Any disposition imposing capital gains tax on stock exchange is legitimate.

The actual party to the exchange with shares is the plaintiff, and even if the share exchange contract constitutes an act under the organizational law creating a complete parent-subsidiary relationship between the parties as an all-inclusive share swap contract, the share exchange contract can not be seen as a merger, and the method of calculating transfer margin is legitimate.

2010Gudan10252 Revocation of Disposition of Imposing capital gains tax, etc.

Gyeong Kim

○ Head of tax office

January 11, 2011

February 15, 2011

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the plaintiff.

The Defendant’s disposition of imposition of capital gains tax of KRW 49,985,627 against the Plaintiff on May 1, 2010 is revoked.

1. Details of the disposition;

A. On June 2006, the Plaintiff owned 303,750,000 shares of CCC Co., Ltd. (hereinafter “CCC”), an unlisted corporation, through Nonparty BB, after acquiring 303,750,000 shares of 6,750 shares (hereinafter “instant shares”).

(b)DDDD Co., Ltd. (hereinafter referred to as "DDDDD"), which is a KOSDAQ-listed corporation, entered into an all-inclusive share swap contract with a complete parent company and CCC as a complete subsidiary on June 22, 2006, by comprehensively exchanging shares in the way of collective exchange between NFT and NFT.

C. In concluding the above share swap contract, DDR and CCC first requested ES accounting corporation to assess the CCC issuance shares as KRW 9,134 per share on the basis of the average of the values calculated by adding value of assets and earnings value to the ECE accounting corporation, and agreed that DD issuance shares shall be exchanged at the rate of KRW 2,953 per share on the basis of the base price calculated on the first day of the date of the resolution by the board of directors ( June 22, 2006) for share swap, whichever is earlier, on the basis of the base price calculated on the basis of the base price calculated on the first day of the date of the resolution by the board of directors ( June 22, 2006).

D. On September 12, 2006, according to the above share swap contract, DDR became the complete parent company of CCC, CCC became the complete subsidiary of DDR. During that process, the shares of this case owned by the Plaintiff were transferred to DDR, and the Plaintiff became the shareholders of the above company by acquiring DDR shares of 226,601, which are corporations listed on KOSDAQ.

E. On July 13, 2009, the Defendant issued a disposition imposing capital gains tax of KRW 36,224,806, which was calculated by applying the average of the closing price (2,55 won per share) of DDDD stocks for the month immediately preceding September 12, 2006, which was the date of stock exchange, on KRW 578,965,55, and the acquisition value of DD stocks as the purchase price of convertible bonds at KRW 303,750,00, which was calculated as the capital gains tax for the year 2006, on September 12, 2006.

F. On September 11, 2009, the Plaintiff filed a request for review with the Commissioner of the National Tax Service to revoke the said disposition of capital gains tax, and the Commissioner of the National Tax Service, after deliberation by the National Tax Examination Committee, issued a decision to the effect that on November 27, 2009, after acquiring convertible bonds of the CCC at KRW 303,750,00, and converting them into 6,750, and then converting them into 226,601 shares, the actual parties were to exchange DDR stocks at KRW 226,60, and the actual transfer value under the said stock exchange contract, re-audit the actual transfer value under the said stock exchange contract to correct whether capital gains

G. After that, the Defendant acquired CCC’s convertible bonds at KRW 303,750,00 through a reinvestigation pursuant to the above decision of the Commissioner of the National Tax Service and converted them into KRW 6,750, and exchanged DDD stocks at KRW 226,601. The Plaintiff is the Plaintiff. The actual transfer price of the instant stocks should be calculated by applying the appraised value of KRW 99,134 per share of CCC as assessed in the said share swap contract. On May 1, 2010, on the ground that the actual transfer price of the instant stocks should be calculated by applying the appraised value of KRW 9,134,00 per share of CCC as assessed in the said share swap contract, the Defendant issued a disposition to notify the Plaintiff of the aforementioned determination, the tax amount of KRW 36,750,450, penalty tax of KRW 13,695,177, penalty tax of KRW 136,240,7821 (hereinafter the above increase in transfer income tax as stated).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 4, Eul evidence Nos. 1 through 6 (including a natural disaster), Eul evidence Nos. 8 through 12, Eul evidence Nos. 16 through 51 (including a serial number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) The Plaintiff merely invested funds to purchase DDDD stocks to Nonparty HaJ, and it is HaJ that actually purchased CCC’s convertible bonds and converted them into the instant stocks and exchanged them with DDD stocks. Therefore, it is against the principle of substantial taxation to impose capital gains tax on the Plaintiff who did not know such fact.

(2) Even if the Plaintiff acquired the instant shares and exchanged them with DDD stocks, the share swap contract concluded between CCC and DDDD is an all-inclusive share swap contract, and is different from the exchange contract, since it constitutes an act under the organizational law that creates a complete parent company between the parties as a whole-inclusive share swap contract, and thus is different from the exchange contract. Thus, the transfer income tax cannot be imposed on such comprehensive share swap contract.

(3) Furthermore, the exchange of shares is limited to the amount exceeding the amount required to acquire the stocks of the extinguished CCC as stipulated in Article 17(1)3 of the Income Tax Act, and thus, it can be taxed as dividend income only on the ground that the above exchange of shares constitutes a case where a shareholder of the CCC extinguished in the course of a merger with CCC and DDDD has received stocks from DDD.

(4) Finally, in the exchange of shares, gains from transfer are the difference between the value of shares subject to exchange, and it is unlawful to calculate gains from transfer based on the appraised value of the shares at the time of concluding the exchange contract.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

(1) Whether the actual party who acquired CCC’s convertible bonds at KRW 303,750,00 and converted them into KRW 6,750, and exchanged DDDD shares at KRW 226,60,00, constitutes HaJ or HaJ

(가) 위 제1항의 인정사실 및 앞서 제1항에서 설시한 증거들에 의하면, DDDDDDD가 2006. 6. 22. CCC과 사이에 주식을 포괄적으로 교환하여 DDDDDDD를 완전모회사, CCC을 완전 자회사로 하는 내용의 주식의 포괄적 교환 계약을 체결한 사실, CCC의 대표이사이던 소외 김KK과 소외 함JJ은 DDDDDDD의 경영권을 공동으로 양수하여 운영하기로 하고 위 주식교환계약 체결 무렵인 2006. 6. 21.경 위 회사의 주주인 구LL, 구MM와 사이에 DDDDDDD 주식 3,000,000주와 위 회사의 경영권을 150억 원에 양수하기로 하는 계약(양수인 명의는 CCC, 전N, 함JJ)을 체결한 후 함JJ이 소외 전N으로부터 차용한 8억 원을 위 주식양수계약의 계약금으로 구LL에게 송금(5억 원은 전N 명의로, 3억 원은 함JJ의 처인 황PP 명의로 각 송금)한 사실, 그 후 함JJ은 원고, 소외 고QQ, 최RR로부터 금원을 송금 받아 2006. 6. 27. 구LL에게 위 주식양수계약의 중도금 일부로 송금하였고, 위와 같은 주식양수계약 체결 및 이행과정에서 원고는 DDDDDDD의 주식을 취득하여 준다는 함JJ의 약속을 믿고 2006. 6. 27.까지 함JJ에게 3회에 걸쳐 합계 3억 420만 원을 송금하여 준 사실, 그 후 함JJ이 나머지 매매대금을 마련하지 못하여 위 주식양수계약의 이행을 하지 못하게 되자 공동 양수인인 김KK은 함JJ을 위 주식양수계약에서 제외시키기로 하되 함JJ이 기존에 지급한 주식양수대금을 반환하는 대신에 DDDDDDD와 사이에 주식의 포괄적 교환을 추진하고 있던 CCC의 전환사채 발행액 중 일부를 함JJ에게 지급하기로 하고, 그의 동의하에 그에게 주식양수대금을 투자한 원고, 고QQ, 최RR, 황PP, 김SS 외 11인에게 CCC이 2006. 6. 20. 및 같은 달 21. 발행한 제3, 4회 전환사채 4,680,000,000원 및 9,000,000,000원 등 합계 5,580,000,000원 중 일부씩을 인수하도록 한 사실, 이에 따라 원고는 2006. 6. 하순경 기존에 DDDDDDD 주식의 양수 대금으로 함JJ에게 투자한 3억 420만 원 중 303,750,000원에 상당한 CCC의 전환사채를 취득한 후 2006. 6. 30.경 이를 CCC의 주식 6,750주로 전환한 사실, 그 후 DDDDDDD와 CCC 사이의 위 주식교환계약에 따라 2006. 9. 12. CCC의 총 발행주식 486,200주가 DDDDDDD 주식 16,322,025주로 교환되면서 DDDDDDD는 CCC의 완전 모회사가 되고, CCC은 DDDDDDD의 완전 자회사가 되자 원고 소유의 이 사건 주식도 DDDDDDD에게 이전되고 그 대신에 원고는 DDDDDDD의 주식(신주) 226,601주를 취득하여 위 회사의 주주가 된 사실을 인정할 수 있는바, 위 인정사실에 의하면, 함JJ이 2006. 6. 하순경 주식양수대금을 제 때에 지불하지 못하여 위 주식양수계약에서 제외되면서 DDDDDDD의 주식을 양수하는 대신에 양수대금에 상당한 CCC의 전환사채를 인수하기로 하고 공동 양수인으로서 CCC의 대표이사이던 김KK의 승낙 하에 함JJ의 투자자인 원고 등에게 CCC의 제3, 4회 전환사채 발행액 중 일부씩를 취득하도록 하였고, 그 과정에서 원고는 함JJ에게 투자한 금원 중 303,750,000원에 상당한 CCC의 전환사채를 취득 하여 주식 6,750주로 전환한 후 DDDDDDD 주식(신주) 226,601주로 교환하였다고 봄이 상당하다.

(나) 가사, 원고가 CCC의 전환사채를 303,750,000원에 취득하여 주식 6,750주로 전환한 후 DDDDDDD 주식 226,601주와 교환하는 과정에서 이를 알지 못하였다고 하더라도, 앞서 설시한 증거들에 의하여 인정되는 다음과 같은 사정들 즉, ① 원고가 이 사건과 관련한 세무조사 절차에서 2008. 11. 20. 최초로 '주식거래내용확인서' (을 제6호증)를 제출하면서 'CCC 주식회사가 발행하는 전환사채를 사두면 손해는 가지 않을 거라는 주위 사람들의 말을 믿고 위 회사 전환사채 2억 여원 상당을 매수하였다가 같은 해 11.경 전환청구 기간에 이를 전부 주식으로 전환한 후 합병회사인 DDDDDDD 주식 20여만 주를 배정받아 ZZZZ증권 저의 증권계좌에 입금하였다.'는 취지의 진술을 하였다는 점, ② 원고가 그 후 2008. 11. 24. 재차 '주식거래내용확인서'(을 제7호증)를 제출하면서 앞서 진술한 CCC 발행 전환사채의 취득 및 주식 전환 경위 등을 부인하기는 하였으나, 2006. 6.경 아는 사람의 권유로 DDDDDDD의 '신주'를 매수하기로 하고 합계 3억 1,420만 원을 송금하였다고 진술하였고, 당시 CCC은 2006. 6. 22. DDDDDDD와 주식을 포괄적으로 교환하여 DDDDDDD를 완전 모회사, CCC을 완전 자회사로 하는 내용의 주식의 포괄적 교환 계약을 체결한 상태여서 CCC의 전환사채 혹은 주식을 취득하여 DDDDDDD의 신주를 배정받는 방법 외에 달리 DDDDDDD의 신주를 취득할 수 있는 방법은 없어 보이는 점, ③ 위 주식교환계약 체결 당시 CCC 및 DDDDDDD의 주식 시세, 교환 비율 등을 고려할 때 CCC의 전환사채를 인수하여 이를 CCC의 주식으로 전환한 후 위 주식의 포괄적 교환 계약에 의하여 DDDDDDD의 신주를 취득하는 것이 코스닥 시장에서 DDDDDDD의 주식을 매수하는 것보다 원고에게 불리하였다고 보이지 않는 점, ④ 김KK(을 제10, 12호증) 및 함JJ(을 제11호증)은 모두 이 사건 세무조사 절차에서 원고가 함JJ에게 지급한 투자금의 대가로 CCC의 전환사채를 취득한 후 이를 CCC의 주식 6,750주로 전환한 다음 위 주식교환계약에 의하여 DDDDDDD의 주식을 취득한 것으로 확인하고 있는 점, ⑤ 원고가 이 사건 세무조사 절차에서 위와 같은 함JJ의 진술을 확인하고도 이 사건 소송에 이르기까지 함JJ이 원고의 위임 범위를 넘어서 법률행위를 하였다고 주장만 할 뿐 그에 대한 민, 형사상의 책임을 묻지 않고 있는 점, ⑥ 원고와 같은 시기에 함JJ에게 주식 투자금을 송금하였던 고QQ, 최RR가 원고와 같은 방식으로 CCC의 전환사채를 취득한 후 주식으로 전환하였다 가 앞서 본 주식의 포괄적 교환계약에 따라 DDDDDDD의 신주를 취득한 것에 관하여 2009. 7. 13. 및 같은 해 6. 1. 양도소득세 80,839,439원 및 51,527,589원을 각각 부과 받았으나 이를 다투지 않은 채 납부하거나 불복절차를 밟지 않았다는 점 등을 종합하면, 원고가 함JJ에게 금원을 송금할 당시 원고는 DDDDDDD의 신주를 취득 하는데 관하여 함JJ에게 포괄적 위임을 하였거나 최소한 사후에라도 CCC의 전환 사채를 취득하여 주식으로 전환한 후 DDDDDDD의 신주를 취득하는 것에 대하여 추인하였다고 인정되므로, 함JJ이 원고 명의로 CCC의 전환사채를 취득하였다가 주식으로 전환한 후 DDDDDDD의 신주로 교환한 법률행위의 효과는 원고에게 미친다고 봄이 상당하다.

(C) Therefore, it is difficult to accept the Plaintiff’s aforementioned assertion on a different premise.

(2) Whether a share swap contract entered into between CCC and DDD constitutes an all-inclusive share swap contract, which constitutes an act under the organizational law creating a complete parent-subsidiary relationship between the parties, and thus cannot impose capital gains tax contrary to an ordinary exchange contract.

Article 4(1)3 and Article 88(1) of the former Income Tax Act (amended by Act No. 8144, Dec. 30, 2006; hereinafter "former Income Tax Act") provides that "transfer of assets subject to capital gains tax" means that assets are actually transferred for price due to sale, exchange, investment in kind in a corporation, etc. regardless of their registration or enrollment. Since Article 94(1)3 of the same Act includes income accruing from the transfer of stocks of a corporation which is not a stock-listed corporation or KOSDAQ-listed corporation, the transfer of stocks of a corporation which is not a stock-listed corporation or KOSDAQ-listed corporation is subject to capital gains tax as the transfer of assets (see, e.g., Supreme Court Decision 96Nu16704, May 7, 1997). Furthermore, even if an all-inclusive share swap falls under the direct exchange of stocks under the provisions of the Commercial Act, it is difficult to view that it constitutes "D's new acquisition of stocks by means of an all-inclusive share swap agreement between the transfer value of stocks."

An all-inclusive share swap is an act under the Commercial Act which creates a relationship with a company and another company through a comprehensive exchange of shares (Article 360-2 of the Commercial Act) and is an act that comprehensively dissolves all or part of a company that is a party to the Commercial Act and transfers its property to a surviving company or a newly incorporated company, and at the same time brings about the effect that the shareholder is a shareholder of the surviving company or the newly incorporated company (Articles 522 through 530 of the Commercial Act, etc.) and a merger which brings about the effect that the shareholder is a shareholder of the surviving company or the newly incorporated company (Article 522 through 530 of the Commercial Act, etc.) due to a separate act that differs from each other in terms of the requirements, procedures, effects, etc. (Article 17(2) of the Commercial Act, each subparagraph of Article 17(2) of the former Income Tax Act includes a combination

(4) The method of calculating gains from the transfer of stocks (whether the appraised value of the E Accounting Corporation can be recognized as the actual transfer value of the stocks of this case)

(A) According to Articles 94(1)3 (c) and 96(1) of the former Income Tax Act, the transfer value shall be calculated based on the actual transaction value as at the time of transfer in calculating the transfer income tax accruing from the transfer of stocks not listed on the Exchange. Under Article 176-2(1)3 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 19687, Sep. 22, 2006; hereinafter referred to as the “former Enforcement Decree of the Income Tax Act”), where the transferor has to make a report on the actual transaction amount due to lack of evidentiary documents, such as taxpayer’s account book, or obvious falsity, if the transferor fails to recognize or verify the actual transaction value, the transfer value shall be determined based on the standard market value if it is confirmed by applying the method of the estimation, and where such value is not confirmed, the actual transaction value shall be determined by the standard market value if the transferor is an exchange value as at the time of the transfer of the relevant assets, and the difference between the transfer value and the appraisal value as at the market value at the time of transfer value cannot be determined.

(B) In this case, the following circumstances are acknowledged based on the above facts and evidence stated in paragraph (1). ① DDR, a KOSDAQ-listed corporation, enters into an all-inclusive share swap contract with the parent company and the CCC as a complete subsidiary, and the instant shares were exchanged with DDR-related shares. ② The value per share of the KCC-listed corporation at the time of the said share swap is the value per share of the former Securities and Exchange Act (amended by Act No. 8315 of March 29, 2007) and the appraisal value per share of the stock acquired by the KCC-listed corporation is difficult to be determined based on the comprehensive appraisal value per share (amended by Presidential Decree No. 19806 of December 29, 2006) and the appraisal value per share acquired by the KCC-listed corporation based on the comprehensive appraisal value per share (amended by Presidential Decree No. 19806 of Dec. 29, 206).

3. Conclusion

Thus, the plaintiff's claim seeking revocation of the disposition of this case shall be dismissed as it is without merit.