 8, 2013 by Defendant ○○○○○○○○○○ on the gift of Plaintiff CCC and AA shall be revoked, respectively.

1. The issues of the instant case and the judgment of the court of first instance

A. The issues of the instant case

The Defendants: (a) around 2007, with respect to Plaintiff AA’s acquisition of ○○○○○○ shares issued by Plaintiff BB, ○○○○○ shares issued by ○○ Industries Co., Ltd., and ○○○○○ shares issued by Plaintiff CCC in the name of Plaintiff CCC, the Defendants deemed that Plaintiff AA donated each of the above shares to Plaintiff BB and CCC pursuant to Article 45-2(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter the same), and deemed that Plaintiff BB and CCC were donated each of the above shares, and the gift tax was determined and notified to the Plaintiff BB and CCC, the title truster, as joint taxpayers (hereinafter the “instant disposition”).

As to this, the Plaintiffs asserted that the instant disposition was unlawful on the ground that ○○○ Company’s ○○ issued shares for the purpose of protecting management rights and stabilizing stock price, and that there was no purpose of tax avoidance and no actual result of tax avoidance. Thus, the issue of this case is whether Plaintiff AA had the purpose of tax avoidance in title trust with Plaintiff BB and CCC.

B. Judgment of the court of the first instance

Based on the premise that the court of first instance had the burden of proving that there was no tax avoidance purpose, the court held that: ① it is difficult to conclude that Plaintiff AA had a 60% share of 0% (including shares in a related party) of the shares issued by ○○○ for a period from 2002 to 2010, and thus, the maintenance of management right was threatened; ② Plaintiff AA cannot find any reasonable ground for conducting stock transaction in the name of another party for the purpose of the stock price management; ② Plaintiff AA traded shares in the name of Plaintiff BB, CCC, as well as the name of the business partner, DD, EE, and FF, an executive officer of ○○○; ③ it is difficult to conclude that Plaintiff AA had no other purpose of tax avoidance purpose, such as reporting and failing to pay capital gains tax, ④ it is difficult to acknowledge that the Plaintiffs did not have any other purpose of tax avoidance purpose, in light of the fact that Plaintiff AA had no clear reason for tax avoidance purpose, not the actual title trust and gift tax.

2. The judgment of this Court and the citing the judgment of the first instance court

In full view of the circumstances presented by the court of first instance, the decision of the court of first instance is justifiable even if the plaintiff reviewed the supplementary arguments in the court of first instance.

Therefore, the court's explanation of this case is identical to the part of the reasoning of the judgment of the court of first instance. Thus, it is citing this as it is in accordance with Article 8 (2) of the Administrative Litigation Act and Article 420 of the Civil Procedure

3. Conclusion

Therefore, the judgment of the court of first instance is just in conclusion, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.