Seocho 2012,0210 ( August 21, 2012)

It is difficult to see that the Plaintiff’s name was stolen in the case of title trust of the shares at issue, and thus, to impose gift tax pursuant to the title trust agenda is legitimate

The plaintiff asserts that it was false name theft, but it seems that it was impliedly consented, and it was recognized that there was a purpose of other tax avoidance such as avoidance of application of progressive tax rate, and that the title truster without return of the name is holding the share certificates without return of the title is not the termination of the title trust, but the taxation on constructive gift of title trust is legitimate

2012Guhap38510 Revocation of Disposition of Imposition of Gift Tax

AAA

Samsung Head of Samsung Tax Office

June 27, 2014

August 19, 2014

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The defendant's disposition of imposition of the OOO of the gift tax belonging to the year 2009 against the plaintiff on November 9, 201 is revoked.

1. Details of the disposition;

"BB Co., Ltd. (BB) issued 30,864,198 shares by the third party allotment method on May 8, 2009; at this time, the transfer of ownership was completed upon the allocation of 1,200,00 shares in the Plaintiff’s name (hereinafter “instant shares”); (b) the director of the Central Regional Tax Office of China conducted a gift tax investigation on BB from June 30, 201 to August 8, 201; and (c) the representative director of BB made a title trust of 30,864,198 shares issued to 20 persons including the Plaintiff, including the Defendant, with the title trust of 30,864,198 shares issued on May 8, 2009.

C. Accordingly, on November 9, 201, the Defendant decided and notified OO of the gift tax on May 8, 2009 (hereinafter “instant disposition”) by applying Article 45-2(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010; hereinafter “former Inheritance Tax and Gift Tax Act”), which is a provision for deemed donation of the nominal trust property, to the Plaintiff. The Plaintiff dissatisfied with the instant disposition and filed a request with the Tax Tribunal on December 2, 2011, but the said request was dismissed on August 21, 2012.

Facts without any dispute, Gap's 1 through 3, Eul's 1, the purport of the whole pleadings, and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) Title trust of the security right

Since KimD’s offering of new shares to secure its loan claims against EE and KimF’s loan claims against EE, and the BBB management rights transfer balance OOG’s transfer of management rights to E, and trust the instant shares to the Plaintiff via EE and KimG, it is difficult to apply the provision on deemed donation of trust property under Article 45-2(1) of the former Inheritance Tax and Gift Tax Act.

(2) Use of name;

The Plaintiff’s disposition based on title trust is unlawful, since Song-H, who had lived with the premise of marriage, only left Song-H with his resident registration certificate and his seal imprint as it is necessary for the corporate merger and acquisition, and the Plaintiff did not agree to use the Plaintiff’s name in relation to the capital increase with respect to BB’s capital increase in stocks, etc.

(3) Non-existence of tax avoidance purpose

BB In light of the fact that business losses have continuously occurred, that there is no tax evaded when the trustee 20 persons are subject to the highest tax rate of global income tax, and that the instant shares were sold before the dividend base date, the instant disposition is unlawful since there is no purpose of tax avoidance.

(4) Return of title trust property

Around May 21, 2009, the instant share certificate issued in the Plaintiff’s name was returned to the title truster or his/her designated person according to the direction of the title truster, which was within three months from the last day of the month to which the date of title trust belongs, and thus, it should be deemed that there was no donation from the beginning pursuant to Article 31(4) of the former Inheritance Tax

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) Title trust of the security right

In full view of the purport of the entire argument in part of Gap evidence Nos. 10, 12, and 13 (including additional evidence Nos. 10, hereinafter the same), E, the representative director of BB at the time of capital increase with capital increase, is recognized that E, the representative director of BB at the time of capital increase with capital increase, acquired the shares one’s own shares in the name of the nominal holders, including the plaintiff, and KimGG, Kim D, etc. agreed to deliver the share certificates for the bond security, so the plaintiff’s assertion on this part is not acceptable.

(2) Use of name;

Article 45-2(1) of the former Inheritance Tax and Gift Tax Act applies to property, the transfer or exercise of which requires registration, etc. in the name of the actual owner and the nominal owner by agreement or communication, and where a registration, etc. is made in the name of the nominal owner unilaterally regardless of the intent of the nominal owner, by using the nominal owner. In this case, the tax authority can only prove that the actual owner and the nominal owner are different from the nominal owner, and the burden of proving that the use of the nominal owner was made by the unilateral act of the actual owner ought to be the nominal owner (see, e.g., Supreme Court Decision 2007Du15780, Feb. 14, 2008). Moreover, the title trust relationship is not necessarily established by an implied agreement, rather than by an express agreement between the truster and the trustee (see, e.g., Supreme Court Decision 200Da49091, Jan. 5, 2001).

In light of the above legal principles, since there is no dispute between the parties that the Plaintiff, a nominal owner, is not the actual owner of the instant shares, the Plaintiff must prove that the nominal owner was using the instant shares as a nominal owner’s unilateral act.

"The above evidence, Gap evidence, evidence Nos. 4 through 9, evidence Nos. 4 and evidence No. 9, and evidence No. 1 of the witness Song H added to the overall purport of the pleadings. In other words, the plaintiff did not respond to the following circumstances, i.e., ① the plaintiff's request for explanation of the source of funds and submission of documents related to the acquisition of the shares of this case during the investigation period, and the plaintiff did not respond to the demand. After receiving the notice of the tax investigation results, the plaintiff filed a complaint against Song H as a forgery of private document, but Song H was prosecuted as a forgery of private document by Song H on July 26, 2013, and Song H was sentenced to a non-prosecution decision under the suspicion of suspicion No. 36308 from the Seoul Central District Prosecutor's Office on July 26, 2013. (2) The evidence submitted by the plaintiff cannot be recognized as acquiring the shares of this case on the premise of marriage, and there is no other evidence supporting the plaintiff's use of the shares."

(3) Purpose of tax avoidance

The legislative intent of Article 45-2(1) of the former Inheritance Tax and Gift Tax Act is to recognize an exception to the substance over form principle in the purport that the act of tax avoidance by using the title trust system is effectively prevented, thereby realizing the tax justice. As such, the burden of proving that there was no purpose of tax avoidance in the purpose of title trust lies on the person asserting it. In addition, the application of the provision on presumption of gift may not be avoided solely on the ground that the nominal owner has no purpose of tax avoidance (see Supreme Court Decision 2010Du24968, Mar. 28, 201

In light of the above legal principles, the following circumstances acknowledged in addition to the purport of the entire argument of the evidence mentioned above, namely, EE is insufficient to acknowledge that the evidence submitted by the Plaintiff alone did not have any purpose of tax avoidance in the title trust of this case, and there is no evidence to acknowledge this otherwise, the Plaintiff’s assertion on this part cannot be accepted, in light of the following circumstances: (a) transfer income tax under Article 94(1)3 (a) of the Income Tax Act (tax on the transfer of shares by a major shareholder who owns not less than 3/100 of the total amount of shares issued by the relevant corporation); (b) dividend income tax (Article 17(1)1 of the Income Tax Act); (c) financial income comprehensive taxation (Article 14(2) of the Income Tax Act); and (d) the Plaintiff did not present any data on the fact that EE had any apparent purpose other than the purpose of tax avoidance.

(4) Return of donated property

Article 31(4) of the former Inheritance Tax and Gift Tax Act provides that where the donated property is returned by an agreement between the parties concerned within the time limit for filing the gift tax base under Article 68 (3) of the same Act, the donation shall be deemed not to have existed from the beginning: Provided, That the same shall not apply to cases where the tax base and tax amount are determined before the return, and the above provision does not apply to the title trust deemed the donation under Article 45-2 of the former Inheritance Tax and Gift Tax Act. In light of the above, the above provision does not apply to cases where the donated property is returned by an agreement between the parties concerned within the time limit for filing the gift tax base or where the donated property is returned, and where the donee or the title trustee does not own the property any longer, Article 31(4) of the former Inheritance Tax and Gift Tax Act applies to cases where the title trust is terminated and returned (see Supreme Court Decision 2011Du8765, Sept. 29, 2011).

However, there is no evidence to acknowledge that the share certificates of the instant shares were issued to the title truster or his/her designated person, as alleged by the Plaintiff, and thus, the Plaintiff’s assertion based on such premise is without merit without further review.

Even if the share certificates were issued to the title truster as alleged by the Plaintiff, insofar as there is no evidence that the title truster, the title truster, was transferred to E, it cannot be deemed that Article 31(4) of the former Inheritance Tax and Gift Tax Act is still applicable for the following reasons. In other words, Article 45-2 of the former Inheritance Tax and Gift Tax Act is deemed that a donation by the transfer of shares was made on the date of the transfer of shares to a nominal shareholder based on the transfer of shares publicly notified. As such, it is reasonable to view that the termination of the title trust and the return of the shares deemed as a gift for the purpose of applying Article 31(4) of the former Inheritance Tax and Gift Tax Act ought to be the return of the name by the transfer of title. The fact that the title truster received and holds the share certificates without the return of the title is rather the typical form of the title trust rather

Therefore, no one can accept this part of the argument.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.