Cho High Court Decision 2010Du0311 (Law No. 106.30)

Since title trust is deemed to have no purpose of tax avoidance, disposition imposed on the constructive gift of title trust is illegal.

The title trust was made under the purpose of meeting the number of promoters under the Commercial Act and avoiding compulsory execution, and in light of the fact that dividends have not been paid since the incorporation of the company, it is recognized that the title trust was not the purpose of tax avoidance, so the disposition imposed on the constructive gift of title trust is illegal.

2010Guhap37414 Revocation of Disposition of Imposition of Gift Tax

Gyeong-gu et al.

O Head of tax office

1. Each gift tax made by the Defendants against the Plaintiffs, as shown in the attached Form 1, October 1, 2009, respectively.

The imposition disposition shall be revoked.

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

The same shall apply to the order.

1. Details of the disposition;

"가. 주식회사 BBBBBB(이하이 사건 회사'라 한다)는 1995. 8. 31. 이ZZ에 의하여 자본금 50,000,000원(1주당 가격 : 5,000원, 총 주식수 : 10,000주)으로 설립된 회사인데, 설립 시부터 2005. 6. 24. 유상증자시까지의 주주변동 상황은 아래 표와 같다. 이ZZ는 2008.경 이 사건 회사의 주식 중 정WW의 주식을 제외한 나머지 주식을 인수하였다.", "나. 피고는 위 표 중 정WW의 주식을 제외한 나머지 주식(음영부분)을 이ZZ가 명의신탁(이하이 사건 명의신탁'이라 한다)한 것으로 인정하고 증여로 의제하여 2009. 10. 1. 원고들에게 별지1 처분내역 기재와 같이 증여세를 부과(이하이 사건 부과처분' 이라 한다. 다만 별지1 처분내역 중 원고 공QQ, 전SS에 대한 세액은 2009. 10. 1. 이후 감액된 세액이다)하였다.",다. 원고들은 이 사건 부과처분에 불복하여 조세심판원에 심판청구를 하였으나 2010. 6. 30. 모두 기각되었다.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 and 2, purport of the whole pleadings

2. Whether each of the dispositions of this case is legitimate

A. The plaintiffs' assertion

Since the title trust of this case cannot be deemed as a gift for the following reasons, the instant disposition of this case is unlawful.

1) The title trust of this case is not established for the purpose of tax avoidance, but established in order to satisfy the number of promoters under the Commercial Act, and to avoid the risk of compulsory execution against the anticipated shares when the Z becomes a shareholder of the Z.

2) Since the establishment of the instant company did not pay dividends to shareholders once up to the date, there was no outcome of evading global income tax on dividend income due to the instant title trust. The instant company’s tax default due to temporary shortage of funds, most of which was paid within 3 months after the expiration of the payment period, and there were considerable earned income from which taxes can be paid every year. As such, the instant title trust resulted in the instant nominal trust, and there was no outcome of evading the secondary tax liability of oligopolistic shareholders. Since capital gains tax was imposed at a single tax rate of 10% regardless of the nominal owner, the instant title trust and tax avoidance are entirely not related to the instant transfer income tax, and the Z was paid in installments on February 28, 2011, and thus, there was no outcome of evading capital gains tax.

3) On August 27, 199, the acquisition of Plaintiff RR and this XX shares was made without a transfer of title prior to the incorporation of the provision of the Inheritance Tax and Gift Tax Act, which provides that the determination of title trust can be made based on the specification of stock transfer, etc., even if there was no change in the register of shareholders or any change in the register of shareholders. Thus, it cannot be

(b) Related statutes;

Attached Table 2.

C. Determination

The legislative purpose of preventing the abuse of the title trust system as a means of tax avoidance is to ensure the transfer or exercise of the right. Thus, inasmuch as the actual owner and the nominal owner are different, if there is no purpose of tax avoidance, it shall not be applied (see, e.g., Supreme Court Decision 2004Du7733, May 12, 2006). In addition, the burden of proving that there was no purpose of tax avoidance exists any other purpose than the purpose of tax avoidance. The burden of proving that there was no purpose of tax avoidance can be proven by means of proving that there was a purpose other than the purpose of tax avoidance, which is obvious to the extent that there was no objective of tax avoidance in the title trust, and there was an obvious purpose that is not related to the tax avoidance, and that there was no tax avoidance at the time of the title trust or in the future, it should be proven to the extent that it does not have any doubt if there was an ordinary purpose by evidence that can be objectively and publicly known that there was no tax avoidance at the time of the title trust (see, etc.).

First of all, we examine whether the title trust of this case was made for a clear and unrelated purpose with tax avoidance. According to Article 288 of the Commercial Act (amended by Act No. 5053, Dec. 29, 1995) which was in force at the time of the incorporation of the company, more than seven promoters were required to establish the company. In addition, according to the evidence Nos. 3 through 5, this Z was jointly and severally guaranteed by the JJJJ corporation on September 27, 1985, and the above company was fully and severally liable for indemnity against the Korea Credit Guarantee Fund upon its default on its payment on October 24, 1986. In light of the fact that the above company did not perform its obligations after the lapse of the repayment, the above ZZ was out of the total debt repayment period of the company, which was 1,233,281,506 won, and it was out of the total debt repayment period of the company, the remaining ZZ was out of the total debt repayment period of the company.

Next, we examine whether there is no tax to be avoided at the time of the instant title trust or in the future. The fact that the instant company did not pay dividends after its establishment is in dispute between the parties. It is reasonable to deem that there was no intent to avoid global income tax on dividend income, and that there was no intention to avoid tax. Furthermore, according to the evidence No. 28 of this case, even if the instant company had been in arrears over 32 occasions after its establishment and on June 10, 2008, it can be recognized that the instant company’s failure to pay value-added tax has been terminated within 3 months in most of such delinquency. Thus, the said failure merely appears to be a temporary period according to the financial situation before its establishment and the second tax liability of the Z through the instant title trust, and it does not appear that the said failure was avoided by the Defendant’s second tax liability as the shareholder of the ZF and the second tax liability. Furthermore, in light of the fact that there was no possibility that there was no possibility that the transfer of the instant shares between the Plaintiff 104% and the instant company’s shares were transferred (see Article 1014(b).

Therefore, since the title trust of this case is deemed to have no purpose of tax avoidance, the instant disposition of this case is unlawful.

3. Conclusion

Therefore, the plaintiffs' claim of this case shall be accepted on the grounds of its reasoning, and it is so decided as per Disposition.