Cho Jae-2015-2855 (Law No. 17, 2015)

Whether the disposition of imposition is unreasonable on the ground that the mother of the key real estate title trust to the Plaintiff

Under the substance over form principle, the person liable to pay the relevant capital gains tax has the burden of proving that the title truster who is the subject of the transfer does not become the taxpayer, but can be subject to the substance over form under the substance over form principle.

Article 14 of the Framework Act on National Taxes

2015Guhap1842 Tax Imposition Disposition Revocation

AA

AA Head of the Tax Office

November 29, 2016

January 10, 2017

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s imposition of capital gains tax of KRW 31,915,270 against the Plaintiff on December 15, 2014 and the imposition of KRW 14,731,200 shall be revoked.

1. Details of the disposition;

A. On December 17, 2004, the Plaintiff and the Plaintiff’s mother purchased a second-class house of 145-73 ground (hereinafter “the instant real estate”) from NA, etc. and shared 1/2 shares in AO, etc., respectively. On April 10, 2013, the Plaintiff acquired and held an additional share of KimA.

B. Since February 26, 2014, the Plaintiff sold the instant real estate to the largestA, etc., and reported transfer income tax by using the transfer value as the OOO, acquisition value as the OOO, and necessary expenses as the OOO.

C. As a result of the investigation of capital gains tax on the Plaintiff from August 29, 2014 to September 20, 2014, the Defendant: (a) deemed that the Plaintiff first acquired the instant real estate, as at the time of the Plaintiff’s acquisition; (b) denied the beneficial expenditures and the OO of the construction cost of buildings out of the amount included in the necessary expenses at the time of the Plaintiff’s declaration of capital gains tax; and (c) decided and notified the Plaintiff on December 22, 2014 as to the Plaintiff on December 26, 2004, the OO of the gift tax on donation and the capital gains tax on the donation of December 26, 2014 and the OO of the capital gains tax on the transfer income of 2014 (hereinafter “instant disposition”).

D. The Plaintiff appealed and filed an appeal with the Tax Tribunal on June 19, 2015, but was dismissed on September 17, 2015.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff did not participate in the acquisition and transfer of the instant real estate, and KimA only lent the name when the Plaintiff acquired and transferred the instant real estate. As such, the instant disposition based on the premise that the Plaintiff is the actual owner of the instant real estate was unlawful as it violates the principle of substantial taxation.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

If a title truster transfers real estate to a third party and income from such transfer was attributed to a title truster, under the principle of substantial taxation as stipulated in Article 14(1) of the Framework Act on National Taxes, if the title truster, who is the subject of the transfer, does not become a taxpayer of the relevant capital gains tax (see, e.g., Supreme Court Decision 96Nu6387, Oct. 10, 197); however, the title truster, who is the subject of the transfer, is not a taxpayer of the relevant capital gains tax (see, e.g., Supreme Court Decision 84Nu68, Jun. 26, 1984).

As to the instant case, the following circumstances, which could be known through the health care unit, Gap evidence Nos. 7, 11, and 15, Eul evidence Nos. 3 through 8, witness KimA’s testimony and the overall purport of the pleadings, namely, ① the plaintiff and KimA entered into a contract to purchase the instant real estate with Jung, etc. on Sep. 24, 2004, before the conclusion of the said contract, the plaintiff transferred OOO Won to KimA on Sept. 7, 2004, and borne part of the purchase price of the instant real estate. ② KimA entered into an investigation by the tax authorities to obtain a confirmation that the plaintiff paid part of the purchase price of the instant real estate to the plaintiff at the time of the purchase of the instant real estate, and ③ KimA entered into a loan from a financial institution on several occasions under its own name, under the premise that the plaintiff acquired 50,000,000 won of the instant real estate from Han Bank as collateral, and ④ The plaintiff directly owned the instant real estate under title trust agreement with the plaintiff No. 2316.

shall not be held.

3. Conclusion

Thus, the plaintiff's claim is dismissed as it is without merit.