[1] The scope of "tax" under the proviso of Article 32-2 (1) of the former Inheritance Tax Act and the burden of proving that there was no purpose of tax avoidance (=title holder)

[2] The case holding that the title trust of shares cannot be deemed as a result of statutory restrictions or other similar inevitable circumstances without any tax avoidance purpose

[1] The legislative intent of Article 32-2(1) of the former Inheritance Tax Act (amended by Act No. 5193, Dec. 30, 1996) is to recognize an exception to the principle of substantial taxation to the purport that the act of tax avoidance using the title trust system is effectively prevented, thereby realizing the tax justice. As such, the proviso of the same Article is applicable only if the purpose of the title trust is not included in the purpose of tax avoidance, and the tax under the proviso is not limited to the gift tax, and the burden of proving that there was no purpose of tax avoidance in the title trust is against the claimant.

[2] The case holding that the title trust of shares cannot be deemed as a result of statutory restrictions or other similar inevitable circumstances without any tax avoidance purpose

[1] Article 32-2 (1) of the former Inheritance Tax Act (amended by Act No. 5193 of Dec. 30, 1996) (Article 41-2 (1) of the current Inheritance Tax and Gift Tax Act) / [2] Article 32-2 (1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 5193 of Dec. 30, 1996) (Article 41-2 (1) of the current Inheritance Tax and Gift Tax Act)

[1] Supreme Court Decision 95Nu13555 delivered on April 12, 1996 (Gong1996Sang, 1617), Supreme Court Decision 95Nu10068 delivered on May 10, 1996 (Gong1996Ha, 1918), Supreme Court Decision 95Nu11573 delivered on May 10, 1996 (Gong1996Ha, 1921), Supreme Court Decision 95Nu9174 delivered on August 20, 1996 (Gong196Ha, 2898)

Plaintiff (Law Firm Rate, Attorneys Hy Chang-soo et al., Counsel for the plaintiff-appellant)

Head of the District Tax Office

Seoul High Court Decision 98Nu6687 delivered on January 15, 1999

The judgment below is reversed and the case is remanded to Seoul High Court.

We examine the grounds of appeal.

1. According to the reasoning of the judgment below, the court below determined that the non-party 1 was not a shareholder of the above non-party 1 corporation (the non-party 1 corporation's trade name was 25%, 25%, 30%, and 4% of the company's corporate tax was owned by the non-party 1 upon the non-party 2's request of his father who established the above non-party 1, but the plaintiff was registered as a shareholder. The plaintiff was not a shareholder of the non-party 1, but did not actually paid the capital increase at the time of December 31, 194. The non-party 1 paid the capital increase to the plaintiff under the name of the non-party 1's company's own shares at the time of the above capital increase and was not a shareholder of the non-party 1 corporation, and the non-party 1 was not a shareholder of the above non-party 1 corporation's own shares at the time of the above capital increase or was not a shareholder of the above non-party 1 corporation.

2. The legislative purport of Article 32-2(1) of the former Inheritance Tax Act is to recognize an exception to the substance over form principle to the effect that the act of tax avoidance using the title trust system is effectively prevented, thereby realizing the tax justice. As such, the proviso of the same Article can only be applied unless the purpose of tax avoidance is not included in the purpose of title trust, and the taxes prescribed in the proviso cannot be limited to the gift tax, and the burden of proving that there was no purpose of tax avoidance in the title trust is against the nominal owner who asserts it (see, e.g., Supreme Court Decisions 95Nu9174, Aug. 20, 1996; 95Nu1068, May 10, 1996).

However, even based on the facts acknowledged by the court below, it is difficult to recognize that the title trust of this case was an inevitable measure such as the limitation under the law, such as that the title trust of this case was aimed at collecting the number of promoters under the Commercial Act without any tax avoidance purpose. First of all, there was no deliberation on the number of shares held by the promoters, shareholders, and each person at the time of incorporation of the non-party company. Moreover, the shares of this case were acquired at the time of capital increase after the incorporation, and there was no reflect of the deliberation on the reasons for allocating shares to the

In addition, according to the facts established by the court below, the ratio of the Plaintiff’s shares is higher than 25%, which is the actual owner of the non-party company, and the ratio of the Plaintiff’s shares owned by the non-party 3, which is the wife of the non-party 1, is 20%. As cited by the court below, the mere fact that the non-party company did not acquire real estate or that the non-party company continued to be in a state of deficit after its establishment is insufficient to readily conclude that the non-party 1 did not have any purpose of tax avoidance, such as avoiding disadvantages under the tax law that the company would be suffered as oligopolistic shareholders

Nevertheless, the court below's decision that Article 32-2 (1) of the former Inheritance Tax Act shall not apply to the title trust of this case is erroneous or erroneous in the misapprehension of legal principles as to the above provisions of the former Inheritance Tax Act, or in the misconception of facts against the rules of evidence or the incomplete hearing. The ground for this decision is with merit

3. Therefore, the lower judgment is reversed, and the case is remanded to the lower court. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Yong-hun (Presiding Justice)