early 208west3591 ( December 31, 2009)

propriety of the disposition imposing the tax on the person in a special relationship by deeming that the shares were received.

There is no other way to verify the market price, and there is no other method to verify the market price of the shares between the parties with a special relationship, and thus no gift tax is levied on the shares at the market price of the shares at issue.

The contents of the decision shall be the same as attached.

Man Doz 300

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of KRW 2,473,656,180 against the Plaintiff on July 1, 2008 shall be revoked.

쇠지지鹬 u3000

1. Details of the disposition;

(a) AAAA (hereinafter referred to as the “AAA”) is an unlisted corporation established on December 17, 1984 and engaged in sales of film and prize value for printing.

B. On December 26, 2003, the Plaintiff acquired shares of AAB 17,950 (hereinafter “instant shares”) from BB in total at KRW 682,100,000 per share of KRW 38,000 (hereinafter “instant shares”).

C. Meanwhile, the shareholding ratio by shareholder before and after the instant transaction on the shareholder registry of AA is as follows.

D. At the time of the instant transaction on July 1, 2008, the Defendant: (a) deemed that the amount equivalent to the difference between the acquisition price and the market price is donated to the Plaintiff on the ground that the Plaintiff’s acquisition of the instant shares from thisB at a price lower than the market price constitutes “the acquisition of property at a price lower than the market price from a person in a special relationship under Article 35(1)1 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 7010, Dec. 30, 2003; hereinafter referred to as “first Inheritance Tax and Gift Tax Act”); and (b) deemed that the Plaintiff was donated to the Plaintiff, and thus, issued the instant disposition imposing gift tax as stated in the purport of the claim against the Plaintiff.

[Ground of recognition] Facts without dispute, Gap 1 to 4 evidence, Eul 1 and 2 evidence (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) The instant transaction is not between parties with a special relationship.

B, the transferor of the instant transaction, is not a person having a special relationship with the Plaintiff for the following reasons.

(A) On December 28, 1998, KimCC transferred AAA’s 20,00 shares to DaD on December 28, 1998, and was delegated by DaD with the authority to exercise shareholders’ rights of 20,000 shares. At the time of the instant transaction, B and E’s shares held by 32,450 shares (i.e., 17,950 shares held by BB + 14,500 shares held by E), and the shares held by B and E are 40.56 percent, and the shares held by 44,000 shares (i.e., 14,00 shares owned by the Plaintiff + 10,000 shares owned by YGG + 20,000 shares owned by the Plaintiff, and thus, the largest shareholder of CC is not 5,500 shares held by NAB.

(B) This B and E are merely the largest shareholders on the pretext of a mere nominal investor and did not participate in the management of AAA. Since the Plaintiff and the KimCC decided on the major business affairs of AA, the Plaintiff cannot be an employee of the BA.

(C) At the time of the instant transaction, the Plaintiff acquired shares in a conflicting relationship with BB at the time of the instant transaction. In the event that shares are acquired not in a conflicting relationship with the transferor, but in a conflicting relationship with the transferor, the Plaintiff should be interpreted by limiting the acquisition of shares to fall under the

(2) At the time of the instant transaction, the value of KRW 38,00 per share constitutes the market price that reflects an objective exchange value at an adequate level.

In light of the fact that on December 31, 2002, the Kim GG agreed to re-purchase 20,000 shares at KRW 15,500 per share with the changedD on December 31, 2002, that it is difficult to find the purchaser because the shares were non-listed shares, and that the price per share of the shares of the AAAAA assessed by the Accounting Corporation is 42,733, etc., the price per share of the shares of this case constitutes the market price that reflects objective exchange values at the time of the instant transaction. Nevertheless, the defendant applied the supplementary evaluation method in the instant disposition.

(3) The market price of the instant shares shall be calculated in accordance with Article 56(1)2 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 18627 of Dec. 31, 2004; hereinafter “the second Enforcement Decree”).

AAA is a company that sells Arabic printing films without intellectual property rights, such as patent rights and goodwill. AAA temporarily increased net income from 2001 to 2003 due to a sudden decline in exchange rate due to the lack of profit at the time of the IMF financial situation. AAA’s net income has increased rapidly as above, but it was anticipated that the amount of sales of printed films would be reduced rapidly due to the distribution of digital devices to the printing and publishing industry. In fact, even from 2004 to 2007, there was a temporary net income for the business year from 2008 and from 2009 to 2009. In light of these circumstances, the market value of the instant shares should be calculated in accordance with Article 56(1)1 of the Enforcement Decree of the 2001.

(4) Article 54(1) and (2) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 18177, Dec. 30, 2003; hereinafter “the first Enforcement Decree”) exceeded the scope and limitation of delegation under Article 63(1)1(c) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter “the second Inheritance Tax and Gift Tax Act”).

Although Article 63(1)1(c) of the second Inheritance Tax and Gift Tax Act provides that the value of unlisted stocks shall be appraised by considering all assets and profits, Article 54(1) and (2) of the first Enforcement Decree of the first Enforcement Decree shall, in principle, evaluate the value of non-listed stocks as net profit and loss, and only if the net profit and loss value fall short of net asset value, it shall be evaluated as net asset value as net asset value. Article 54(1) and (2) of the first Enforcement Decree of the first Enforcement Decree exceeds the scope and limitation of delegation by expanding the scope of taxation subject to gift tax disadvantageous to taxpayers, rather than Article 63(1)1(c) of

(5) Article 35(2) of the Inheritance Tax and Gift Tax Act, Article 26(4)1 and Article 19(2)2 of the Enforcement Decree of the First Inheritance Tax and Gift Tax Act

No. 6, Article 13 (6) 2 and (8) 1, Article 4 of the Enforcement Rule of the Inheritance Tax and Gift Tax Act, and Article 4 of the Enforcement Rule of the Inheritance Tax and Gift Tax Act, which considers B as a person having a special relationship with the plaintiff

Even if B is in a special relationship with the Plaintiff, such relevant provisions violate the principle of no taxation without law, the principle of prohibition of comprehensive delegation, the principle of prohibition of excessive restriction, and the principle of guarantee of property rights.

B. Relevant statutes

It is as shown in the attached Form.

(c)a recognition;

(1) The Plaintiff is a director of the AA on April 25, 1996, and the representative director of the AA on March 5, 2002, who is in office as a director and the representative director of the AA until now. The KimCC retired on March 27, 2009 while he was in office as a director on March 12, 1993. The BB resigned on April 25, 1998 while he was in office as a director on March 12, 1993.

(2) On December 18, 1998, KimG entered into a share acquisition agreement with the acquisition of the following contents.

O KimG transfers 20,000 shares of AA to Daehan in 350,00,000 won per share.

OunD shall pay to KimG the down payment of KRW 210,000,000 on December 28, 1998, and the balance of KRW 140,000,000 shall be paid according to the following special agreements:

C. Matters of the special agreement: KimG shall postpone the preparation for the registration on KOSDAQ within three years from the date of the contract and register on KOSDAQ within six months from the date of the completion of the preparation. Upon the completion of the registration on KOSDAQ, KimG shall determine the mutually agreed stock value (17,500 won per share) within six months, and shall pay the difference of 140,000 won in cash, etc. to KimG. Where the KOSDAQ fails to perform the registration on KOSDAQ within three years from the date of the transfer of stocks, KimG may not demand the payment of the balance to the changedD, and at the time of the contract, at the time of the transferred stocks, at KRW 10,500 per share, KRW 15,500 per share paid by the changedD, KRW 310,500 per share, and at the time of the contract, at KRW 310,500 per share, KRW 15,500 per share.

(3) On August 3, 2001, DaD requested 20,000 shares to be purchased in KRW 344,40,000 on the ground that it was not registered on the KOSDAQ to KimG.

(4) On May 24, 2002 and September 5, 2002, 2002, LeeB requested the Plaintiff to purchase the AAA shares owned by the Plaintiff.

(5) The KimG, on December 30, 2002, agreed with the following content with the changed Diplomatic on December 30, 202:

O KimG re-purchases the amount of 20,000 shares of AAA from DD to December 31, 2010 plus the interest calculated by adding 8% interest at the annual interest rate from January 1, 2003 to the date of re-purchase.

O modifiedD shall be in blank to KimG the rights of shareholders (general shareholders' meeting) with respect to 20,000 shares of such shares.

(6) around July 18, 2003, AAA requested evaluation services on the value of shares for the purpose of supporting the decision-making of its operators to the XX accounting corporation. On September 30, 2003, the XX accounting corporation assessed AA shares of KRW 42,733 per share.

(7) On October 28, 2003, the Plaintiff and KimCC entered into a prior agreement on stock purchase and sale as follows, between BB and E.

O) A provisional agreement shall be made in order to calculate the weighted average of 38,000 won per share value calculated by applying the method of welfare calculation of 10% per annum to the share value at the time of acquisition of shares by Y accounting corporation based on a semiannual review report of Y accounting corporation, and the share value at the time of acquisition by B and E shall be 40% per share value as the sales value.

O The time necessary to review and raise an objection to the price assessment as above is about one month.

o To conclude this Agreement by December 31, 2003

(8) On December 8, 2003, the Plaintiff traded the instant transaction with the BB.

(9) On December 8, 2003, the EE sold 14,500 shares of the AA to the Z in total of KRW 551,00,000 per share.

[Ground of recognition] Facts without dispute, Gap 3, 4 evidence, Eul 2, 3, 4, 40 to 51 evidence (including paper numbers)

each entry, the purport of the whole pleading

D. Determination

(1) As to the first argument

(A) Article 35(1)1 of the Inheritance Tax and Gift Tax Act provides that in case where the property is acquired by transfer from a person having a special relationship at a price lower than the market price, the transferee of the property is deemed to have received a donation equivalent to the difference between the price of transfer and the market price, which is equivalent to the profits prescribed by the Presidential Decree. In this case, Article 35(2) of the Inheritance Tax and Gift Tax Act, Article 26(4)1 of the Enforcement Decree of the First Inheritance Tax and Gift Tax Act, Article 19(2)2 and 6, and Article 13(6)2 and 13(8)1 of the Enforcement Rule of the Inheritance Tax and Gift Tax Act provides that in relation to the scope of "a person having a special relationship", Article 4 of the Enforcement Rule of the First Inheritance Tax and Gift Tax Act provides that "a transferor or transferee (hereinafter referred to as "transferor, etc.") and an employee (including an executive officer of a corporation controlled by a person who has been transferred at least 30/100 of

As seen earlier, the transferor and its type EE hold 40.56% of the shares of the AA and are subject to the control of the AA as at the time of the instant transaction. The Plaintiff constitutes a representative director of the AA whose name and this trade name are invested and controlled by the BB as at the time of the instant transaction, and constitutes an employee of the BB and the EA as at the same time as the employee of the AA, and thus, this constitutes a person in a special relationship between BB and the Plaintiff.

(B) Under the principle of no taxation without law, the elements of taxation, non-taxation, or tax reduction or exemption shall be avoided, and the interpretation of tax laws and regulations shall be governed by the text of the law, barring any special circumstance, and shall not be extensively interpreted or analogically interpreted without reasonable grounds (see Supreme Court Decision 2001Du5521, Jul. 26, 2002).

In light of the above legal principles, the above provision on the scope of "a person in a special relationship" should be interpreted as not taking into account whether the transferor is the largest shareholder, whether the transferor is the shareholder, whether the transferor is the shareholder's actual management, or whether the transferor is in conflict with the transferor's transferee and the transferor's relationship. [The plaintiff argues that the part of "the largest shareholder or largest investor as prescribed by the Presidential Decree" in Article 22 (2) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010; hereinafter "third Inheritance Tax and Gift Tax Act") violates the principle of prohibition of comprehensive delegation, but the above provision on the scope of "a person in a special relationship" does not take into account whether the transferor is the largest shareholder,

(C) The plaintiff's above assertion is without merit.

(2) On the second argument

Article 60 of the 3rd Inheritance Tax and Gift Tax Act provides that "The market price" shall be the value which is generally accepted if a transaction is made freely between many and unspecified persons and shall include the expropriation and public sale price, appraisal price, and other things recognized as the market price under the conditions as prescribed by the Presidential Decree.

As seen earlier, in light of the fact that there was a special relationship between the Plaintiff and BB, and that the value assessed by the accounting firm at the time of the instant transaction is computed by a method other than the method of assessment stipulated in the Inheritance Tax and Gift Tax Act, it is difficult to deem that the acquisition price of the instant transaction and the value assessed by the accounting firm XX at the time of the instant transaction to properly reflect the objective exchange value of the instant shares at the time of the instant transaction. Moreover, even upon examining all evidence submitted by the Plaintiff, the value recognized as ordinarily established in the instant transaction between unspecified and unspecified persons within a certain period before and after the instant transaction date cannot be found. In light of this, the value of the instant shares is difficult to be computed by a method other

(3) On the third argument

"The reason why the net profit of the plaintiff claimed by the plaintiff has increased normally, or that the business loss was anticipated at the time of the transaction in this case and actually occurred from the 2008 business year," does not constitute "the case prescribed by the Ordinance of the Ministry of Finance and Economy as being unreasonable to be based on the weighted average amount of net profit for the last three years per share due to the reason that the relevant corporation under Article 56 (1) of the Enforcement Decree of the second Enforcement Decree has started its business or that the net profit for the last three years has increased normally due to the temporary contingent case, etc."

Article 63(1)1 (c) of the Inheritance Tax and Gift Tax Act provides that "non-listed stocks shall be assessed according to the method as prescribed by the Presidential Decree in consideration of the corporation's assets, profits, etc.," and Article 54(1) and (2) of the Enforcement Decree of the First Instance provides that the value of non-listed stocks shall be assessed as net profit and loss (i.e., the weighted average amount of net profit and loss per share for the last three years ± the rate determined and publicly announced by the Commissioner of the National Tax Service in consideration of the rate of return on distribution of the company with the maturity of 3 years old corporate bonds guaranteed by the financial institution)". In addition, Article 63(2) provides that where the appraised value of net profit and loss by net asset value

Article 63(1)1 (c) of the Inheritance Tax and Gift Tax Act provides that “The assets and earnings of the relevant corporation shall be reflected together with the assets and earnings of the relevant corporation or shall be equally reflected in the calculation of the value of the non-listed stocks, as an important action to be taken into account in the calculation of the value of the non-listed stocks.” Thus, Article 54(1) and (2) of the Enforcement Decree of the first Inheritance Tax and Gift Tax Act cannot be deemed as exceeding the scope and limit of delegation under Article 63(1)1 (c) of the second Inheritance Tax and Gift Tax Act, the parent corporation, is not deemed to have deviates from the scope and limit of delegation (see Supreme Court Decision 2005Du15311, Nov

(5) As to the fifth argument

Article 54 (1) and (2) of the Enforcement Decree of the first half of the Act does not deviate from the scope and limit of delegation by the mother law.

In addition, the plaintiff asserts that a ground provision which considers as a person with a special relationship is against the principle of no taxation without law, the principle of prohibition of comprehensive delegation, the principle of prohibition of excessive delegation, and the principle of guarantee of property rights, but it does not explicitly state the ground.

Article 35 (2) of the Inheritance Tax and Gift Tax Act delegates the same to the Presidential Decree without specifying the specific criteria of the person in a special relationship. However, even according to the above provision, it can be easily predicted that the concept of the person in a special relationship will be determined as the person in a close relationship based on blood relationship or contractual relationship. In light of the legislative intent of the above provision, it is necessary to properly realize the concept of the person in a special relationship according to the economic situation at that time. Therefore, delegation to the Presidential Decree, rather than specifically determining the concept of the person in a special relationship, seems to be more rational than delegation to the person in a special relationship, in light of the above principle of prohibition of delegation under the delegation of Article 35 (2) of the Inheritance Tax and Gift Tax Act, Article 26 (4) 1, Article 19 (2) 2 and 6, Article 13 (8) 1 of the first Enforcement Decree, Article 4 of the Enforcement Rule of the Inheritance Tax and Gift Tax Act does not violate the principle of no taxation without law.

In addition, the above-founded provisions aim to regulate the act of unfairly evading the burden of gift tax by acquiring property from a person who is closely related based on blood or contractual relationship at a price lower than the market price and to realize fair tax burden through substantial taxation. The legitimacy of the legislative purpose is recognized. The choice of the means to deny the transfer of property at a low price between the persons closely related as above and to receive a donation of the difference between the acquisition price and the market price is the choice of the appropriate means for the above legislative purpose. The deemed donation of only the difference between the acquisition price and the market price is the necessary and minimum infringement for the achievement of the above legislative purpose. Thus, the above excessive prohibition principle and the principle of property right security are not violated. The plaintiff's above assertion is without merit.

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.