Seocho 2015west 1184, 2017.20

The value under a stock sales contract shall not be the market value prescribed by the former Corporate Tax Act, and it shall not be deemed the market value at the time of acquisition, as it is not an amount reflecting the

It is difficult to view that the stock transaction in this case was conducted based on a bearer contract similar to exchange between the three parties, and that the value under the stock transfer contract is not the amount determined through the appraisal of shares, but the net asset value in the account book is the same as the net asset value in light of the complicated control relationship of the EE corporation at the time.

Article 41 of the Corporate Tax Act; Article 63 of the Inheritance Tax and Gift Tax Act

2017Guhap70700 Corporate tax and request for revocation of a disposition rejecting rectification

1. AAAAA;

2. BB

CCC Head of the tax office

May 1, 2018

June 21, 2018

1. The Defendant’s disposition of imposition of KRW 7,790,516,840 on November 3, 2014 against Plaintiff AAA, Inc. for the imposition of KRW 7,790,516,840 for the business year 201 shall be revoked.

2. The plaintiff BB's claim is dismissed.

3. Of the litigation costs, the part arising between the Plaintiff AAA and the Defendant is borne by the Defendant, and the part arising between the Plaintiff BB and the Defendant is borne by the Plaintiff BB.

Cheong-gu Office

The primary purport of the claim is as stated in paragraph (1).

Preliminary Claim: First, the Defendant’s refusal of correction of KRW 7,835,732,90 for the business year 2002 against Plaintiff BB, and the Defendant’s refusal of correction of KRW 7,835,732,90 for the business year 2002 against Plaintiff AAA, is revoked.

1. Details of the disposition;

A. The Plaintiff Company AAA is a company established on April 1, 2009 by dividing the industrial goods of the Plaintiff Company BB into the division of industrial goods of the Plaintiff Company BB (hereinafter the Plaintiffs indicated are omitted.)

B. On August 31, 2001, Plaintiff BB acquired USD 33,700,000 (hereinafter referred to as “DD corporation’s stocks”) from Germany’s xxxxxxxxxxxxxxx and Co., Ltd. (hereinafter referred to as “D corporation”). From Germany’s x.xxxxxx (hereinafter referred to as “D corporation”) 49% of the shares of Xxxxx (hereinafter referred to as “the shares of DD corporation”).

C. On November 6, 2002, the plaintiff BB transferred the shares of the Switzerland Corporation x.xxx. S.A. (hereinafter "EE corporation") located in Switzerland on November 6, 2002 (hereinafter "DD corporation's shares") and acquired 49% of the shares of the EE corporation (hereinafter "the shares of the EE corporation") from the D corporation on the same day (hereinafter "the total transfer of shares of the DD corporation and the acquisition of shares of the EE corporation").

Plaintiff BB did not include separate earnings or losses in relation to the transfer of stocks of the EE corporation acquired through the stock transaction in this case, considering that the value of the stocks of the EE corporation originally acquired is the same as that of the stocks of the DE corporation, but included the acquisition value of the EE corporation in the account book as KRW 43,203,400,000, such as the acquisition value of the stocks of the D corporation.

D. EE corporate stocks have been disposed of as a profit and loss from the 2002 to 8 years, and the book value became 0 "0" at the end of 2009.

E. On April 1, 2009, Plaintiff AA acquired the shares of the EE Corporation upon division and establishment in Plaintiff BBB, and on January 31, 2011, transferred the shares of the EE Corporation to Indiax in KRW 693,515,633.

Plaintiff AAA, at the time of filing a corporate tax return for 2011, was recognized as 42,509,884,367 won (i.e., 43,203,40,400 won - 693,515,633 won) by appropriating 693,515,633 won as the disposal profit of the shares of the EEA corporation, and by ratification of 43,203,40,000 won as the valuation loss of the shares of the EE corporation managed by the reservation for taxation purposes.

F. From June 10, 2014 to October 15, 2014, the director of the Seoul Regional Tax Office: (a) as a result of the tax investigation conducted with respect to Plaintiff AB during the period from June 10, 2014 to October 15, 2014, deemed that the legitimate acquisition value of the shares of the EE corporation acquired by Plaintiff BB was KRW 15,438,073,540 (12,710,000) recorded as the purchase price in the share transfer contract (Evidence 3-1, 200) prepared at the time of the acquisition of shares of the EE corporation; and (b) determined that Plaintiff AAA made an excessive appropriation of KRW 27,765,326,460 as losses incurred from the disposal of shares of the EE corporation (=43,203,40,000 - 15,438,540 won).

On November 3, 2014, the defendant notified the head of Seoul Regional Tax Office of taxation data as above, notified the plaintiff AAAA to correct and notify the tax amount of KRW 7,790,516,840 (including additional tax) for the business year 201.

G. On January 28, 2015, Plaintiff AA was dissatisfied with the disposition of imposition of the instant corporate tax, and filed an appeal with the Tax Tribunal on January 28, 2015.

H. Meanwhile, the Plaintiffs should additionally include the acquisition value of stocks of the EE legal entity in deductible expenses when deeming it as KRW 15,438,073,540 in accordance with the disposition of the instant corporate tax in 202, the transfer amount of stocks of the D legal entity should also be KRW 15,438,073,073,540 in relation to the report of corporate tax for 2002 business year. As such, the Plaintiffs should additionally include the transfer amount of stocks of the D legal entity in deductible expenses (i.e., KRW 15,438,073,073,540 in acquisition value - KRW 43,203,400 in acquisition value - KRW 43,732,90 in value, 30,000 in value, which constitutes the amount of tax to be refunded and corrected for the first 20,2402 or 450-2,000 in the tax base reported for correction for reasons other than the first 250,30,250.

(i) The Plaintiffs did not receive any notification from the Defendant by February 28, 2015, which was two months after the date of the request for correction, and, if a person who filed a request for correction fails to receive any notification within two months, the Plaintiffs deemed that the Defendant rendered a disposition rejecting correction pursuant to the proviso of Article 45-2(3) of the former Framework Act on National Taxes (hereinafter referred to as “instant disposition rejecting correction”), and Plaintiff BBB filed a request for review of each of the instant disposition rejecting correction on August 4, 2015 and May 29, 2015.

(j) On April 20, 2017, the Tax Tribunal dismissed all appeals on the disposition of imposition of corporate tax in this case and the disposition of refusal of correction in this case.

[Ground of recognition] Facts without dispute, Gap evidence 1 through 5, 7 through 12, Eul evidence 1 to 3 (including each number; hereinafter the same shall apply), the purport of the whole pleadings

2. The plaintiffs' assertion

A. The plaintiff's assertion

A. Plaintiff AAA’s primary claim (related to the disposition of imposition of the corporate tax of this case)

The purchase price of the EE corporation’s shares stated in the transfer contract asserted by the Defendant is not the price calculated through appraisal, but rather the price formally recorded the net asset value on the account books of the EE corporation. There is no other evidence to acknowledge that the acquisition price of the EE corporation’s shares is KRW 15,438,073,540. Rather, the stock transaction of this case is an unregistered transaction between the stocks of the DE corporation and the stocks of the EE corporation similar to the exchange or exchange of the stocks of the EE corporation. Since the value of the EE corporation’s shares after the instant stock transaction is identical to that of the D corporation prior to the instant stock transaction, it is reasonable to view the acquisition price of the stocks of the EE corporation as KRW 43,203,40,000. Ultimately, the acquisition price of the stocks of the Plaintiff BB or the Plaintiff AE corporation’s shares succeeded to the stocks of the EE corporation cannot be deemed as KRW 15,438,07,540.

B. The plaintiffs' preliminary claim (related to the rejection of correction of the case)

If the corporate tax imposition disposition of this case is lawful, the corporate tax base and tax amount of the business year of 2002 decreased due to the disposition of this case on the business year of 201, which constitutes the grounds for subsequent request for correction under Article 45-2(2)4 of the Framework Act on National Taxes. Therefore, the rejection disposition of this case is unlawful. As such, with respect to Plaintiff BB, who is the subject of the report on the transfer of stocks of DD corporation at the time of the business year of 2002, and the subject of the report on the corporate tax base and tax amount, it should be revoked as preliminaryly divided from Plaintiff BBB in 209 and succeeded to the stocks of EE corporation.

3. Whether the disposition of imposition of the corporate tax of this case is legitimate

(a) Relevant statutes;

It is as shown in the attached Form.

(b) Fact of recognition;

1) At around 2001, Germany’s xxx.xxxxxxx KG (hereinafter “DD parent corporation”) mainly engaged in the development, manufacture, and sale of salt rates and related products in Europe and the United States through DD corporations, its subsidiary. Plaintiff BB entered into an understanding with DD parent corporation on January 11, 2001, that Plaintiff BB participated in a joint venture business by acquiring stocks of DD corporations owned by German holding company while transferring DB to DD parent corporation for restructuring of salt royalty business.

At the time of August 31, 2001, D&C shares were owned by D&C companies 51%, and 49%, and Plaintiff BB acquired D&D shares from German holding company on August 31, 2001 in KRW 43,203,40,00, and held shares of D&D companies at the rate of 49:51. D&C shares were generated and sold by D&C companies that produce and sell d&D shares, such as Modum, leather, Bady, and Modum, and Modum, and all export and import of E&C shares were owned by 10% of the shares of D&E companies; EE corporations owned the shares of D&C companies, which are sales companies, such as France, the United States, Italy, the United Kingdom, and Korea, with KRW 100.0% of the shares of DB and the shares of Plaintiff B&C companies. After the acquisition of Plaintiff B’s shares.

[The share structure of the Doman Group after acquiring the shares of Plaintiff BB as DB in August 2001]

Omission

2) The Plaintiff BB and DB were to conclude that Switzerland B1 was more favorable than Germany in terms of expenses and procedures among the review of measures for listing BB on the German Stock Exchange in accordance with the above MO note, and that EBB and DD1 were to be converted into EE corporation. Accordingly, on November 6, 2002, at the same time, the contract was entered into between the EE corporation and the EE corporation with the content of transferring DB shares owned by the respective EE corporation, 49:51, 49B and DB were purchased by the Plaintiff B, 30, 300, 190, 400, 2010, 300, 2010, 310, 400, 310, 40, 207, 201, 310, 40, 319, 206, 310, 204, 310, 410, 201.

3) After the instant stock transaction, the shareholding structure of the Do Man Group is as follows.

【D Group’s share structure subsequent to the instant share transaction in November 2002】

Omission

4) Plaintiff BB deemed that the instant stock transaction constitutes a formal stock exchange transaction without changing the actual value, and thus, the acquisition value of the EE corporation’s stocks in the business year 2002 was appropriated as the acquisition value of the stocks of the existing D corporation, and did not perform separate accounting and tax processing.

[Ground of recognition] Gap evidence 2 to 6, 10, Eul evidence 1 to 6, the whole pleadings

C. Determination

1) The nature of the instant stock transaction

In terms of its form, two sales contracts exist between Plaintiff BB and EEB, Plaintiff BB and DD, respectively, and acquire EE corporation’s shares, and the subject matter of payment is evaluated as money between the parties. However, it is reasonable to view that the stock transaction in this case was not conducted according to each of the above sales contracts, but based on a bearer contract similar to exchange between Plaintiff BB and DD corporation and the three parties of the EE corporation, rather than under each of the above sales contracts, the above sales contract was conducted in mutual reliance on the exchange. In other words, it was reasonable to view that Plaintiff BB and DD were intended to exchange their shares in this case’s shares in order to list their shares in Switzerland, and there was no substantial balance of shares transfer contracts between Plaintiff BBB and DD corporation and the EE corporation, within the scope of the net asset value set off against the Plaintiff EE corporation, and there was no difference between Plaintiff BBBB and the EE corporation’s claim for the remaining amount of shares transfer from the EEB corporation, not from the EB corporation.

(ii) the acquisition value of stocks of EE corporations;

A) Under Article 41(1)3 of the former Corporate Tax Act (amended by Act No. 9267 of Dec. 26, 2008; hereinafter the same) and Article 72(1)5 of the former Enforcement Decree of Corporate Tax Act (amended by Presidential Decree No. 17826 of Dec. 30, 2002; hereinafter the same), the acquisition value of assets acquired by a domestic corporation through an unregistered contract similar to an exchange shall be calculated as “market price at the time of acquisition.” Article 72(1)5 of the former Enforcement Decree of Corporate Tax Act does not expressly stipulate that the acquisition value of assets shall be the market price, and it is reasonable to interpret the concept of “market price under the former Corporate Tax Act or the former Enforcement Decree of Corporate Tax Act” as the same meaning as “market price under Article 52 of the former Corporate Tax Act, which defines the concept of “market price” in relation to the denial of wrongful calculation.

Article 52 (2) of the former Corporate Tax Act provides that "the market price shall be applied or deemed as applicable to sound social norms and commercial practices and normal transactions between persons other than persons with a special relationship". In addition, under the former Enforcement Decree of the Corporate Tax Act, in a situation similar to the pertinent transaction, where there is a price for continuous transactions with many and unspecified persons other than persons with a special relationship or for generally transacted between third parties other than persons with a special relationship, the price shall be deemed as one of the market price (Article 89 (1) of the former Enforcement Decree of the Corporate Tax Act), and where the market price is unclear, the price shall be based on the appraised value if there is an appraisal value (excluding stocks, etc. not listed on the Stock Exchange), and where there is no appraisal value, the "net value and net asset value, which are the values appraised by applying mutatis mutandis Article 63 of the Inheritance Tax and Gift Tax Act (Article 89 (2) of the former Enforcement Decree of the Corporate Tax Act). The burden of proof on the market price under the former Enforcement Decree of the Corporate Tax Act shall be deemed as the Defendant (see, 2003Du1249

B)In light of the above legal principles, considering the following circumstances revealed in light of the health stand, the facts acknowledged earlier, and the purport of the entire pleadings, it is insufficient to recognize that the market price of the shares above was 15,438,073,540 won as of November 6, 2002, the market price of the shares above was 15,438,073,540 won as of November 6, 2002, and there is no other evidence to acknowledge otherwise.

① At the time of November 6, 2002, Plaintiff BB’s stocks acquired by the Plaintiff BB as of November 6, 2002 were non-listed stocks and owned 100% of the stocks. As such, at the time of November 6, 2002, the stocks of the EE corporation were not traded among many unspecified persons, and there was no objective exchange price formed by a normal transaction.

② Each stock transfer contract prepared at the time of the instant stock transaction did not state the amount determined through valuation of the subject-matter of the purchase price, but rather state the net asset value on the account book, which is the basis of the agreement that can be indicated as the purchase price, in intent to exchange the stock held through the form of sale. Accordingly, in addition, in addition to the change of the stock held from the stocks held by DD corporation to the stocks held by the EE corporation due to the instant stock transaction, no one is actually paid or received any payment. Moreover, the party to the instant stock transaction cannot be deemed as the market value as stipulated in the former Corporate Tax Act as a specially related person.

(3) The value of the shares issued by the holding company shall be determined according to the value of the subsidiary company that actually runs its business, and the value of the shares in this case shall be the highest holding company and the value of the assets and profit-making of the subsidiary company, and the value of the assets and profit-making value of the EE corporation, the subsidiary company, the French corporation, the United States corporation, the Italy corporation, the United Kingdom corporation, the English corporation, the Chinese corporation, and the Chinese corporation.

After the stock transaction of this case, DDR was divided into complete subsidiaries controlled by EEE corporation, and EE corporation was the highest holding company. After the stock transaction of this case, the stock value of EE corporation was the value of assets and earnings of EE corporation itself, the value of assets and earnings of DDR, the subsidiary, and the value of assets and earnings of other subsidiaries of the French corporation, the United States corporation, the Italy corporation, the United Kingdom corporation, the Korean corporation, and the Chinese corporation.

In addition, the shares of the EE Corporation that the Plaintiff acquired by transferring its shares through the instant shares transaction are shares of the EE Corporation as the parent company of the D Corporation, not the subsidiary company of the D Corporation.

④ In the case of the usual purchase of stocks, the net asset value of the EE corporation acquired by the Plaintiff through the instant stock transaction is the same as the net asset value on the account books of the EE corporation stated in the stock transfer contract as above. In other words, it is reasonable to deem that the value of the EE corporation’s stocks acquired by the Plaintiff through the instant stock transaction is included in the stock value of the E corporation as the highest holding company, and the net asset value on the account books of the EE corporation stated as the purchase value on the stock transfer contract reflects only the value of the EE corporation as its subordinate company before the D corporation still holds the stocks of the DD corporation.

(5) In full view of these circumstances, the purchase price stated in the share transfer contract for the EE corporation cannot be deemed as the market price stipulated in the Corporate Tax Act, and furthermore, it cannot be deemed as the net value of the EE corporation as a supplementary assessment method, because it does not reflect the value of the stocks acquired by the Plaintiff BB, and there is no other evidence to support that the purchase price is the market price at the time of acquisition of the stocks acquired by the Plaintiff BB of the EE corporation.

D. Sub-committee

Therefore, the disposition of imposition of the corporate tax in this case on the premise that the market price at the time of the acquisition of the shares of the EE corporation is the amount specified in the share transfer contract is illegal. Thus, the main claim of the Plaintiff AA is reasonable, and so long as the Plaintiff receives the main claim of the Plaintiff AAA, the conjunctive claim of the Plaintiff BB based on the premise that the above claim is not accepted, that is, the conjunctive claim of the Plaintiff BBB, that is, the preliminary claim of the Plaintiff BB, which is premised on the premise that the above claim is not accepted, is not reasonable without any need to further examine (In addition, since Plaintiff AAAA is accepted the main claim of the Plaintiff, the conjunctive claim of the Plaintiff

3. Conclusion

Thus, the primary claim of the plaintiff AAA is accepted on the grounds of its merit, and the claim of the plaintiff BB is dismissed on the grounds of its merit. It is so decided as per Disposition.