early 208west 4078 ( December 28, 2009)

Title trust of shares with capital increase shares

The value of the donated property for the re-title trust of the shares issued with capital increase shall not be the price for the new shares issued with capital increase, but be the assessed value of the newly trusted shares.

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

1. All of the plaintiffs' claims are dismissed.

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

The Defendant’s imposition of KRW 113,510,320 of the gift tax on November 1, 2001 and KRW 113,510,320 of the gift tax on November 1, 2001 against the Plaintiff UA and KRW 280 of the gift tax on November 1, 2001 against the Plaintiff UA (it is evident that each of the amount of the gift tax on which the Plaintiff sought withdrawal by a written complaint is erroneous as a mistake) is revoked.

1. Circumstances of dispositions;

A. Jinwon Trade Co., Ltd. (hereinafter referred to as "Sinwon Trade Co., Ltd.") is an unlisted corporation that runs export and import business, agricultural products, and food sales business. The representative director, the OCC, respectively, held 4,000 shares out of 40,000 shares issued at the time of establishment under title trust with the plaintiffs.

B. On November 1, 2001, Nonparty Company issued 60,000 new shares by offering shares with capital increase in accordance with the shareholder allocation method. The Plaintiffs acquired each of 6,000 shares for 6,00 shares for 1 share (hereinafter “the shares for 6,000 shares”). The Plaintiffs received shares for 5,000 shares for 6,00 shares for 6,00 shares for 6,00 shares for 1 share.

C. Pursuant to Article 42-2(1) of the Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 2002; hereinafter referred to as the "Act"), and Articles 54(1) and 56 of the Enforcement Decree of the Act (amended by Presidential Decree No. 17459, Dec. 31, 2001; hereinafter the same shall apply), the Defendant assessed the value per share of the instant stock based on the weighted average value of net profit and loss for the latest three years (the value applying 30% to the largest shareholder) by 179,998 won per share (the value applying 30%). On September 10, 2008, the Defendant imposed gift tax on Plaintiff U.A on Sep. 10, 2008 (hereinafter referred to as “the first disposition”).

D. The Plaintiffs were dissatisfied with the initial disposition and filed a claim for revocation with the Tax Tribunal. On December 28, 2009, the Tax Tribunal: (a) calculated the net profit and loss calculated by reflecting the number of shares increased by capital stock; (b) KRW 75,889; (c) KRW 85,633, which is the net asset value; and (d) accordingly, the tax base was reduced to KRW 131,975,160, respectively; and (c) the Defendant, when rectifying the error in the calculation, reduced to KRW 113,510,320, by recognizing the net value per share of the instant shares as KRW 75,89, the net value per share of the instant shares as net value (hereinafter “the instant disposition”).

[Ground of recognition] Facts without dispute, Gap evidence 1 through 4 (including branch numbers for those with additional numbers; hereinafter the same shall apply), Eul evidence 1 to 4, the purport of the whole pleadings

2. Whether the disposition of this case is lawful

A. The plaintiffs' assertion

In a case where title trust shares were issued with capital increase, the tax base of the shares held in title with capital increase shall be the value of the property actually increased by the pertinent capital increase with the capital increase. Therefore, the Plaintiffs’ taxation on the capital increase that was paid by the Plaintiffs from CC should be imposed. Therefore, the instant disposition imposing tax on deeming the assessed value of the shares as the donation amount

B. Relevant statutes

It is the same as the entry in the attached statutes.

C. Determination

The provision on the presumption of title trust donation under Article 42-2 (1) of the Act is one of the exceptions to the substance over form principle, and it is presumed that the title trust system is a donation to the extent of realizing tax justice by effectively preventing the abuse of it as a means of tax avoidance. This does not change the existence of the title trust property. Thus, the actual owner of the title trust property is still the title truster notwithstanding the above presumption provision (see, e.g., Supreme Court Decision 2004Du1220, Sept. 22, 2006).

On the premise of the above legal principles, since the plaintiffs' first title trust shares are still vested in OrCC, the preemptive right to the shares issued with new shares is naturally vested in OrCC. Therefore, the right to the shares issued with new shares is not vested in OrCC as a matter of course. Accordingly, the value of donated shares to which OrCC used the above preemptive right and paid the purchase price to the plaintiffs for new shares issued with new shares again in title trust to the plaintiffs should be the assessed value of new shares issued with new trust rather than the HH increase price. Accordingly, it is lawful for the defendant to assess the value of the shares issued with new shares issued with new shares issued with new shares to the amount of gift in imposing gift tax on the trust in the name of the shares

3. Conclusion

Therefore, the plaintiffs' claim of this case seeking revocation on the premise that the disposition of this case is unlawful is dismissed as it is without merit. It is so decided as per Disposition.