Seoul Administrative Court-2016-Gu Partnership-5305 ( January 13, 2017)

Seocho 2015west 3918 ( November 04, 2015)

The title truster did not assert and prove that there was no tax avoidance purpose, and it is difficult to deem that there was no tax avoidance purpose due to title trust.

(1) In light of the fact that, by title trust of shares, the shares could have been subject to progressive tax rates on dividend income, secondary tax liability under the Framework Act on National Taxes, and deemed acquisition tax under the Local Tax Act, it is difficult to deem that there was no tax avoidance purpose.

Article 45-2 (Legal Fiction of Donation of Title Trust Property)

Article 69 (Tax Base Return of Gift Tax)

2017Nu3333 Revocation of Disposition of Imposing gift tax

○○ Kim & 23

○ Head of tax office 9

Seoul Administrative Court Decision 2016Guhap53005 decided January 13, 2017

June 1, 2017

September 21, 2017

1. The plaintiffs' appeals against the defendants are all dismissed.

2. The costs of appeal are assessed against the plaintiffs.

The judgment of the first instance court is revoked. Each disposition imposing gift tax on the plaintiffs in the attached Form 1 that the Defendants made against the plaintiffs shall be revoked.

1. Quotation of judgment of the first instance;

The reasoning of this court's judgment is as follows, except for adding some contents as follows, and thus, it is cited by Article 8 (2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

Parts to be added

○ The following shall be added to the 7th judgment of the first instance court, the following:

4) Even if it is lawful to impose gift tax on the Plaintiffs due to the title trust of the instant shares, it is unlawful that the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17828, Dec. 30, 2002) and the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 18177, Jan. 1, 2004) allow the Plaintiffs to assess the gift value on the basis of the net value of profit and loss as an assessment standard, which goes beyond the limit of delegated

5) Even if it is lawful to impose gift tax on the Plaintiffs due to the title trust of the instant shares, it is unlawful for the Plaintiff to apply the premium rate in calculating the value of gift tax, even though the number of shares acquired by the Plaintiff does not fall short of the maximum equity ratio for the shares acquired by the Nonparty Company in 2002 and 2003, or the equity ratio exceeding 50 percent of the management premium.

6) Even if ○○○○○○○ Association is recognized as a title truster, in the case of a disposition imposing gift tax for 2010 and 2012, the title trustee is merely a change in the title trustee, and it is not subject to the provision on deemed donation of title trust as there is no purpose

○ The following shall be added to the seventh 20th of the judgment of the first instance.

▣ 구 상속세 및 증여세법(2003. 12. 30. 법률 제7010호로 개정되기 전의 것)

Article 63 (Appraisal 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 with the Korea Stock Exchange shall be the average daily market price ( regardless of whether they are traded or not) published every two months before and after the evaluation base date: Provided, That in the calculation of the average amount, if it is inappropriate to be based on the average amount during two months before and after the evaluation base date in cases where reasons for capital increase, merger, etc. occur during two months, the average amount of the periods calculated as prescribed by Presidential Decree during two months before and after the evaluation base date;

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

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

○ The following shall be added to the 6th sentence of the judgment of the first instance.

▣ 구 상속세 및 증여세법 시행령(2002. 12. 30. 대통령령 제17828호로 개정되기 전의 것)

Article 54 (Appraisal of Unlisted Stocks)

(1) Stocks and equity shares that are not listed on the Korea Stock Exchange (hereafter in this Article, referred to as unlisted stocks) under Article 63 (1) 1 (c) of the Act shall be the value appraised by the following formula:

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

▣ 구 상속세 및 증여세법 시행령(2003. 12. 30. 대통령령 제18177호로 개정되기 전의 것)

Article 54 (Appraisal of Unlisted Stocks)

(1) Stocks and equity shares not listed on the Korea Stock Exchange (hereafter in this Article, referred to as unlisted stocks) under Article 63 (1) 1 (c) of the Act shall be the value appraised by the following formula:

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

○ The following shall be added to the next 20th of the 11st judgment.

4) Whether the former Enforcement Decree of the Inheritance Tax and Gift Tax Act deviates from the limitation of delegated legislation

Examining the purport of the amendment of Article 63 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 7010 of Dec. 30, 2003), in the case of unlisted stocks, it is unreasonable to evaluate the value per share as a net asset value even if the corporation is a deficit with simple average of asset value and profit value, even if it is recognized as at least the asset value at the time of the sale of the corporation, and there is a case of abusing shares so that shares can be evaluated as low by lowering the asset value at the time of the sale of the corporation. Accordingly, the revision requires improvement measures. Accordingly, the true value of the company should be deemed as a profit value reflecting the future profit value, and in principle, it shall be evaluated as a profit value. However, if this does not fall short of net asset value, it shall be evaluated as a net asset value at least as a net asset value in light of the general net asset value.

The issue of how to choose a certain legislative method in assessing the value of shares of each individual corporation and to grant a certain degree of value should be determined by the legislators within the scope that does not deviate from the legislative formation discretion in consideration of various social and economic factors. Although the purport of the amendment is stated to the effect that the appraisal of shares of an unlisted corporation under Article 63(1)1 (b) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 7010, Dec. 30, 2003) requires consideration of the assets and profits of the corporation in assessing the shares of the unlisted corporation, the method of appraisal that does not reflect both assets and profits shall not mean that it is illegal. As seen earlier, the purpose of the amendment is to assess the value of non-listed shares, which reflects the real value of the company in assessing the value of the non-listed shares, and it is deemed that the assessment based on the net asset value falls within the legislative discretion and is beyond the limit of the delegated legislation.

Therefore, this part of the plaintiffs' assertion is without merit on different premises.

5) Whether it is appropriate to add the premium rate at the time of assessing the stock value

Generally, shareholders of a stock company are treated equally in accordance with the principle of equality of shareholders. However, shares held by the largest shareholders, etc. have special value that can exercise management rights or control rights of the company in addition to the general value. In the event that management rights or control rights of the company are transferred, such special value is reflected in the inheritance tax and gift tax, thereby adopting the evaluation method that adds a certain percentage to the general share appraisal amount in the inheritance tax and gift tax.

The Plaintiffs asserted that the instant disposition by the Defendants, which applied the premium rate, is unlawful on the premise that whether the shares of each of the Plaintiffs, a title trustee, are the largest shareholders to whom the premium rate applies, should be determined based on the shares ratio attributed to the donee. However, as seen earlier, the actual owners of the instant shares held in title in the Plaintiffs, as seen earlier, are the ○○○○ Association, the title truster, and even if the title of the shares is the trustee, there is no difference in exercising the company’s business management or management right. Therefore, it is reasonable to assess the value of the instant shares at the price reflecting the maximum shareholder premium rate.

Therefore, this part of the plaintiffs' assertion is without merit on different premises.

6) Whether the purpose of tax avoidance is recognized in the title trust in 2010 and 2012

In 2010, the fact that the shares of the non-party company were transferred to the name of the non-party company in the name of the plaintiff Lee○, Lee○, and Lee○ in 2012 is as seen earlier. However, all of the above plaintiffs were changed in the name of the executives and employees of the non-party company, who was the title holder of the above shares, had the officers and employees of the non-party company who were the former executives and employees of the non-party company withdraw from the company. This change in the name of the current executives and employees to facilitate management of the shares. Such change should be deemed to have completed the title trust relationship after having

Therefore, as seen earlier, the purpose of tax avoidance recognized by the ○○○○○ Association in the course of title trust to the former executives and employees should be equally recognized in the newly-established title trust relationship with the said Plaintiffs.

Therefore, this part of the plaintiffs' assertion is without merit on different premises.

2. Conclusion

Since the judgment of the first instance is justifiable, the plaintiffs' appeal against the defendants is dismissed in its entirety due to the lack of grounds.