Examination Donation 2008-0043 ( October 31, 2008)

Taxes subject to tax avoidance are not limited to gift tax.

Since taxes subject to the tax avoidance are not limited to the gift tax, if the deemed acquisition tax for oligopolistic shareholders under the Local Tax Act is avoided, there is the purpose of the tax avoidance.

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

Article 45-2 (Presumption of Donation of Title Trust Property)

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposing gift tax of KRW 200,336,230 against the Plaintiff on May 9, 2008 shall be revoked.

1. Circumstances of the disposition;

A. On May 26, 200, the Plaintiff was registered as a shareholder who acquired 87,648 shares of ○○ Mutual Savings and Finance Company 74-22, ○○-dong, ○○ Metropolitan City (hereinafter “○○ Mutual Savings and Finance Company”) (hereinafter “instant shares”).

B. After investigating the details of stock change in the ○○ Mutual Savings and Finance Company, the Busan Regional Tax Office notified the Defendant of taxation data stating that “the Plaintiff is a nominal shareholder who lent the ownership of the instant shares to ○○○○, and that ○○○ actually acquired the instant shares.” Accordingly, the Defendant was given a donation of the instant shares (value 935,817,696 won) pursuant to the provision on the constructive donation of title trust property under the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 2002; hereinafter the same) on May 9, 2008, pursuant to the provision on constructive donation of title trust property under the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 200; hereinafter the same), the Plaintiff determined and notified KRW 200,36,230

C. On May 14, 2008, the Plaintiff received a notice of tax payment of the gift tax and filed a request for review with the National Tax Service on August 6, 2008, but the request for review was dismissed on October 31 of the same year. The Plaintiff filed the instant lawsuit on February 2, 2009 upon receiving a written decision of dismissal on November 5 of the same year.

[Ground of recognition] Facts without dispute, Gap evidence 1, 4, Eul evidence 1, Eul evidence 2-1 to 3, Eul evidence 3-5, the purport of the whole pleadings

2. Whether the dispositions of the instant case are legal.

A. The plaintiff's principal

1) The actual owner of the instant shares is not ○○, but ○○ Mutual Savings and Finance Company (hereinafter referred to as “○○ Mutual Savings and Finance Company”) that ○○○ worked as the representative director. Although ○○ Mutual Savings and Finance Company intended to acquire ○○ Mutual Savings and Finance Company, it stipulated that the act of acquiring the instant shares shall be subject to authorization of the Financial Supervisory Commission as to the act of acquiring the shares in the name of the Plaintiff for the purpose of evading the above authorization of the Financial Supervisory Commission, under Article 10 subparagraph 2 of the former Mutual Savings and Finance Company Act (amended by Act No. 6429, Mar. 28, 2001). Thus, the instant disposition that imposed gift tax on the acquisition of the shares in the name of the Plaintiff without such authorization is unlawful.

2) Even if ○○○○○ acquired the instant shares under the Plaintiff’s name, not the purpose of tax avoidance, ① this is not for the purpose of tax avoidance, but for the acquisition of shares exceeding 30/100 among the voting shares of ○○ Mutual Savings and Finance Company pursuant to Article 10-2(3) of the former Mutual Savings and Finance Company Act, and was for the purpose of evading such obligation to report. ② At the time of the Plaintiff’s acquisition of the instant shares, ○○ Mutual and Finance Company did not have any tax in arrears with ○○ Mutual and Finance Company. The ○○○ Mutual and Finance Company was declared bankrupt on July 16, 2001, and the said ○○ Mutual and Finance Company did not have any outcome of avoiding the global income tax on dividend income or the secondary tax liability of oligopolistic shareholders due to the title trust of the instant shares. ③ It cannot be deemed that the ○○○ Mutual and Finance Company’s exercise of voting rights by the Financial Supervisory Commission, and thus, it cannot be deemed that the acquisition tax was unlawful in view of the status of ○○○ Mutual and Finance Company’s.

(b) Related statutes;

It shall be as shown in the attached Form.

C. Determination

(i)the first proposal;

① The “transfer of business” means a transfer of all the human and physical organizations organized for a certain business purpose to a single unit, which is distinguishable from the transfer of stocks. The former Mutual Saving and Finance Company Act provides that the transfer of all the shares shall be subject to authorization. However, the former Mutual Savings and Finance Company Act provides that the acquisition of shares with voting rights shall be subject to reporting; however, the former Mutual Savings and Finance Company Act provides that the exercise of voting rights shall be restricted for the acquisition of shares with no voting rights; and that the disposition may be ordered for the non-performance of the obligation to report shall not be denied; thus, the acquisition of shares of this case shall not be deemed to have the same effect as the transfer of business. Accordingly, the Plaintiff’s allegation on the different premise is without merit.

(ii) the second light judgment;

The legislative intent of the provisions of Article 41-2 of the former Inheritance Tax and Gift Tax Act is 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 can be applied only if the purpose of tax avoidance is not included in the purpose of title trust. In addition, according to the provision of paragraph (5) of the same Article, the taxes subject to tax avoidance are not limited to the gift tax, and the burden of proving that there was no purpose of tax avoidance in the title trust is the nominal person who asserts it.

Considering the overall purport of the pleadings in the name of ○○○○ Mutual Savings and Finance Company, etc., Gap evidence 2-1, Gap evidence 3 through 7, Eul evidence 9 through 11, Eul evidence 2-1 through 3, Eul evidence 3 through 5, and the whole purport of the pleadings is as follows: (1) Trade Union and Finance Company actually takes over all the shares issued by ○○○ Mutual Savings and Finance Company under its name, but it does not constitute 87,648 shares (21.3%; hereinafter the same shall apply) under its name, 103,130 shares (25.1%), 93,30 shares (8.7%), 45,00 shares in the name of ○○○○○○○○ Mutual Savings and Finance Company under the former Mutual Savings and Finance Company Act, and it is found that the purpose of ○○○○○○○ Mutual and Finance Company’s acquisition of shares was not yet acknowledged as having been subject to the above ○○○○○ Mutual and Finance Company under its name.

3. Conclusion

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