Even if inherited shares are not transferred for a long time, they may not be taxed as deemed donation of title trust.

Even if an inheritor did not complete the change of entry of shares, the disposition imposed on the donation of title trust is illegal because it does not fall under the scope of the application of the overall provision of Article 41-2 of the Inheritance Tax and Gift

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

Disposition of revocation of imposition of gift tax, etc. by the Seoul Administrative Court 2016Guhap6405

OraA

○ Head of tax office and three others

March 31, 2017

1. As to the plaintiff:

(a) Defendant SP head of the tax office KRW 000,00,000, gift tax (including additional tax) on November 3, 2014;

B. Defendant B’s head of the tax office’s gift tax (including additional tax) on November 5, 2014 2005;

C. Defendant GG Head of the District Tax Office: (a) gift tax (including additional taxes) for the year 2005, Nov. 3, 2014;

D. Each disposition of imposition of KRW 000 on gift tax (including additional tax) accrued in 2005 by Defendant D head of the tax office on November 1, 2014 shall be revoked.

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

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. The plaintiff is the head of the Go JK (hereinafter referred to as the "the deceased"), and the largest BB is the mother of the plaintiff as the wife of the deceased, and the highest BS, DLH, and most DT are the relatives of the largest BB.

B. As a business proprietor of theY industry corporation (hereinafter “Y industry”), the Deceased held 90,00 shares of the Y industry, and held 33,34 shares of 90,00 shares in title trust to the largestB, 31,333 shares in the Y industry, 15,889 shares in DLH, and 33,34 shares in the Y industry. Of the total shares of the Y industry 400,000 shares in the Y industry, the Deceased held 180,00 shares in the Y industry and 49,444 shares in the Y industry.

C. On September 22, 1995, the deceased died, and on September 12, 1995, on September 12, 1995, 80,556 shares of the Y industry owned by the deceased and title trusted in the name of 180,00 shares of the Y industry and maximum BS, DLH, and maximum DT ( = 31,33 +15,89 shares + 334 shares), the deceased prepared a testamentary document of each testamentary gift to the Plaintiff.

D. On March 14, 1996, after the death of the deceased, the Plaintiff and LB made an agreement with the effect that the ownership of the Y industry shares is verified by the Plaintiff.

E. On May 31, 2014, the Director of the Regional Tax Office conducted a gift tax investigation against the Plaintiff on the Y industry’s total issued shares of 400,00,000 shares, and confirmed that the Plaintiff did not transfer the title to the Plaintiff’s name by December 31, 2004, with shares of 90,000 shares in the name of the largestB, shares of 31,333 shares in the name of the largestBS, shares of 15,889, shares in the name of DoLH, shares of 33,34 shares in the name of the largest DH, and shares of 170,556 shares in the name of the deceased (hereinafter “instant shares”).

F. Accordingly, the director of regional tax office of 00 shall regard the shares of this case as shares of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 2002; Act No. 7010, Dec. 30, 2003; hereinafter referred to as the "former Inheritance Tax and Gift Tax Act") as shares of a long-term unregistered one based on the donated trust property under Article 41-2 of the former Inheritance Tax and Gift Tax Act, and notify that the date of deemed donation shall be the date of acquisition of ownership (as of January 1, 2003, the enforcement date of the former Inheritance Tax and Gift Tax Act pursuant to Article 9 of the Addenda of the former Inheritance Tax and Gift Tax Act) and the Defendants imposed gift tax on each title truster as shown below [Attachment 1], while imposing gift tax according to the designation of each of the parties jointly and severally liable to pay the Plaintiff (hereinafter referred to as the "each disposition of this case").

[Attachment 1] Each disposition of this case: omitted

[Reasons for Recognition] Unsatisfy, each entry in Gap evidence 1 to 3 (including each number), and the purport of the whole pleadings

2. Related statutes;

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

(1) Notwithstanding the provisions of Article 14 of the Framework Act on National Taxes, in case where the actual owner and the nominal owner are different in property which requires a registration, etc. for the transfer or exercise of rights (excluding land and buildings; hereafter the same shall apply in this Article), the value of such property shall be deemed to have been donated from the actual owner by the nominal owner on the date when the actual owner registers, etc. as the nominal owner (in case of the property, referring to the date following the end of the year following the year in which the date of acquisition of ownership falls, if the property is subject to a change of ownership), (hereafter referred to as "general

1. Where any property is registered in another person's name without the purpose of tax avoidance or transfer is not made in the name of the actual owner who acquired the ownership;

2. Where converting the name of the actual owner into the name of a third party with respect to the stocks, etc. which have been entered in the register of shareholders or the register of members or whose transfer has been made in the name of a third party pursuant to a trust or agreement prior to January 1, 1997 (hereafter in this Article, referred to as the "period of grace") from among the stocks or equity shares (hereafter in this Article, referred to as "stocks, etc."): Provided, That the same shall not apply to cases where converting the name of a person in a special relationship with the stockholders (including investors) of the corporation which has issued the relevant stocks, etc. or of a minor person as of January

(2) Where any property is registered, etc. under another person's name, and a transfer of ownership is not made under the name of the actual owner, and where the title of stocks, etc. is not converted under the name of the actual owner during the grace period under paragraph (1) 2, it shall be presumed that there exists a purpose of tax avoidance: Provided, That the same shall not apply to cases where the transferor files a report on the transfer income tax base under Articles 105 and 110 of the Income Tax Act

Article 1 (Enforcement Date) of the Addenda No. 6780, Article 6780, Article 1 (Enforcement Date) This Act shall enter into force on January 1, 2003 (hereinafter referred to as "Enforcement Date").

Article 5 (Application Cases concerning Presumption of Donation of Property under Title Trust) The amended provisions of Article 41-2 (1) and (2) shall apply from the portion of first acquisition of ownership after the enforcement of this Act.

Article 9 (Transitional Measures concerning Property in Title Trust) The portion acquired prior to the enforcement of this Act and the change of ownership pursuant to the amended provisions of Article 41-2 (1) and (2) as of the enforcement date of this Act shall be deemed to have been acquired as of the enforcement date of this Act.

3. Whether the instant disposition is lawful

The overall title of this case provides that if a transfer of ownership is not made by the end of the year following the date of acquisition of the property, the person who acquired the shares shall be deemed a gift. The primary taxpayer of the gift tax shall be the transferor in the position of the title trustee upon the application of the provision. However, the transferor of shares may be deemed as directly involved in the formation of appearance such as the title trust due to the neglect of transfer of ownership. Furthermore, the presumption of tax avoidance purpose can be reversed by reporting the tax base, etc. of the transfer income tax or securities transaction tax pursuant to the proviso of Article 41-2(2) of the former Inheritance Tax and Gift Tax Act, and thus, it is difficult to escape from the subject of deemed donation. On the other hand, where the shares held in title trust are inherited, the existing title trustee is not only subject to the provision on deemed donation of title trust at the date of the original transfer of ownership, but also does not have any new act to form the title trust relationship within the future, and even if the transfer of ownership is not subject to inheritance within the same period after the inheritance of the title trustee.

4. Conclusion

Therefore, the plaintiff's claim against the defendants is justified, and it is so decided as per Disposition with the assent of all participating Justices.