National Tax Service Review Donation 2010-0075 ( November 12, 2010)

It shall be determined as at the time of reduction of stocks whether the person is a specially related person.

Although the former Act and subordinate statutes did not include “retirement executives”, the amendment of the Act and subordinate statutes cannot be deemed to be an employee at the time of capital reduction, and the imposition of gift tax by deeming an officer for whom five years have not passed after his retirement as a specially related person cannot be deemed to violate the principle of prohibition of retroactive legislation.

2011Revocation of revocation of disposition imposing gift tax, 4770

Park XX et al.

O Head of tax office

August 18, 2011

September 15, 2011

1. All of the plaintiffs' claims are dismissed.

2. The costs of lawsuit are assessed against the plaintiffs.

The Defendant’s imposition of KRW 1,714,142,350 on the gift tax of KRW 1,714,142,350 on June 1, 2010 against Plaintiff Park Dong-B, and the imposition of KRW 52,84,250 on the gift tax of KRW 205 on the same day shall be revoked.

1. Details of the disposition;

A. The company established at July 1, 198, and the plaintiff Park Jong-chul held 172,038 shares of the corporation of this case (24,50 shares in the name of KimCC) until August 9, 2005, and the plaintiff Eul held 12,110 shares of the above corporation as the wife of the plaintiff Park Jong-A. Meanwhile, the Busan branch of the corporation of this case (24,50 shares in the name of the above corporation) was the head of the Busan branch of the corporation of this case and retired on November 9, 2001. On August 9, 2005, it held 47,849 shares of the above corporation (18,642 shares in the name of the above corporation).

B. On August 9, 2005, the instant corporation held a temporary shareholders’ meeting to reduce its capital to reduce its 47,849 shares. Accordingly, the instant corporation reduced its 47,849 shares, and paid its 2,952,196,700 won per share calculated as KRW 61,698 (hereinafter referred to as “the instant capital reduction”), and paid its 2,952,196,700 won per share to D (hereinafter referred to as “the instant capital reduction”).

"The defendant reduced the value (61,698 won per share) lower than the value calculated by the supplementary evaluation method by the corporation of this case (14,19 won per share) and deemed as being donated to the plaintiffs pursuant to Article 39-2 (1) of the Inheritance Tax and Gift Tax Act (hereinafter "the Inheritance Tax and Gift Tax Act") which is a specially related party of the plaintiffs, the "interest arising from the reduction of capital" shall be deemed as having been donated to the plaintiff Park Jong-A on June 1, 2010, the disposition of imposition of KRW 1,714,142,350 for the gift tax of 205, and the disposition of imposition of KRW 52,84,250 for the plaintiff Lee-B on the gift tax of 205 (hereinafter "the disposition of this case") and / [the grounds for recognition], Gap, 2, and 10 items, and the purport of the whole pleadings as a whole.

2. Whether the instant disposition is lawful

A. The plaintiffs' assertion

(1) Clerks are not related to the plaintiffs.

(A) Although Article 13(7)1 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act (hereinafter “Enforcement Decree”) provides that an officer (referring to an officer who was an officer under Article 20(1)4 of the Enforcement Decree of the Corporate Tax Act and a person who was an officer for whom five years have not passed after retirement; hereinafter the same shall apply), Article 13(4)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 18177, Dec. 30, 2003; hereinafter the same shall apply) only provides that an officer (referring to an officer under Article 43(6) of the Enforcement Decree of the Corporate Tax Act; hereinafter the same shall apply) is an employee under Article 13(4)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 18177, Dec. 30, 2003; hereinafter the same shall apply).

(B) Article 2 of the Addenda to the Enforcement Decree (No. 18177, Dec. 30, 2003) provides that “The Enforcement Decree shall apply from the portion donated after the enforcement of the Decree,” while at the time of determining whether a person in a special relationship is a person, it shall be deemed as December 11, 2001, which is the date on which the first agreement on the reduction of capital of this case was reached. Accordingly, west is not an employee under Article 19(2)2 of the Enforcement Decree of the former Enforcement Decree.

(C) Even if Article 13(7)1 of the Enforcement Decree of the amended Do governor with respect to uD applies, the representative director and the officer of a corporation cannot be deemed as having a relationship between employees under the principle of strict interpretation derived from the principle of no taxation without law.

(2) The capital reduction of this case cannot be taxed on the grounds that the price falls under the market price or the illegality of the transaction is not recognized.

(A) The price for the reduction of capital of this case constitutes an objective exchange price formed by a normal transaction between the parties through the court’s conciliation. Therefore, it should not be deemed that there was a gift of profit due to the reduction of capital based on the value calculated by the complementary valuation method.

(B) Even if the cost of capital reduction of this case does not correspond to the market price, the capital reduction of this case may not be subject to gift tax unless the “unfairness” under Article 2(4) of the Inheritance Tax and Gift Tax Act is recognized as a transaction between the parties having economic rationality.

(b) Related statutes;

It is as shown in the attached Form.

(c) Fact of recognition;

(1) Its shareholders holding 119,624 shares of the instant corporation were registered directors of the said corporation and the head of Busan Branch. On October 24, 2001, it filed a complaint with the prosecution against the Plaintiff Park Jong-A, the representative director of the said corporation, for embezzlement, etc., and retired on November 9, 2001.

(2) Accordingly, on December 11, 2001, Plaintiff Park Jong-chul transferred all the shares and officetels 2 debentures possessed by Doddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddd

(3) After that, on July 28, 2004, Plaintiff Park Jong-A filed a complaint with the Prosecutor on the following facts: (a) on July 28, 2004, Plaintiff Park Jong-A filed a complaint with the Prosecutor's Office on the following facts: (b) on the part of the Prosecutor's office, Plaintiff Park Jong-A filed a complaint with the Prosecutor's Office, stating that “I-B-A-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U-U.

(4) On April 11, 2005, in the case of the above claim objection, the conciliation was concluded between the plaintiff Park Jong-A and the corporation of this case and SDR. The main contents of the conciliation are as follows (hereinafter referred to as "the instant conciliation"), and Gap evidence 6.

(Contents) The following:

[Ground of recognition] Facts without dispute, entry of Gap 3 to 9 evidence, purport of the whole pleadings

D. Determination

(1) As to the first argument

For the following reasons, Western is a "employee" under Article 19 (2) 2 of the Enforcement Decree, and is a person who has a special relationship with the plaintiffs.

(A) Article 13(7)1 of the Enforcement Decree, which applies as of August 9, 2005 when the capital reduction of this case took place, provides that an officer in whose case five years have not passed since his retirement shall be included in “executive under the Enforcement Decree of the Act.” However, Western constitutes “executive” under the Enforcement Decree, since it constitutes a person who retired on November 19, 201 and was an executive in whose case five years have not passed since his retirement, and thus constitutes “executive” under Article 13(10)2 of the Enforcement Decree, and Article 4 of the Enforcement Rule of the Inheritance Tax and Gift Tax Act.

“An employee prescribed by Ordinance of the Ministry of Strategy and Finance (including an employee of a corporation under control by investment; hereinafter the same shall apply). Although Article 13(4)1 of the former Enforcement Decree does not include a “retirement officer”, as the above provision was amended on December 30, 2003 and enforced on January 1, 2004, it cannot be said that DD is not a “employee” by applying the above provision of the former Enforcement Decree at the time of capital reduction.

(B) As seen earlier, the first agreement is merely to transfer the shares of SDR to the person designated by the Plaintiff Park Poe-A, and thereafter, it included the second agreement on the shares at issue as it did not implement the matters agreed upon, and thereafter, the conciliation of this case includes the content that the first and second agreements should be null and void, and it cannot be deemed as December 11, 2001, which is the date on which the first agreement on the transfer of shares of SDR was reached, in view of the fact that the market price of the gift due to the reduction of capital of this case was the date on which the first agreement on the transfer of shares of SDR was reached. Accordingly, it cannot be deemed as a "executive under the Enforcement Decree, who was an executive for whom five years have not passed after retirement under Article 13(7)1 of the Enforcement Decree."

(C) As seen earlier, Article 13(10)2 of the Enforcement Decree provides that "user (including an employee of a corporation under control by investment; hereinafter the same shall apply) as stipulated by Ordinance of the Ministry of Strategy and Finance." Accordingly, an employee under Article 19(2)2 of the Enforcement Decree shall also be deemed as the same concept. Clerks constitutes an employee of the instant corporation under control by investment by the Plaintiffs, which is a major shareholder, and is the representative director of the instant corporation, and thus, cannot be deemed otherwise deemed as a violation of the principle of strict interpretation derived from the principle of no taxation without law.

(2) On the second argument

(A) Article 60(2) of the Inheritance Tax and Gift Tax Act provides that "the market price shall be deemed to be usually established when transactions are made freely between many and specified persons," and Article 49(1)1 of the Enforcement Decree provides that even if there is a fact of sale and purchase of the pertinent property, the transaction price shall not be deemed to be the market price if transactions are made with persons with a special relationship as provided in Article 26(4) of the Enforcement Decree. However, the price of the instant adjustment is based on an agreement between the persons with a special relationship, and it may be deemed that the price should be excluded from the market price under the above Enforcement Decree provision. Further, the plaintiffs' own complaint also states that "the price of the instant adjustment was made in combination with the number or amount such as the value of the company, the management right, the consolation money, and the compensation for damages, etc.," and such circumstance does not appear to constitute the price of the instant shares before and after the exchange of shares, and the objective adjustment of the price of the instant shares, which is the price of the instant case.

(B) Even if the taxation requirement under Article 39-2 of the Inheritance Tax and Gift Tax Act, which is an individual provision, is met, the plaintiffs cannot be taxed on the plaintiffs unless the "unfairness" under Article 2(4) of the Inheritance Tax and Gift Tax Act, which falls under the one half of the day, is recognized. However, Article 2(4) of the Inheritance Tax and Gift Tax Act provides that "if it is deemed that the gift tax has been unjustly reduced by indirect method through a third party or by means of two or more acts or transactions," it shall include a transaction directly by the parties or a continuous single act or transaction, and it shall not be included in the subject of the gift tax assessment under Article 39-2 of the Inheritance Tax and Gift Tax Act, which satisfies the taxation requirement under Article 39-2 of the Inheritance Tax and Gift Tax Act, and it shall not be viewed as a ground provision that "unfairness" should be separately determined on the capital reduction

(3) Sub-decisions

Therefore, the instant disposition is lawful.

3. Conclusion

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