National High Court Decision 2007J357 ( November 21, 2007)

Whether a person is a specially related person, in cases of acquisition of stocks from an executive of a corporation controlled by investment.

Since the Plaintiff and other companies belonging to an enterprise group, which are officers of the company belonging to the enterprise group, invested more than 30% of the total number of shares issued, since the transferor constitutes officers of a corporate company controlled by investment, the transferor constitutes a special relationship as the plaintiff'

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

Article 35 (Presumption of Donation at Time of Transfer of Low Price or High Price)

Article 13 (Methods, etc. of Contribution to Property Invested by Public Interest Corporations)

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the plaintiff.

The Defendant’s imposition of gift tax of KRW 27,966,50 against the Plaintiff on June 8, 2007 is revoked.

1. Circumstances of dispositions;

A. As of February 28, 2002, the current shareholders of ○ Media Co., Ltd. (hereinafter the instant company) are as follows:

B. On February 28, 2002, the Plaintiff, the representative director of the instant company, acquired 5,500 shares of each of 5,500 shares (hereinafter referred to as the “instant shares”) from 10,500 shares from red ○○○○, the director of the instant company, from red ○○, the director of the instant company (hereinafter referred to as “red red ○○, ○○, and the transferor of the instant case”).

C. The Defendant determined that the Plaintiff acquired the shares at a price lower than the market price of the said shares from the transferor who is a specially related party, and calculated the market price of the said shares at KRW 20,416 per share, and then applied Article 35(1)1 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 7010, Dec. 30, 2003; hereinafter the same) to the extent that the Plaintiff received KRW 199,760,000 from the transferor of this case regarding the amount equivalent to the difference between the market price of the shares in this case and the actual amount of the shares acquired, and issued the instant disposition imposing gift tax, such as the written claim, on June 8, 2007

[Reasons for Recognition] Facts without dispute, Gap evidence 1, 2, Eul evidence 1-1 to 3, Eul evidence 2, Eul evidence 3-1, 2, Eul evidence 4-1 to 3, Eul evidence 6-1 to 6-4, Eul evidence 6-1 to 6-4, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

Although the transferor of this case is not a person having a special relationship with the plaintiff, the disposition of this case conducted under the premise that the transferor is a person having a special relationship with the plaintiff is unlawful.

(b) Related statutes;

Article 35 (Presumption of Donation at Time of Transfer of Low Price or High Price)

Article 13 (Methods, etc. of Contribution to Property Invested by Public Interest Corporations)

C. Determination

According to Article 35 of the Inheritance Tax and Gift Tax Act, Articles 13(6) and (8), 19(2), and 26(4) of the Enforcement Decree of the same Act, Article 9 of the Enforcement Rule of the same Act, Article 3 of the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act (amended by Presidential Decree No. 17564, Mar. 30, 2002; hereinafter “Enforcement Decree of the Monopoly Regulation and Fair Trade Act”), where property is acquired from a person with a special relationship at a price lower than the market price, the transferee of the property shall be deemed to have received a certain amount of money as a donation for the difference between the price and the market price (Article 35(1)1 of the Inheritance Tax and Gift Tax Act). In this case, the "person with a special relationship" includes "employee of the transferee" (Article 19(2)2 of the Enforcement Decree of the same Act; Article 13(2)2 of the same Act includes officers of a corporation controlled by investment; Article 19(3) of the same Enforcement Decree including 30 or more stocks issued by the same person.

However, according to the above facts, as of February 28, 2002, ○ Industry Co., Ltd. (hereinafter referred to as the "○ Industry") owned not less than 30/100 of the total number of shares issued by the company of this case independently and constitutes the largest shareholder, and thus, ○ Industry and the company of this case are treated as the company of this case. The plaintiff, which is an executive of the company of this case belonging to the above enterprise group, and ○ Industry, which is another company belonging to the above enterprise group, invested not less than 30/100 of the total number of shares issued by the company of this case, and therefore, the company of this case is controlled by the plaintiff's investment. The transferor of this case constitutes an executive of the company of this case, which is a corporation controlled by the plaintiff through the above investment, and the transferor

3. Conclusion

Thus, the plaintiff's claim of this case seeking the revocation of the disposition of this case on the premise that the transferor is not a specially related person is dismissed as it is without merit. It is so decided as per Disposition.