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Disposition on which gift tax is imposed on the nominal holder of preemptive rights and the truster, respectively, shall not be deemed double taxation.

The gift tax on the profit from exercising the preemptive right is a taxation on the increase in the value of the property acquired by exercising the preemptive right, and the gift tax on the nominal trust property is not a substance but a double taxation in order to prevent the tax avoidance.

Donation of profits from the conversion of convertible bonds, etc. into stocks under Article 40 of the Inheritance Tax and Gift Tax Act

Seoul Administrative Court 2015Guhap60570

○ ○

○ Head of tax office

September 4, 2015

September 18, 2015

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The disposition of imposition of KRW 00,000,000, which the Defendant rendered to the Plaintiff on October 000, 2010, shall be revoked.

1. Details of the disposition;

A. The Plaintiff and Cho Jong-○ is a separate bonds with warrants with ○○○○ Co., Ltd. as follows.

After acquisition, it was exercised.

B. On November 201, 2013, the Defendant: (a) determined and notified KRW 00,000,000 as gift tax on profits from the exercise of preemptive rights on the ground that the Plaintiff, ○○○, was in title trust to the Plaintiff; and (b) did not report gift tax on the exercise of preemptive rights; and (c) determined and notified the Plaintiff of KRW 00,00,000,000 according to the title trust donation agenda (hereinafter “instant disposition”).

C. On January 20, 2014, the Plaintiff filed an appeal with the Tax Tribunal, but was dismissed on January 6, 2015.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 and 2 (including a provisional number; hereinafter the same shall apply), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

1) Article 45-2 of the Inheritance Tax and Gift Tax Act explicitly states that where a provision on deemed donation applies, the provision on substantial taxation does not apply. Thus, the Defendant’s disposition imposing gift tax on ○○, the nominal owner, and the Plaintiff, the truster, respectively, is contrary to Article 3(1)2 of the Framework Act on National Taxes and Article 45-2 of the Inheritance Tax and Gift Tax

2) Since the tax base of gift tax imposed pursuant to the legal fiction of title trust donation includes profits arising from the exercise of preemptive rights, the instant disposition is erroneous in the double taxation.

B. Determination

1) In cases where the actual owner of property necessary for the transfer of rights or the registration thereof is different from the nominal owner, the nominal owner shall be deemed to have donated the value of such property from the actual owner on the date when the actual owner is registered as the nominal owner (Article 45-2 of the Inheritance Tax and Gift Tax Act). Article 4(5) of the Inheritance Tax and Gift Tax Act provides that the donor shall be jointly and severally liable to pay gift tax in cases falling under

As long as the Plaintiff trusted the instant shares to Cho○○, the instant disposition against which the Defendant imposed gift tax on Cho○ and the Plaintiff respectively cannot be deemed unlawful.

2) Gift tax on gains from exercising preemptive rights is imposed on an increase in the value of property acquired by exercising preemptive rights. Gift tax on title trust property is a taxation on the current state, not real, in order to prevent the avoidance of tax, with the meaning and purport of each provision different, and it is difficult to view the instant disposition as the secondary taxation on the grounds that the requirements and timing for establishing tax liability differ.

3) Therefore, the Plaintiff’s assertion is rejected.

3. Conclusion

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