The revocation of disposition imposing gift tax (related to the exercise of preemptive rights)

Since the plaintiffs cannot be deemed to have received direct donation from the plaintiffs with the exercise interest acquired by the subsidiaries as shareholders of a separate subsidiary, the disposition of this case is not subject to the imposition of gift tax.

Article 40 of the Inheritance Tax and Gift Tax Act

Daejeon District Court 2017-Gu Partnership-101767 ( November 22, 2017)

2017Guhap101767 Revocation of Disposition of Imposition of Gift Tax

To prevent the dilution of shares of a large shareholder rather than obtaining profits from the exercise of a preemptive right;

For the purpose of this case, it is deemed that the preemptive right of this case was owned and exercised at maturity.

naturally, it is natural.

(5) The possibility of failure to carry out the related project in excess of aa’s spathy

bb. 1 year after the issuance of the bonds of this case

acquisition of the instant preemptive right that may be exercised at the time of the exercise of the right

T’s stock price increase is sufficiently expected, and there is insufficient ground to conclude that the stock price increase is sufficiently expected. The preemptive right holder of this case

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The stock price decline due to the risk of business activities and marginal profits from the exercise of preemptive rights;

The plaintiffs are presumed to have been able to accept for a considerable period of time.

the issuance of bonds, the acquisition of preemptive rights of this case, and the exercise of such rights.

It is difficult to view that the acquisition of new shares of Aa and the acquisition of marginal profits was planned to have been made.

and ultimately, the share price is paid to the plaintiffs who are shareholders of bB.

An act used as a means, for the purpose of excessive distribution of profits arising from his/her winning;

It is difficult to readily conclude it.

(6) there is a problem, such as disclosure, if aa directly makes an overseas investment.

As such, Plaintiff CC established unlisted bB, an unlisted company, and thereby, Plaintiff CC established the Philippines

local projects were conducted.bb as domestic sales of products and export of foreign products.

Sales of KRW 1,004, 683,340, 4,105, 577,859, 1,448,945,302 for the year 2012

Inasmuch as there exists an entity of business, such as achieving its business, the Plaintiff e, etc., the entity of which is the Plaintiff cC

It can only be seen as a company established for the purpose of donating property.

3) Sub-decisions

Therefore, the defendant's disposition of this case is illegal as imposed without the grounds of the Inheritance Tax and Gift Tax Act.

The plaintiffs' assertion is with merit.

3. Conclusion

Thus, the plaintiffs' claims of this case are justified, and the state shall accept all of them.

It is so decided as per sentence.

QQQ

1.c. c.

e. e.

a) the Director of the Tax Office

F. F. Head of tax office

Red*

October 28, 2017

October 18, 2017

November 22, 2017

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J. M. M. L. L. L.C.

Part 1. Ministry of Justice

sales agreement

November 22, 2017

1. The Defendant’s imposition of KRW 510,760,810 (including additional taxes) of gift tax against Plaintiff CC on January 12, 2016 and the imposition of KRW 1,257,441,630 (including additional taxes) of gift tax against Plaintiff E shall be revoked in entirety.

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

The provisions of paragraph (1) of the Gu office shall apply to the Gu office.

1. Details of the disposition;

(a) A. 20b. 10b. 20 2.0b. 20 20 c. 3 c. 3 c. 4 c. 3 c. 4 c. 5 c. 3 c. 3 c. 0 c. 8 c. 4 c. 5 c. 8 c. 3 c. 4 c. 3 c. 5 c. 5 c. 3 c. 3 c. 4 c. 3 c. 3 c. 3 c. 3 c. 4 c. 3 c. 4 c. c. 0 c. 0 c. 86 c. c. 0 c. 1 c. 80 c. 3 c. 5 c. c. c. 2 c. n. 3 c. c. 4 c. c. c.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 4, 6, 7, 9, 10, 12 (including branch numbers; hereinafter the same shall apply), Eul evidence Nos. 1, 2, and 5, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiffs' assertion

Aa A receives the terms and conditions of the issuance of the instant bonds from multiple underwriters to raise new business funds, among them, they were issued the instant bonds by accepting the terms and conditions set by rrrrh Capital, and rrrh Capital transferred the instant preemptive rights to vvv according to the designation of Aa. Accordingly, the benefits accrued by bbb from the exercise of the instant preemptive rights were attributed to bB, and the benefits that the Plaintiffs, which are the shareholders of ccccc, received from aa, cannot be deemed to have received the said benefits. Accordingly, the instant disposition should be revoked by applying Articles 40(1), 42(1) and 2(3) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 12168, Jan. 1, 2014; hereinafter referred to as the “Inheritance Tax and Gift Tax Act”) on the premise that the Plaintiffs received the benefits from cccccca, and thus, it should be revoked.

It is as shown in the attached Form.

C. Determination

1) In light of the fact that Article 40(1), Article 42(1), and Article 2(3) of the Inheritance Tax and Gift Tax Act introduced the concept of comprehensive donation under the tax-related Acts to cope with an irregular inheritance or donation in advance, and uniformly converting the previous provision on deemed donation into the provision on the timing of donation and calculation of the value of donated property (hereinafter “the provision on the calculation of the value of donated property”), in principle, if a certain transaction or act constitutes the concept of donation under Article 2(3) of the Inheritance Tax and Gift Tax Act, it shall be deemed that gift tax may be levied pursuant to Article 2(1) of the same Act.

However, the conversion of the regulation on the calculation of the value of the donation into the category 2 of Chapter 3 on the deemed donation from "the legal fiction, etc. of donation" to "Calculation of the value of the donated property", and each amendment of the title of the regulation on individual donation from "the legal fiction of donation" to "the value of the donated property" to "the value of the donated property", and due to that, the contents related to the taxation requirements, such as the taxable object and the scope of taxation, which have been regulated in the previous provision on the deemed donation, remain as they are.

In other words, the provision on assessment of individual value requires that a special relationship exists between the parties to a transaction with a certain type of transaction or act. Such a provision on assessment of individual value requires the amendment from time to time to time regarding matters relating to the taxable subject matter or scope of taxation. In order to promote predictability of taxpayers and stability in tax law relations and prevent confusion in taxation due to the introduction of the complete universal taxation system, it shall be deemed that the legislative intent to maintain matters relating to the taxable subject matter and scope of taxation, which are regulated by the previous provision on deemed donation, is reflected. Therefore, in a case where the individual value calculation provision regulates specific types of transaction or act to ensure taxpayers’ predictability, and it can be deemed that the scope and scope of taxation of gift tax is limited to only a certain transaction or act subject to gift tax, and the scope of taxation can be limited by prescribing the scope and scope of taxation of gift tax, among the transaction or act governed by the provision on assessment of individual value, even if such transaction or act excluded from the scope of gift tax subject to or scope of taxation of gift tax is inconsistent with the concept of gift under Article 2(3).

(1) Article 40(1) of the Inheritance Tax and Gift Tax Act provides that where a person obtains any of the following profits by converting and exchanging convertible bonds, bonds with warrant (referring to warrant certificates if they are separated) or other stocks, or by acquiring, acquiring, or transferring bonds entitled to take over stocks (convertible bonds, etc.) with convertible bonds, etc., or by converting into, exchanging with, or taking over stocks with, stocks, an amount equivalent to such profits shall be deemed the value of property donated to the person who has acquired such profits. Article 42(1) of the Inheritance Tax and Gift Tax Act provides that, in addition to donations under Articles 33 through 39, 39-2, 39-3, 40, 41, 41-3 through 41-5, 44, and 45, such profits shall be deemed the value of property donated to the person who has acquired such profits:

(2) However, each of the above provisions provides that profits derived from conversion into and exchange with shares or acquisition of shares by convertible bonds shall be deemed as the value of property donated to the person who acquired such profits. Since the person who acquired profits from the exercise of the preemptive right of this case is only bbb that had been holding the preemptive right, it cannot be said that the Plaintiffs obtained profits from the exercise of the preemptive right of this case by deeming that they were shareholders of

(3) On the other hand, Article 41(1) of the Inheritance Tax and Gift Tax Act provides that a deficit exists, or is suspended or closed.

In cases where a specially related person prescribed by Presidential Decree of the shareholders or investors of a certain corporation (a specific corporation) makes any of the following transactions with the specific corporation and thereby the shareholders or investors of such specific corporation gain profits prescribed by Presidential Decree, an amount equivalent to such profits shall be deemed the value of donated property of the shareholders or investors of such specific corporation. In addition, while a provision exists that the gift tax may be imposed on the shareholders or investors of the specific corporation regarding the specific transaction or act of the corporation, as in this case, where the corporation held preemptive rights and gains profits from the exercise of such rights, there is no provision that the gift

(4) Article 2(3) of the Inheritance Tax and Gift Tax Act was introduced in order to solve problems that could not cope with any new type of modified donation. As seen earlier, the acquisition of profits from the exercise of preemptive rights cannot be deemed as a new type of modified donation that could not be predicted by the type of transaction stipulated under Articles 40(1) and 42(1) of the Inheritance Tax and Gift Tax Act. In other words, Articles 40(1) and 42(1) of the Inheritance Tax and Gift Tax Act stipulate a specific type of transaction and regulate only a specific type of transaction and set the scope and limit of taxation of gift tax by prescribing the scope of taxation of gift tax by restricting the scope of taxation of gift tax. Thus, gift tax cannot be levied on the Plaintiffs by applying Article 2(3) of the Inheritance Tax and Gift Tax Act.

2) Whether Article 4-2 of the Inheritance Tax and Gift Tax Act is applicable

A) Article 2(1) of the Inheritance Tax and Gift Tax Act provides that where any donated property is donated by another person’s donation, such donated property shall be subject to the gift tax. Article 2(3) of the same Act provides that “The term “the transfer of tangible and intangible property, regardless of the name, form, purpose, etc. of the act or transaction, in a direct or indirect manner (including the transfer of property at a remarkably low price) or an increase in the value of another person’s property by means of the direct or indirect method,” and Article 4-2 provides that “the transfer of the donated property to a third person without compensation.”

- 8- Where it is deemed that the inheritance tax or gift tax has been unjustly reduced by means of an indirect method, or through two or more acts or transactions, regardless of the name or form of such acts or transactions, it shall be deemed that such acts or transactions have been directly conducted by the parties, or that such acts or transactions have been conducted as a series of single acts or transactions, and thus, the inheritance tax or gift tax shall be levied, as prescribed by this Act. Article 4-2 of the Inheritance Tax and Gift Tax Act provides that if it is deemed that the gift tax has been unjustly reduced by two or more acts or transactions under the economic substance, it shall be imposed by deeming the said economic substance as a series of acts or transactions which are subject to gift tax in accordance with the economic substance. The said provision provides that a gift tax shall be imposed by denying such various stages of transactions in order to achieve the effect of gift tax but to cope with the act of unfairly reducing gift tax while bypassing or changing such transactions, it shall be aimed at promoting tax equity by prescribing one of the forms of the application of the substance over form

However, the taxpayer can choose one of the several legal relations in order to achieve the same economic purpose when carrying out economic activities, and the tax authority is a special tax.

Unless there exist any circumstances, the legal relationship chosen by the parties shall be respected (see, e.g., Supreme Court Decision 2000Du963, Aug. 21, 2001). Moreover, as a result of multiple stages of transactions, compensation for losses, etc. as well as external factors or acts may intervene, etc., it shall not be readily concluded that the substance is a gift act after multiple stages of transactions and thus, it shall not be subject to gift tax (see, e.g., Supreme Court Decision 2015Du3270, Jan. 25, 2017). Therefore, pursuant to Articles 4-2 and 2(3) of the Inheritance Tax and Gift Tax Act, in order to ensure that the parties’ acquisition of new stocks or legal relations, such as the purchase of new stocks at a certain point of time and at a different intervals of business, and thus, the acquisition price of the new stocks, etc. at a different point of time or at a different point of time, should be determined by comprehensively taking account of the following factors: (i) whether the legal form or process of transactions chosen by the parties to pay gift taxes, etc.

(1) A A around 2010, around 2010, developed a technology by which the production cost of lap (the location to make LED chips has been growing by using laps as raw materials, etc.) was low. Aa, using such technology, was required to make funds from financial institutions or to raise necessary funds by issuing convertible bonds or bonds with warrant. Aa has been subject to review of the above financing method even around this time, since a Aa has been financed by a financial institution, it was 5-6% per annum if it was financed by a financial institution, and when it was issued bonds with warrant, it was possible to raise funds by bearing 4% per annum, and even if it was financed by a financial institution up to the lending limit, it was necessary to temporarily use the funds for repayment of KRW 5 billion per annum 200,700,000,000,000 to KRW 100,000,000,000,000).

(2) The acquisition of the instant preemptive right by bB was due to the Plaintiff’s rrh capital agreement with rrh capital at the time of the issuance of the instant bonds. These conditions seem to have been proposed by rrh capital, the underwriter of the instant bonds. rh capital, as the event the instant bonds are held until the maturity, may change the value of the assets due to the change in the stock price, is likely to promptly dispose of part of the preemptive right to new stocks, which is included in options, and make a final determination of profits from the risk reduction rather than obtaining investment profits, rather than obtaining investment profits. Aa and the Plaintiffs, while securing funds, have advantages from minimizing business restrictions under the underwriting contract for bonds with warrants. In light of this, it cannot be said that there is no particular business purpose other than tax avoidance purpose.

(3) Under Articles 5-24(1) and 5-22(1) of the former Regulations on the Issuance and Public Disclosure of Securities (amended by Act No. 2010-37, Nov. 8, 2010), the exercising price of the instant preemptive right is determined as KRW 2,380, whichever is the higher of the average of the weighted average of the prices of the first month, the average of the weighted average of the prices of the first week, and the prices of the preceding weighted average of the prices.

(4) The price at Aa was KRW 2,360 on April 7, 2010, the date of the instant bonds issued, and KRW 6,060 on March 7, 2013, but the said KRW 6,060 during the period from April 7, 2011 to March 8, 2013, when the period for exercising the instant preemptive right, was bb prior to the expiration date of the period for exercising the preemptive right, and thus, the Plaintiffs via BB.