It is difficult to deem that there was no purpose of tax avoidance as long as the oligopolistic shareholder has formed a appearance that does not exist due to the division of shares.

As long as the oligopolistic shareholder intentionally formed the appearance of a nominal trust through the distribution of shares, it is difficult to deem that there was no purpose of tax avoidance solely on the ground that the title truster did not have the secondary tax liability due to the failure to pay taxes after the title trust.

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

revocation of revocation of disposition imposing gift tax on Suwon District Court 2018Guhap66013

AA

00. Head of tax office

October 2, 2018

October 23, 2018

1. All of the plaintiffs' claims are dismissed.

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

Cheong-gu Office

The Defendant imposed a gift tax of KRW 12,213,237 (including additional taxes) on Plaintiff Y in 2009 on October 11, 2017, and revoked all the disposition of notification of designation of a joint and several taxpayer of the gift tax on Plaintiff Y against Plaintiff Y.

1. Details of the disposition;

A. On June 15, 2009, Plaintiff Y received 228,00 shares from JJ and LL (hereinafter “0 Construction”). An agreement was made to trust the shares to Plaintiff Y et al., who is the title of the shares. As a result, the said shares were transferred to Plaintiff M et al. (hereinafter “instant shares”) as shown in attached Table 1.

B. From June 29, 2017 to August 7, 2017, a regional tax office confirmed that all of the above shares were under title trust as a result of conducting a non-regular investigation of corporate tax and a funding investigation against the Plaintiffs. Accordingly, the Defendant notified PlaintiffY of the payment of gift tax under Article 45-2 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010; hereinafter referred to as the “former Inheritance Tax and Gift Tax Act”) on October 11, 2017, deeming that PlaintiffY donated the instant shares to Plaintiff MM, and thus, imposed and notified PlaintiffY of the imposition of gift tax (including additional tax) of KRW 12,213,237 (including additional tax). Pursuant to Article 4(5) of the former Inheritance Tax and Gift Tax Act, the Defendant notified PlaintiffY of the payment of gift tax jointly (hereinafter referred to as “each of the instant dispositions”).

C. The Plaintiffs filed an appeal with the Tax Tribunal on each of the instant dispositions, and the Tax Tribunal dismissed all of them on March 28, 2018.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 3, 8, Eul evidence No. 1, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiffs' assertion

Plaintiff Y is a person with bad credit standing, and thus registered as the largest shareholder, it cannot be deemed that the objective of tax avoidance was committed against the Plaintiffs in light of the following: (a) the instant shares were trusted in trust to Plaintiff Y on account of the need of business in order to avoid difficulties arising from 00 construction when registered as the largest shareholder; and (b) there is little tax evasion. Accordingly, each of the instant dispositions is unlawful

B. Relevant statutes

Attached Table 2.

C. Relevant legal principles

The main text of Article 45-2(1) of the former Inheritance Tax and Gift Tax Act provides that in case where the actual owner and the title holder are different with respect to property which requires a registration, etc. for the transfer or exercise of the right, the value of such property shall be deemed to have been donated to the actual owner on the date when the property is registered, etc. as the title holder notwithstanding Article 14 of the Framework Act on National Taxes, and that in case where the property is registered, etc. in the name of another person without any intention to evade taxes under subparagraph 1 of the same Article, the main text of Article 45-2(2) provides that "in case where the property is registered, etc. in the name

The purpose of the foregoing provision is to effectively prevent title trust act in the name of another person only for the purpose of tax avoidance and realize tax justice. Thus, if the title trust act was recognized to have been conducted for another purpose, not for the purpose of tax avoidance, and only the reduction of minor taxes incidental thereto is generated, such act of title trust cannot be deemed as a donation, deeming that there was an objective of tax avoidance. However, in light of the legislative intent as seen above, only if the purpose of title trust is not included in the purpose of tax avoidance, it shall not be deemed as a donation. Therefore, if it is deemed that there was an objective of tax avoidance, it shall be deemed as a donation, in addition to other purposes, if it is deemed that there was an objective of tax avoidance. The burden of proving that there was no purpose of tax avoidance exists a person who asserts it (see, e.g., Supreme Court Decision 2011Du10232, Feb. 21, 201

Furthermore, as the nominal owner who bears the burden of proof, there was an obvious objective irrelevant to the tax avoidance to the extent that the title trust had no objective of tax avoidance, and it is necessary to prove that there was no tax avoidance at the time of the title trust or there was no tax avoidance at the time of the title trust to the extent that the ordinary person is not suspected of being suspected of being suspected (see, e.g., Supreme Court Decision 2004Du11220, Sept. 22, 2006).

D. Determination

In full view of the following circumstances acknowledged by comprehensively taking into account the respective descriptions of Gap evidence Nos. 4, 5, 6, and 11 (including virtual numbers), it cannot be deemed that the plaintiff YY did not have any purpose of tax avoidance in the title trust of the shares of this case with plaintiff YY. Thus, the plaintiffs' assertion is without merit.

① On November 14, 2008, PlaintiffY received a re-determination of the defaulters’ list, etc. from the 00 district court 000Kadan00000, and was declared bankrupt on May 27, 2013 by the 00 district court 00Hadan0000, and the immunity was granted on April 222, 2014 by the 00 district court 00 00 Y00,000. However, there is no evidence to deem that PlaintiffY as a guarantor may hinder the receipt of a loan from a financial institution. However, in order for a company to obtain a loan, there is no need for a shareholder’s guarantee, other than the representative.

② Since June 15, 2009, 000 construction appears to have no amount of dividends paid to shareholders. However, 00 construction has a considerable amount of un disposed earned surplus, and if it takes the form of allocating dividends to several title trustees who are not Plaintiff Y1, it seems that the amount of income may vary as a result of the diversification of the applicable rate of income, and thus, it would be likely that the applicable rate of income may vary.

③ Plaintiff Y, as a specially related person, formed the appearance of an oligopolistic shareholder under the name of 00, 00, Doz. Doz. 00, Doz. Doz. as indicated in attached Form 1, and formed the appearance where there is no oligopolistic shareholder. As such, Plaintiff Y did not bear secondary tax liability for national taxes and local taxes as an oligopolistic shareholder when transferring the shares of 00 construction in its own name unless it is revealed whether the title trust has been made or not (see, e.g., Supreme Court Decisions 201Du15794, May 9, 2012; 2011Du15794, supra). Therefore, Plaintiff Y, as long as Plaintiff Y intentionally formed the appearance that is not an oligopolistic shareholder of 00 construction, it is difficult to deem that there was no purpose of tax avoidance solely on the ground that Plaintiff Y did not actually have any secondary tax liability (see, e.g., Supreme Court Decision 2011Du15794, May 9, 20101).

3. Conclusion

Then, the plaintiffs' claims are dismissed in its entirety as it is without merit. It is so decided as per Disposition.