Seocho 2012west 3263 ( December 31, 2012)

A gift tax disposition is illegal because there is justifiable reason in terms of transaction practice.

Comprehensively taking account of the fact that there is no special relationship between the parties who are not in a special relationship and that the trading price of stocks is similar or higher to that proposed to the Plaintiff, the transfer of stocks cannot be deemed to have traded at a price significantly lower than the market price without a justifiable reason in light of the transactional practice between persons who are not in a special relationship.

2013Guhap7209 Revocation of Disposition of Imposition of Gift Tax

South AAAA

Head of Yongsan Tax Office

May 24, 2013

June 14, 2013

1. The Defendant’s imposition of KRW 000 on the Plaintiff for the gift tax of January 5, 201, 2007, imposition of KRW 000 on the gift tax of 2008, imposition of KRW 000 on the gift tax of 2008, and imposition of KRW 000 on the gift tax of 2010 on May 14, 201 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. The Plaintiff, as the representative director of the KOSDAQ-listed corporation BBC (hereinafter referred to as “former BBC”), was holding 862,264 shares (13.71%). KimCC held 327,410 shares (5.21%).

B. The Plaintiff did not comply with the proposal to sell the instant shares from the DDteme PP World Co., Ltd. in 2007 to KRW 000 per share, KRW 000 per share from the EE Medical Foundation in October of the same year, and KRW 000 per share.

C. On November 5, 2007, the Plaintiff and KimCC concluded a contract for acquisition of shares and management rights that transfer the management rights of 550,000 shares out of the shares owned by the Plaintiff to the largest F, and 1.50,000 shares out of the shares owned by KimCC (hereinafter referred to as “Plaintiff shares”, and that of the shares transferred by KimCC to 000 won, “the shares in this case”) and the former BBC shares and management rights transfer to the former BBC, within six months after the conclusion of the contract as special terms and conditions, the former BB and GGGGGGE (hereinafter referred to as “GGE”) divided the existing business parts of the former BB services into the Plaintiff, and the FF agreed to pay the acquisition price to the Plaintiff within the maximum of 000 won (hereinafter referred to as “special terms and conditions”).

D. The Plaintiff transferred the Plaintiff’s stocks to the largestF on November 5, 2007 and April 30, 2008 under the above stock and management acquisition agreement, and received KRW 000 in return.

E. On April 30, 2008, the largestF transferred the instant shares to GGGGE 000 won. On the same day, the former BBE merged the GGGE s and changed the trade name into HH HH (hereinafter “HH”). On June 4, 2006, the former BBE established BB E-B service (hereinafter “BB service”).

F. Since then, the third accounting corporation assessed the shares value of BB Roon on August 6, 2010 as approximately KRW 000,000, the Plaintiff and the lowestF agreed to partly modify the special agreement and purchase KRW 1.80,000,000,000, out of 2 million shares issued by BB Roon, the Plaintiff purchased KRW 900,000,000,000, and the lowestF agreed to assume the purchase price in full, but the largestF did not pay the remainder to the Plaintiff on August 13, 201.

G. Accordingly, on August 25, 2010 and October 27, 2010 of the same year, the Plaintiff paid 000 won each of the acquisition price of shares to HH as the purchase price of shares, and filed a lawsuit against the largest FF seeking payment of 000 won of the loan, and the Plaintiff won the judgment (Seoul Central District Court Decision 201Gahap24802) on August 17, 2011, but the largest FF went missing while failing to pay taxes of 000 won or more, and the Plaintiff did not have any real estate or financial assets owned by the largest FF as a result of the Plaintiff’s filing a request for property specification with the largest FF.

H. Under Article 35(2) of the Inheritance Tax and Gift Tax Act (hereinafter “the Inheritance Tax and Gift Tax Act”) deeming that the transfer of the instant shares constitutes a high-priced transfer of shares between non-specially related persons, the director of the Central District Tax Office deemed that the Plaintiff’s share acquisition price of KRW 000 and the largest amount to be borne by the Plaintiff pursuant to Article 35(2) of the Inheritance Tax and Gift Tax Act (hereinafter “the Act”), and notified the Defendant that the amount corresponding to the difference with the market price of KRW 000 ( KRW 000 as of November 16, 2007, KRW 000 as of April 30, 2008) should be regarded as the transfer price of the Plaintiff’s shares, and thus, the amount corresponding to the difference between the market price

I. Accordingly, on January 5, 2012, the Defendant imposed the Plaintiff a gift tax of KRW 000 for the year 2007 and KRW 000 for the gift tax of KRW 200 for the year 2008 (hereinafter “original disposition”).

(j) On January 27, 2012, the Plaintiff filed an objection with the head of the Seoul Regional Tax Office, and the head of the Seoul Regional Tax Office, on April 27, 2012, filed an objection against the Seoul Regional Tax Office, and the Seoul Regional Tax Office dismissed the Plaintiff’s remaining objection to additional gift tax on the ground that the Plaintiff’s gift tax base cannot be subject to gift tax due to impossibility of recovery, on the ground that the Plaintiff’s maximum amount of KRW 000,000,000,000,000,000,000,000,000,000, which was paid by the largest FF, was finalized on August 13, 2010, which was paid by the largest FF on behalf of the Plaintiff.

(k) On January 5, 2012, the Defendant revised the gift tax of 2007 and the gift tax of 2008 to KRW 000,000, among the original disposition on January 5, 2012, and imposed KRW 000,000,000, on the gift tax of 2010 on May 14, 201 of the same year (hereinafter “instant disposition”).

Other. On June 22, 2012, the Plaintiff filed an appeal with the Tax Tribunal on the instant disposition, but was dismissed on December 31 of the same year.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1 through 11, 14, 15, 18, and Eul evidence No. 1 (including all numbers), and the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

From 2005 to 2008, the former BB had experienced difficulties in operating the shares due to cumulative loss. Accordingly, the Plaintiff received a proposal to transfer the shares of the former BBB from several corporations at a price of more than 000 won per share. Meanwhile, GGtechs planned to list the shares through mergers for continuous development. Accordingly, in proposing the Plaintiff to transfer the shares and the right of management of the instant case, the former BBEs were merged with the former BBEs and the former BBBEs, and the Plaintiff provided a condition that the Plaintiff will take over the shares again after which the Plaintiff would take over the shares of the instant case, including the management premium and the profits from listing. Ultimately, the Plaintiff and the largest FF concluded the agreement to transfer the shares of the instant case to maximize each of the rights of management, and thus, they constituted an unlawful transaction price at a free market price, and thus, they constitute an unlawful transaction price at a higher price than that of the instant case.

B. Relevant statutes

Attached Form is as shown in the attached Form.

C. Determination

(1) Article 35(2) of the Act provides that in a case where a person who is not a related party acquires or transfers property between the parties, without justifiable reasons, the amount equivalent to the difference between the price and the market price shall be presumed to have been donated. Article 26(6) of the Enforcement Decree of the Act provides that the price of the transferred property minus the market price is 30/10 or more of the market price. Meanwhile, according to Article 63(1)1 and (3) of the Act and Article 63(1) of the Act and Article 35(2) of the Enforcement Decree of the Act, the stocks of a KOSDAQ-listed corporation shall be assessed as the average market price at the Korea Exchange every two months before and after the evaluation base date, and if the largest shareholder, etc. holds more than 50/100 of the total number of stocks issued by the corporation, 30/100 (15/100 in cases of a small and medium enterprise prescribed by Presidential Decree) shall be added to the assessed price.

(2) Comprehensively taking account of the fact that the tax authority bears the burden of proof of taxation requirement in a lawsuit seeking revocation of taxation, the language and text of Article 35(2) of the Act, and the form of provision, etc., the transferor’s transfer of assets to persons other than those with a special relationship, as well as the fact that there is no justifiable reason for transaction practice (see Supreme Court Decision 2011Du2075, Dec. 22, 201). If the above facts are revealed, i.e., if the above facts are freely traded with sufficient information between the parties, it can not be readily concluded that the above transaction is not a general and normal transaction, and that the transfer of stocks to the Plaintiff is no more than the market price at the time of the transaction. (2) It can be concluded that the transfer of stocks to the KOSDAQ-listed company is no more than the sale and purchase price at the market price at the time of the KOSDAQ-listed company’s market price under the former Act and no more than the market price at the time of the sale and purchase by the KOSDAQ-listed company.

(3) Therefore, the instant disposition on the premise of objection should be revoked as it is unlawful.

3. Conclusion

The plaintiff's claim shall be accepted, and the costs of lawsuit shall be borne by the losing defendant.