Plaintiff (Attorney Lee Chang-hoon et al., Counsel for the plaintiff-appellant)

The Director of Gangnam District Office

March 22, 2011

Seoul Administrative Court Decision 2009Guhap48012 decided July 2, 2010

1. The plaintiff's appeal is dismissed.

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

The judgment of the court of first instance shall be revoked. The defendant's taxation of the gift tax of 231,04,790 won on December 31, 2005, the gift tax of 231,04,790 won on March 31, 2006, and the gift tax of 44,446,100 won on March 31, 2006, and the gift tax of 233,947,050 won on December 31, 206, and the gift tax of 106,706,706,990 won on March 31, 207, as well as the taxation of 29,111,580 won on each of the above gift taxes of 106,706,99,6,210 won on June 111, 2008, shall be revoked.

1. Quotation of judgment of the first instance;

A. The reasoning for the statement concerning this case is that the court shall dismiss “Article 41-2” of the second 14th 14th 2 of the judgment of the court of first instance as “Article 45-2,” and the reasoning for the judgment of the court of first instance is the same with the reasoning for the judgment of the court of first instance, except for addition of the judgment on the argument of unconstitutionality below, and therefore, it shall be cited as it is in accordance with Article 8(2)

B. Judgment on the unconstitutionality argument

(1) Summary of the Plaintiff’s assertion

The main text of Article 45-2(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828 of Dec. 31, 2007) and Article 45-2(1)1, (2), and (6) (hereinafter “instant legal provision”) which are the basis of each of the instant dispositions are unconstitutional as the Plaintiff is in violation of the principle of proportionality (conformity of means and balance of legal interests) and the principle of tax equality. In addition, in a case where the Plaintiff is deemed to be a donation of each of the instant shares from Nonparty 1 (the Nonparty Nonparty) in 2005, insofar as the Plaintiff sells the shares trusted in title in 205 and subsequently acquired another shares in consideration of the price, even if the newly acquired shares constitute a separate shares, it shall be deemed that the gift tax cannot be levied additionally by focusing on the changed name only on the changed name, unless there is any change in real property value, and construing otherwise is contrary to the principle of proportionality or the principle of excessive prohibition.

Shed Judgment

㈎ 비례의 원칙 등에 반하는지 여부에 대하여

The avoidance of taxes under the title trust is not only a gift tax, but also also possible with respect to various national taxes, local taxes, and customs duties, such as inheritance tax, income tax, and acquisition tax, so the same is also applicable to the case of gift tax that there is a need to prevent and punish other taxes other than the gift tax by the method of the title trust. Moreover, the imposition of the gift tax on the title trust intending to avoid taxes other than the gift tax may not be deemed as imposing any more damage on the taxpayer compared to the case where the violator is subject to criminal punishment or the penalty is imposed by a reasonable amount of penalty, etc. In addition, the imposition of the gift tax as seen above is significantly high in the public interest of tax justice and tax balance achieved by the imposition of the gift tax.

Therefore, there is a reasonable reason to choose the legislation that requires the use of a title trust for the purpose of evading taxes other than gift tax, and that the title trust should be deemed as a gift, and that the tax rate higher than the tax imposed for the purpose of avoidance should be imposed, and the method is appropriate to achieve the legislative purpose and the balance of legal interests is not contrary to the principle of proportionality (see, e.g., Constitutional Court Order 2002HunBa66, Nov. 25, 2004; Constitutional Court Order 2004HunBa40, Jun. 30, 2005).

㈏ 조세평등의 원칙에 반하는지 여부에 대하여

The imposition of gift tax on the title trustee, which is a significant high rate on the tax evasion by using title trust, is a substantial financial burden on that trustee. However, this is limited to the case where the purpose of tax avoidance is recognized, and the title trustee is bound to be held liable for the tax evasion by lending his/her name. As such, the disadvantage suffered by the title trustee through the imposition of gift tax is not grossly unreasonable, and the tax avoidance scheme cannot be effectively prevented unless it is so determined.

Therefore, even if gift tax is imposed by treating a title trustee who has no tax-bearing capacity equally with a person who actually donated, this does not violate the principle of tax equality (see, e.g., Constitutional Court Order 2002HunBa66, Nov. 25, 2004; Constitutional Court Order 2004HunBa40, Jun. 30, 2005).

㈐ 이 사건 법률조항의 해석론에 관한 위헌 주장에 대하여

The imposition of gift tax on a person who does not receive a gift may be contrary to the principle of substantial taxation. However, in the event that the title trust is used as a means of concealing or evading taxes, imposing gift tax within the limited scope recognized as the purpose of tax avoidance is recognized as reasonable as an appropriate method to realize the equity of tax justice and tax, and thus, it may be allowed as an exception to the principle of substantial taxation.

As an exception to the substance over form principle, the legal provision of this case is presumed to be a donation to the extent that it is intended to effectively prevent the abuse of the title trust system as a means of tax avoidance, and does not change the ownership of the title trust property. Thus, the actual owner of the title trust property shall be deemed to be the title truster notwithstanding the above provision (see Supreme Court Decision 2004Du11220, Sept. 22, 2006). Therefore, if the non-party sold the shares held in the year 2005 through the borrowed-name securities consignment account in the name of the plaintiff and held another shares in the year 2006, if it is deemed that a separate title trust was made with respect to the shares increased to new shares held in the year 2005, which are different from the shares held in the name of the plaintiff in the year 2006, and as long as such interpretation through the legal provision of this case contributes significantly to the pursuit of public interest as well as the interests infringed, it shall not be deemed as a violation of the principle of proportionality or proportionality under the Constitution.

The plaintiff's assertion that the above provision of law is in violation of the Constitution is without merit.

2. Conclusion

Therefore, the plaintiff's claim shall be dismissed. The judgment of the court of first instance is just in its conclusion, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.

Judges Sung Pung-tae (Presiding Judge)