Seoul Administrative Court 2013Guhap5164 ( October 28, 2014)

Seocho 2012west 3609 ( November 29, 2012)

Since a sales contract was revoked, the transferor shall not be deemed as income from the transfer of assets.

If the transferor cancels the sales contract due to the failure of the transferee to perform the obligation for payment of the remaining amount, etc., the sales contract is retroactively invalidated, and thus the transfer of assets, which is a taxation requirement of the transfer income tax, cannot be deemed to exist. Thus, even if the transferor acquires the right to claim compensation for damages due to the impossibility of restitution, it cannot be deemed as income arising from the transfer of assets.

2014Nu6985 Revocation of Disposition of Imposition of Capital Gains Tax and Securities Transaction Tax

AA

Head of Seocho Tax Office

Seoul Administrative Court 2013Guhap51664, revocation of disposition imposing capital gains tax and securities transaction tax.

15.05.19

2015.06.02

United States, U.S. and other legal resources

Part 1. Ministry of Justice

sales agreement

2014Nu6985 Revocation of Disposition of Imposition of Capital Gains Tax and Securities Transaction Tax

Also Incidental Appellant AAA

OOOOOOO-ro OO-dong OO-dong OO-dong (O-dong, O-O-style apartment)

Attorney OOO-O

At the same time, the Appellate Director

OO,OO of the litigation performer

Supreme Court Decision 2013Guhap51664 Decided October 28, 2014

May 19, 2015

June 2, 2015

1.The judgment of the first instance shall be modified as follows:

According to the Plaintiff’s expansion of the purport of the claim in the trial, the Defendant imposed capital gains tax of KRW 87,535,880 and penalty tax of KRW 13,036,596 on May 2, 2012 on the Plaintiff, and the disposition of imposition of KRW 4,841,20 and penalty tax of KRW 1,583,243 and penalty tax of KRW 4,841,20 on May 9, 2012 shall be revoked.

2. All costs of the lawsuit shall be borne by the defendant.

1. The purport of the claim expanded by the trial;

The Defendant’s transfer income tax of 87,535,880 won and additional tax against the Plaintiff on May 2, 2012

The judgment that both the imposition of KRW 13,036,596 and the imposition of KRW 4,841,200 and additional tax of KRW 1,583,243 on May 9, 2012 are revoked.

2. Purport of appeal

The judgment of the first instance is revoked and the plaintiff's claim is dismissed.

1. Details of the disposition;

The court's explanation on this part is identical to the corresponding part of the judgment of the court of first instance except for the modification of the items e.g., and f., "the reasons for the disposition of the court of first instance" in Article 8 (2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

E. From September 30, 201 to December 31, 2011, the Director of the Regional Tax Office: (a) determined that the amount that the transferor, including the Plaintiff, received until that time, was transferred to KRW 532 won per share under the premise that the transfer price was the transfer price (in the case of the Plaintiff, KRW 968,240,00) and notified the Defendant of the same data; (b) accordingly, the Defendant issued a notice of the acquisition tax and additional tax of KRW 55,049,470 for the transfer income tax of KRW 209 and additional tax of KRW 5,049,470 for the transfer income tax of KRW 87,535,80 for the transfer income tax of KRW 13,036,596 for the transfer income tax of KRW 13,05,523,00 for the already paid tax amount of KRW 45,523,000 for the transfer income tax of KRW 305,29384,205.

F. On July 27, 2012, the Plaintiff appealed to the remainder (excluding the portion of capital gains tax of KRW 55,049,470 and securities transaction tax of KRW 2,99,380) of the instant disposition, but the Tax Tribunal dismissed the Plaintiff’s appeal on November 13, 2012. On May 19, 2015, the Plaintiff extended its purport by seeking revocation of the instant disposition, including the capital gains tax and securities transaction tax, which was already paid.

2. Determination

The court's explanation on this part is as stated in Article 8 (2) of the Administrative Litigation Act and the main text of Article 420 of the Civil Procedure Act, except for the modification of Paragraph (d) of the "2. Judgment of the court of first instance" to the part corresponding to the judgment of the court of first instance.

D. Determination

(1) After the closing of argument in the court of first instance, the Defendant’s determination on the legitimacy of the part of the claim extended in the middle of the lawsuit in this case (the part on which the Plaintiff sought revocation of the part of the capital gains tax and securities transaction tax that was previously reported) has occurred after the lapse of three years, which is the period for filing a request for correction, and the written reference to the purport that it is unlawful since the period for filing a request for correction has not gone through the procedure for a prior trial. Although it cannot be deemed legitimate prior to the merits, it shall be determined ex officio and examined ex officio. After that, the Defendant’s determination on the legitimacy of the part of the claim in this case, which was extended in the middle of the lawsuit in this case, sought revocation of the tax disposition only with regard to the above amount in the first instance trial, and extended the period for filing a request for revocation of the entire disposition in the first instance trial pursuant to the judgment of the court of first instance, it cannot be deemed that the grounds for illegality of the extended part of the claim in this case was identical to the first instance trial procedure, thereby allowing the institution to review to review the remainder of the claim in this part 97.

(2) Judgment on the merits

(A) Determination on the part of the disposition of this case (including additional tax)

Article 4(1) of the former Income Tax Act (amended by Act No. 9897, Dec. 31, 200; 200; 200 million won for the transfer of assets) provides that “income accrued from the transfer of assets” (No. 3) by dividing the resident’s income into global income, retirement income, and transfer income. Thus, even if the transfer of assets seems to have been transferred by the sale contract, the transfer price received by the transferor should be returned to the transferee as a matter of principle, and thus, it cannot be deemed that the transfer was subject to taxation of transfer income tax (see, e.g., Supreme Court en banc Decision 2010Du23648, Jul. 21, 201; 2008Du18089, Sept. 1, 200).

(B) Determination on the part of securities transaction tax (including license tax) in the disposition of this case

(1) The defendant's assertion added in the trial.

The securities transaction tax is a kind of distribution tax that assumes the fact that the transfer of the original share certificates or shares (hereinafter referred to as "share certificates, etc.") is based on the original share certificates or shares (hereinafter referred to as "share certificates, etc.") and recognizes and imposes the ability to pay taxes, and it is not imposed by taking advantage of the benefits that the transferor may obtain by disposing of the share certificates, etc. but by taking advantage of the fact that the transferor transfers the share certificates, etc. from the transferor to the transferee. Therefore, the securities transaction tax should be imposed as a matter of course on the preemptive right of this case for which the consideration has already been paid as a consideration for the transfer

(2) Related statutes.

4. Securities Transaction Tax Act (amended by Act No. 10401, Dec. 27, 2010)

Article 1 (Taxable Objects)

The securities transaction tax shall be levied on a transfer of stock certificates or quotas (hereinafter referred to as “stock certificates, etc.”) under this Act: Provided, That in case where the transfer of stock certificates, etc. falls under any of the following subparagraphs, the securities transaction tax shall not be levied:

1. Where stocks, etc. listed on the foreign market (limited to the market prescribed by Presidential Decree; hereafter in this Article, referred to as the "foreign securities market") which is similar to the securities market under Article 9 (13) 1 of the Financial Investment Services and Capital Markets Act and the KOSDAQ market under subparagraph 2 of the same paragraph are transferred;

2. Where stock certificates, etc. are transferred to an underwriter (referring to an underwriter under Article 9 (12) of the Financial Investment Services and Capital Markets Act; hereinafter the same shall apply) for listing stocks, etc. in a foreign securities market;

3. Where the Korea Exchange that has assumed debt pursuant to subparagraph 3 of Article 377 of the Financial Investment Services and Capital Markets Act transfers stock certificates, etc.;

Article 2 (Definitions)

(3) For the purpose of this Act, the term "transfer" means that the ownership is transferred at a cost due to contractual or legal causes.

(4) Shares prior to the issuance of share certificates, rights arising from underwriting of shares, preemptive rights and investment certificates issued by a corporation established by special Acts shall be deemed share certificates in the application of this Act.

Article 5 (Time of Transfer)

(1) In the application of this Act, the time of transfer of stock certificates, etc. shall be the time the relevant transaction becomes final and conclusive.

(2) Matters necessary for confirmation of transactions under paragraph (1) shall be prescribed by Presidential Decree.

(1) Enforcement Decree of the former Securities Transaction Tax Act (amended by Presidential Decree No. 24364, Feb. 15, 2013)

Article 2 (Time of Transfer)

The time for confirmation of sale and purchase transactions under Article 5 (2) of the Act of stock certificates, etc. shall be as follows:

1. With respect to the stocks transacted on the securities market (hereinafter referred to as the "securities market") or the KOSDAQ market (hereinafter referred to as the " KOSDAQ market"), when the transfer value is settled;

2. When a financial investment business entity trades or trades on consignment, or acts as a broker or an agent for a trade, stocks, etc. other than those referred to in subparagraph 1, pays or receives the payment in full;

3. In cases other than those under subparagraphs 1 and 2, when the relevant stock certificates, etc. are delivered or paid in full: Provided, That in cases where the right is transferred before the stock certificates, etc. are delivered or paid in full, the time such right is transferred.

(3) Determination

Article 1 of the former Securities Transaction Tax Act (amended by Act No. 10401, Dec. 27, 2010) provides that securities transaction tax shall be imposed on "transfer of stock certificates, etc." and Article 2(3) of the same Act provides that "transfer" refers to "transfer of stock certificates, etc. at a cost due to a contractual or legal reason." However, when a sales contract for stock certificates, etc. is concluded, the transferee has changed the name of stock certificates, etc. in advance in the future, or new stocks are converted to the transferee's name based on the stock certificates, etc., but the transferee fails to perform the obligation for payment of remaining amount, etc., if the transferor cancels the sales contract or the conditions for cancellation are fulfilled, the above sales contract becomes retroactively null and void, and even if the transferor acquires the right to claim compensation for damages due to the failure of the transferor's future performance, it shall not be deemed as compensation for the transfer of the above stock certificates, etc., even if the transferor acquired the right to claim compensation for damages due to such failure.

(4) Actions

Ultimately, the part on which securities transaction tax and additional tax are imposed on the premise that the preemptive right of this case, among the dispositions of this case, has been transferred at a cost due to legal or contractual causes, is unlawful.

3. Conclusion

Therefore, the plaintiff's claim extended in the trial of the court is justified, and it is decided to revoke the whole disposition of the case and to revise the judgment of the court of first instance as it is decided as per Disposition.