Seoul High Court 2005Nu18404 (Law No. 12, 2006)

Calculation of the interest of shareholders of a specific corporation deemed to have been donated through transactions with the specific corporation;

The calculation of profits deemed to have been donated through a transaction with a specific corporation shall be calculated by multiplying the value per share, such as stocks actually increased compared with the value of the donation, by the number of stocks equivalent to the largest shareholder, etc., due to the amount equivalent to the donation profit. The defendant's mere division of the amount equivalent to the interest on a gratuitous loan into the number of stocks

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

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The date of sentencing of the original judgment shall be corrected to the "No. 28, 2006.4.28" "No. 12, 2006.5.12"

The appeal is examined.

1. Ground of appeal No. 1 and ex officio determination

Article 41 (1) of the Inheritance Tax and Gift Tax Act (amended by Act No. 7010, Dec. 30, 2003; hereinafter referred to as the "amended by Act") provides that where a person in a special relationship with a stockholder or investor of a specified corporation obtains profits from a shareholder, etc. of the specified corporation through a transaction falling under any one of the following subparagraphs, such as the provision of property or service without compensation, the amount equivalent to such profits shall be deemed the value of donated property of the relevant specific corporation [the contents of this provision shall be deemed to be the same in the case of Article 41 (1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 2002; hereinafter referred to as the "former Act") as of the completion of the taxation requirement of this case, the method of calculating profits shall be delegated to the Presidential Decree, and Article 41 (2) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 1817, Dec. 30, 2003>

Article 38 of the Constitution provides that "All citizens shall be liable to pay taxes under the conditions as prescribed by Act, and Article 59 provides that "the items and rates of taxes shall be determined by Act," thereby adopting the principle of no taxation without the law. The taxation requirements, etc. of such principle of no taxation without the law shall be prescribed by the Act enacted by the National Assembly, which is a representative organ of the people, and shall be strictly interpreted and applied to the enforcement of such Act, and the extension or analogical application of administrative convenience is not allowed. Thus, it is against the principle of no taxation without the law to provide for matters concerning taxation requirements, etc. by administrative legislation, such as orders or rules, without the delegation of the law, or to provide for the interpretation of the contents that can be inferred and expanded without the permission of the law (see, e.g., Supreme Court Decision 2006Du8648

Article 41 of the amended Act delegates only "the calculation of profit" to the Enforcement Decree on the premise that "the largest shareholder, etc. has acquired the profit through the transaction, such as the gratuitous provision of property with a specific corporation." However, Article 31 (6) of the amended Enforcement Decree stipulates that the profit acquired by a specific corporation shall be deemed "the profit acquired by the shareholders, etc." and Article 41 (1) of the amended Act stipulates that "the profit acquired by the shareholders, etc. shall be calculated the value of donated property." In addition, even if there is no profit from the provision of property to a specific corporation, if there is no profit from the provision of property to the specific corporation without compensation, it may be excluded from the subject of gift tax if there is no profit from the provision of property to the specific corporation, but Article 31 (6) of the amended Enforcement Decree provides that if there is no profit from the provision of property to the specific corporation without compensation, etc., it shall be deemed that the shareholder, etc. has obtained the profit, and therefore, Article 31 (6) of the amended Enforcement Decree shall be liable to pay gift tax.

On the other hand, Article 6 of the Addenda to the Enforcement Decree of the amended Act provides that "Article 31 of the amended Act (excluding the matters concerning the standard of KRW 100 million in the same paragraph) shall apply from the portion on which gift tax is determined or corrected after this Decree enters into force," Article 31 (6) of the Enforcement Decree of the amended Act provides that the above provision shall be applied retroactively to the case where the taxation requirement is completed prior to the enforcement of the amended Enforcement Decree, which is a provision of this Rule, and the above provision of the Addenda shall also be deemed null and void (see, e.g., Supreme Court en banc Decision 2006Du19693, Mar. 19, 2009).

According to the above legal principles and facts duly established by the court below, as to the lending of ○○○ and ○○○, the father, the mother of the plaintiff, without compensation, to a specific corporation, the largest shareholder of which is the plaintiff, from January 1, 200 to December 31, 2002, the defendant shall be deemed to have been donated benefits from the related parties on April 1, 2004. The original obligation to pay gift tax is established upon completion of all taxation requirements before January 1, 2004, and where the gift tax is determined after the enforcement of the amended Enforcement Decree, as long as Article 6 (6) of the Addenda of the amended Enforcement Decree provides that Article 31 (6) of the amended Enforcement Decree shall apply to the establishment and scope of the Plaintiff’s obligation to pay gift tax, as long as the establishment and scope of the Plaintiff’s obligation to pay gift tax becomes effective at the time when the tax liability is established, Article 31 (6) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17828, Dec. 30, 30, 200).

Although the judgment of the court below on this part of its reasoning is somewhat insufficient, it is just in its conclusion that Article 31 (6) of the Enforcement Decree of the Act prior to the amendment applies to this case, and it is not erroneous in the misapprehension of law as alleged in the ground of appeal.

2. The second ground for appeal

With regard to the calculation of profits that a shareholder, etc. of a specific corporation is deemed to have been donated pursuant to Article 41(1) of the former Enforcement Decree of the Act, Article 31(6) of the former Enforcement Decree of the Act provides that "the value of shares or equity shares increased per share due to the value of donated property or profits acquired from exemption from debts, etc." shall be calculated by multiplying the number of stocks of the relevant largest shareholder, etc.

The court below found the facts as stated in its reasoning after comprehensively taking account of the adopted evidence, and held that the calculation of profits that a shareholder, etc. of a specific corporation is deemed to have been donated through a transaction with a specific corporation by dividing the amount equivalent to the donation profits by the number of stocks, etc. in question before the donation, shall be calculated by multiplying the value per share of the relevant largest shareholder, etc., by the number of stocks, etc., compared with the donation profits. In this case, if it is difficult to calculate the market price, the "value per share" shall be calculated in accordance with the supplementary evaluation methods stipulated in Article 63 (1) 1 (c) of the Act before the amendment, and Article 54 of the Enforcement Decree before the amendment (see, e.g., Supreme Court Decision 2003Du4249, Nov. 28, 2003). In light of the relevant regulations and legal principles and records, the court below's finding of facts and determination as above are justifiable, and there is no violation of the method of appeal as alleged in the ground for appeal by the defendant.

Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. The judgment of the court below on April 28, 2006, "the sentencing date of April 2006" is clear that it is a clerical error in the "206.5.12". It is so decided as per Disposition by the assent of all participating Justices.