Whether the purpose of tax avoidance is at the time of the non-listed trust

In light of the fact that it is difficult to deem that there was a purpose of evading the progressive tax rate pursuant to the global income tax assessment on dividend income related to the stocks of this case because there is no possibility to pay dividends at the time of stock title trust, it is difficult to deem

Donation of title trust property under Article 41-2 of the Inheritance Tax and Gift Tax Act

1. The Defendant’s disposition of imposition of KRW 160,752,700 against the Plaintiff on May 4, 2005 shall be revoked.

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

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. On June 15, 200, 190, ○○○○ Co., Ltd. (former trade name: ○○○○ Co., Ltd.; hereinafter “Nonindicted Company”) acquired shares 1,017,692, and on December 6, 2000, 330,751 shares out of the above shares (hereinafter “instant shares”) of the Plaintiff.

B. Around September 2004, the Defendant discovered the fact of trust in the above name, and imposed KRW 160,752,500 on the Plaintiff on May 4, 2005 based on Article 41-2 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002) (hereinafter referred to as the “instant disposition”). At the time, the Defendant at the time calculated the value per share of the instant shares as KRW 1,777 based on the supplementary assessment method stipulated in Article 63(1)1(c) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6301 of Dec. 29, 200), based on which the tax base was calculated as KRW 587,74,527 (=30,7517517).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, Eul evidence Nos. 1 and 3, each of the statements Nos. 1 and 2, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The parties' assertion

(1) The plaintiff's assertion

(A) In the event of the occurrence of a legal dispute with the Yellow City, the Defendant trusted the instant shares to the Plaintiff for the purpose of avoiding provisional seizure, etc. Therefore, the Defendant’s disposition of this case was unlawful inasmuch as the purpose of tax avoidance was not achieved in the title trust of the instant shares.

(B) Even if there is a tax avoidance purpose in the title trust of the instant shares, the value of donated property shall be calculated on the basis of the above amount, not by the amount calculated by the supplementary evaluation method, as the instant shares, which were non-listed shares, were purchased at KRW 805.74 per share on June 15, 200.

(C) Even if the value of the donated property is calculated based on the supplementary valuation method, since the amount of KRW 2,777,610,000 of the net asset value of the non-party company’s company invested in a local corporation in China is irrecoverable bonds, the above amount shall be deducted from the net asset value.

(2) The defendant's assertion

(A) Since △△ may avoid cumulative taxation on stock dividend through a title trust, it cannot be deemed that there was no purpose of tax avoidance. In light of the fact that securities transaction tax was delinquent as of December 6, 2000, the title trust date, but paid the securities transaction tax 5,168,360 won on June 20, 201, it cannot be deemed that there was no purpose of avoiding the seizure of the shares of this case by the tax authority. In addition, when considering the shareholder status of the non-party company as of December 31, 200, △△△ was 15% for the non-party company, ○○○, which is the main unit of △△△△, owned each share of 13% for the plaintiff, and △△△ was an oligopolistic shareholder, and Osan was for the purpose of evading secondary tax liability or deemed acquisition tax under the Framework Act on National Taxes and the Local Tax Act due to the title trust on the shares of this case.

(B) After acquiring the shares of this case on June 15, 200, 100, 5 months or more from the acquisition of the shares of this case to the Plaintiff on December 6, 2000. Under Article 49(1) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17039 of Dec. 29, 2000), △△△ cannot calculate the sales price of June 15, 200 as the value of property donated to the Plaintiff on December 6, 200.

(C) On the basis of the audit report prepared by the external accounting corporation of the non-party company, the defendant calculated the value per share of the shares of this case by including the assets of the non-party company in the net asset value of the non-party company. There is no

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

(1) Facts of recognition

The following facts may be acknowledged in light of the evidence of subparagraphs 4 through 6, Gap evidence 7-1 through 3, Gap evidence 8-1, 2, Gap evidence 9, Gap evidence 10-1 through 3, Gap evidence 11-1 through 4, Gap evidence 12, Gap evidence 13-1, 2, Gap evidence 14-16, Eul evidence 3-1, and Eul evidence 3-2:

(A) On June 15, 200, five persons, including the Oral Corporation, acquired the entire shares of the non-party company 2,544, 231 shares (e.g., par value 5,000 shares) from the Oral Corporation, a U.S. corporation. At the time, Oral Corporation took over KRW 1,017,692 shares, the maximum amount of 0%, and Yellow ○, respectively, 381,635 shares, each of which is equivalent to 15% of 15%, 508,846 shares, and 254,423 shares, each of which is equivalent to 20% of the total shares of the non-party company.

(B) On June 12, 200 prior to the acquisition of the above shares as above through the introduction of Yellow City. On June 12, 200, △△△ agreed to pay 381,625 shares out of the shares so purchased, to the joint representative director of the non-party company, and to pay the amount equivalent to 70% of the refund to the non-party company in the case of the disposition of revocation of imposition, such as corporate tax, which is in progress at the time, if the non-party company won in the case of the above purchase, the company must pay the amount equivalent to 35% out of the refund to the △△. If the △△△ does not assign the joint representative director, the amount equivalent to 50 million won out of the refund, and if the non-party company fails to pay the amount equivalent to 70% of the above refund, the amount equivalent to 90 million won out of the refund shall be paid.

(C) After the date of appointment of the Non-Party Company as the joint representative director, the Non-Party Company was dismissed from the office of joint representative director on December 8, 200 on the ground that the Jung-gu Office used the company’s funds and neglected to perform its duties. On January 19, 2001, the Non-Party Company was dismissed from the office of director of the Non-Party Company.

(D) On December 2, 200, 200, △△△ was punished for dispute over the implementation of the agreement between △△ and the above on June 12, 200, and on December 2, 200, △△△ rendered a provisional injunction against disposal of shares against the above 381,625 shares out of the shares owned by △△△. Based on this, on December 13, 200, △△△ decided on December 13, 200 on December 13, 200.

(E) On April 13, 2001, △△△ brought an action against the Defendant to comply with the procedure for transfer of the said shares 381,625 shares, and on April 18, 2001, the Defendant filed an action against the Nonparty Company seeking compensation for damages by being dismissed from the joint representative without justifiable grounds.

(F) Thereafter, on June 29, 2001, △△△ had agreed with △△, withdrawn all of the above lawsuits, and on April 30, 2002, the Plaintiff transferred the name of the instant shares to △△△ on April 30, 2002.

(G) On December 6, 200, 200, the Plaintiff, who was under dispute with the Yellow City, trusted the instant shares to the Plaintiff. On December 31, 200, as of December 31, 200, the Plaintiff owned 381,634 share holding by the Nonparty Company, which is equivalent to 15%, and 1,017,692 share holding by the ○○○, the maximum amount of 40%, and 330,751 share holding by the Plaintiff, which is equivalent to 13%.

(h) On the other hand, the U.S. corporation, which operated the non-party company prior to the acquisition of the shares of the non-party company by the Ohman, was in a state of suspension of operation of the non-party company as well as the local corporation, and the non-party company was in a state of unsound business normalization due to the labor

(i) On August 14, 2001, the non-party company reduced its capital from KRW 12,721,15,000 to KRW 5,08,445,00, and KRW 2,500,000 again on March 20, 2002, respectively, and eventually, on October 16, 2003, the non-party company sold a factory located in Song-dong, Chungcheongnam-gu, Chungcheongnam-gu, Chungcheongnam-dong, Chungcheongnam-gu, Seoul, and closed its business on April 30, 200. As such, the non-party company did not pay dividends from the acquisition of shares to the closure of its business.

(2) Determination

The following facts revealed in the above facts: (a) the time when the Plaintiff received the instant shares under title trust was at the time when the Plaintiff had a legal dispute with the Yellow City; (b) the period for holding the instant shares under the Plaintiff’s name was about one year and five months, and the name was restored to △△; and (c) at the time when the △△ Province held the instant shares to the Plaintiff, including the above title trust shares, at the time of the title trust to the Plaintiff, the ownership of the shares including the above title trust shares was about 28% of the issued shares of the non-party company, 385 shares (= 381,634 shares + 330,751 shares). The Plaintiff did not appear to be subject to the Plaintiff’s global income tax avoidance under the premise that it was difficult to view that the purpose of this case’s global income tax avoidance was not the oligopolistic shareholder under the name of the non-party 16 under the former Framework Act on National Taxes (amended by Act No. 7008, Dec. 30, 2003).

3. Conclusion

If so, the plaintiff's claim of this case is reasonable, and it is decided as per Disposition.

Related Acts and subordinate statutes

Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002)

Article 41-2 (Presumption of Donation of Title Trust Property)

(1) Where the actual owner and the nominal owner are different in property (excluding land and buildings; hereafter the same shall apply in this Article) which requires a registration, etc. for the transfer or exercise of rights, the value of such property shall be deemed to have been donated by the actual owner on the date when it is registered, etc. as the nominal owner, notwithstanding Article 14 of the Framework Act on National Taxes: Provided, That the same shall not apply

1. Where assets are registered, etc. in the name of another person without the purpose of tax avoidance;

Inheritance Tax and Gift Tax Act

Article 60 (Principles for Evaluation, etc.)

(1) The value of property on which an inheritance tax or gift tax is levied under this Act shall be the market price as of the date the inheritance commences or the date of donation (hereinafter referred to as the "date of appraisal"). In such cases, the value appraised by the method of appraisal stipulated in Article 63 (1) 1 (a) and (b) (excluding cases falling under the provisions of Article 63 (2))

(2) The market price under paragraph (1) shall be the price which is considered to be normal in cases of free trade between many and unspecified persons, and shall include the public auction price and appraisal price, and others which are recognized as the market price under the conditions as prescribed by

(3) In applying paragraph (1), where it is difficult to compute the market price, the price assessed by the methods prescribed in Articles 61 through 65 shall be based on the types, scale, transaction conditions, etc. of the relevant property.

Inheritance Tax and Gift Tax Act (amended by Act No. 6301 of Dec. 29, 2000)

Article 63 (Evaluation of Securities, etc.)

(1) The appraisal of securities, etc. shall be conducted by the following methods:

1. Appraisal of stocks and investment shares:

(a) Stocks and equity shares traded on the Korea Stock Exchange shall be the average amount of the final market price (whether there is any transaction record or not) the Korea Stock Exchange on the emails on two months before and after the evaluation base date: Provided, That in the calculation of the average amount, in cases where it is inappropriate to apply the average amount on the grounds of capital increase or merger, etc. during two months before and after the evaluation base date, the average amount of the period from the day following the date of capital increase or merger, etc. to the day on which two months after the evaluation base date falls;

(b) The provisions of item (a) shall apply mutatis mutandis to the stocks and equity shares as prescribed by the Presidential Decree among the stocks and equity shares of the Association-registered corporations as prescribed by the Presidential Decree. In this case, the “final market price” shall be deemed

(c) Stocks and equity shares not listed on the Korea Stock Exchange other than those under item (b) shall be appraised according to the methods prescribed by Presidential Decree in consideration of corporation assets and profits;

Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17039 of Dec. 29, 2000)

Article 49 (Principles, etc. of Assessment)

(1) The term "those recognized as the market price as prescribed by Presidential Decree, such as the price of expropriation or public auction, appraisal value, etc." in Article 60 (2) of the Act means sale, appraisal, expropriation or auction (referring to an auction under the Civil Procedure Act) for a period not exceeding six months (three months in the case of donated property) before or after the standard date of appraisal.

Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17828, Dec. 30, 2002)

Article 54 (Appraisal of Unlisted Stocks)

(1) Stocks and investment shares not listed on the Korea Stock Exchange (hereinafter referred to as “non-listed stocks” in this Article) under Article 63 (1) 1 (c) of the Act shall be the value assessed by the following formula:

Value per share = The weighted average amount of net profits and losses for the preceding three years per share / The rate prescribed by the Ordinance of the Ministry of Finance and Economy in consideration of the average interest rate formed in the financial market.

Enforcement Decree of the Inheritance Tax and Gift Tax Act (Amended by Presidential Decree No. 18177, Dec. 30, 2002)

Article 54 (Appraisal of Unlisted Stocks)

(2) Where the value of unlisted stocks appraised under paragraph (1) falls short of the value appraised by the following formula, the value shall be the value appraised by the following formula:

Value per share = Net asset value of the relevant corporation / Total number of outstanding stocks

Framework Act on National Taxes (amended by Act No. 7930 of April 28, 2006)

Article 39 (Secondary Tax Liability of Contributors)

(1) Where the property of a corporation (excluding a corporation whose stocks are listed on the Korea Stock Exchange) is insufficient to cover the national tax, additional dues, and disposition fee for arrears that the corporation has imposed on or is to pay, any person who falls under any of the following subparagraphs as of the date on which the liability to pay national taxes is established shall assume secondary tax liability for such shortage: Provided, That in the case of an oligopolistic stockholder under subparagraph 2, the limit shall be the amount calculated by multiplying the amount obtained by dividing the shortage by the total number of issued stocks (excluding non-voting stocks; hereafter the same shall apply in this Article) or total amount of investment of the corporation by the total number of issued stocks (excluding non-voting stocks; hereafter the same shall apply in this Article) of the

1. General partners;

2. An oligopolistic stockholder who falls under any of the following items:

(a) A person who actually exercises the rights to 51/100 or more stocks or shares out of the total number of issued stocks or investments of the relevant corporation;

(b) An honorary chairperson, chairperson, president, vice president, senior managing director, managing director, director, or any other person who actually controls the management of the corporation, notwithstanding the title thereof;

(c) The spouse (including the person in de facto marital relations) of the persons under items (a) and (b) and the lineal ascendants and descendants sharing their living

Framework Act on National Taxes (amended by Act No. 7008 of Dec. 30, 2003)

Article 39 (Secondary Tax Liability of Contributors)

(2) For the purpose of paragraph (1) 2, the term “major stockholder” means a person who is a relative or has other special relations with a stockholder or partner with limited liability as prescribed by the Presidential Decree, and the total amount of stocks owned or investment is 51/100 or more of the total number of issued stocks or investment amount of the juristic person

Enforcement Decree of the Framework Act

Article 20 (Scope of Relatives and Those Who Have Special Relations)

The term "relatives or other persons having special relations as prescribed by the Presidential Decree" in Article 39 (2) of the Act means persons falling under any of the following subparagraphs: Provided, That in case where a stockholder or partner with limited liability is a woman, excluding the cases of subparagraphs 9 through 13, the husband's relationship shall be followed:

1. The wife of any paternal blood relationship within the sixth degree and the wife of any paternal blood relationship within the fourth degree;