Whether the value of property transferred to a lineal ascendant or descendant is presumed to have been donated by his lineal ascendant or descendant, etc. when the transferor transfers the property.

It is difficult to evaluate that the transfer price is 30 million won or more, which is the income or gift tax that the plaintiff has received or reported, and it is judged that the transfer price is the most favorable donation.

Presumption of donation of the property transferred to the spouse, etc. under Article 44 of the Inheritance Tax and Gift Tax Act

Incheon District Court 2016Guhap50055 Revocation of Decision on Imposition of Gift Tax

OO

O Head of tax office

November 24, 2016

January 19, 2017

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of gift tax of KRW 235,763,140 against the Plaintiff on November 1, 2014 is revoked.

1. Details of the disposition;

A. On February 15, 2012, a sales contract was prepared for the Plaintiff’s purchase of KRW 30,000 non-listed shares (hereinafter “instant shares”) issued in the ○○ Trade Co., Ltd. (the father of the Plaintiff and the father of the Plaintiff, who was the fraud of ○○○○○, were the representative of the Plaintiff), to KRW 30,000 (hereinafter “instant shares”) and on February 16, 2012, KRW 30,000 were transferred from the instant account under the name of the Plaintiff (hereinafter “instant transaction”).

B. On November 1, 2014, the Defendant assessed KRW 593,032,00 ( KRW 296,516 per share x 2,000 per share) based on the supplementary assessment method, and imposed KRW 235,763,140 on the Plaintiff (hereinafter “instant disposition”).

C. On August 7, 2015, the Plaintiff filed an appeal with the Tax Tribunal, but was dismissed on October 27, 2015.

[Ground of recognition] Facts without dispute, Gap 1, 2, 8, 10 (including branch numbers, if any; hereinafter the same shall apply), Eul 1 and 3, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. Summary of the Plaintiff’s assertion

(1) The Plaintiff purchased the instant shares not by donation but by paying a lawful purchase price. As such, the transfer of the instant shares constitutes Article 44(3)5 of the former Inheritance Tax and Gift Tax Act (wholly amended by Act No. 11609, Jan. 1, 2013; hereinafter referred to as the “former Inheritance Tax and Gift Tax Act”) and Article 33(3)2 of the Enforcement Decree of the same Act and the provision on presumption of donation is excluded.

Even if the Plaintiff purchased the instant shares at a price lower than the market price, the sales contract of the instant shares is genuine. As such, the transfer of the instant shares constitutes a donation of profits arising from a low-price transfer under Article 35 of the former Inheritance Tax and Gift Tax Act, and is deemed unlawful only in excess of the market price (13,491,6591).

On a different premise, the instant disposition was wholly or partially unlawful.

(2) The Plaintiff is a non-resident who does not reside in the Republic of Korea, and thus, is liable to pay the gift tax within the limit of the property donated under Article 4(2)2 of the former Inheritance Tax and Gift Tax Act. The Plaintiff has no ability to pay taxes, and thus, the gift tax shall be exempted pursuant to Article 4(

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) Determination on the first argument

㈎ 관련 법리

Article 44(1) of the former Inheritance Tax and Gift Tax Act provides that the value of the property transferred to a spouse, or a lineal ascendant or descendant shall be presumed to have been donated to his/her lineal ascendant or descendant at the time of transfer of the property and that such property shall be deemed to be the value of property donated to his/her lineal ascendant or descendant. Article 44(3)5 of the former Inheritance Tax and Gift Tax Act provides that where the fact that the property was transferred in return for payment to his/her lineal ascendant or descendant, etc. is clear, and where it is proved that the payment has been made at the income amount already received (including cases where the property was non-taxable or exempted) or reported for the acquisition of the property, or at the price of inherited or gift property (Article 44(3)2 of the former Inheritance Tax and Gift Tax Act is not applicable (Article 3).

In light of the form and content of the above provision, it is reasonable to assume that the Plaintiff bears the burden of proving that the Plaintiff had paid and purchased the instant shares from Cho○○, i.e., the reason for the exclusion of the presumption of gift, and the fact that it is evident that the Plaintiff had paid and purchased the instant shares from Cho○. Such proof is a standard for determining whether the Plaintiff has an economic rationality ordinarily made between general trading parties who have no relationship with the other trading conditions in light of the purport of the provision (the prevention of the act of abolition in cases of donations between relatives with a strong relationship under the common interest of avoiding

㈏ 이 사건 거래의 실체가 매매인지 여부

First of all, according to the purport of each entry and pleading between Gap and 23, a sales contract for the shares of this case was prepared between the plaintiff and Cho ○○○, and the account for subscription of a bank under the name of the plaintiff was terminated, and thus KRW 4,369,650 on January 13, 2012 was transferred to the account of this case. The cash of KRW 26,12,000 on four occasions on February 16, 2012, which is the day of the instant transaction, was deposited into the account of this case, and immediately was transferred to the account of Cho○○○○○, and the fact that ○○○○ reported and paid the capital gains tax and securities transaction tax with respect to the instant transaction is recognized.

However, in full view of the following circumstances acknowledged based on the aforementioned relevant legal principles, comprehensively taking into account each of the evidence and the statements in B-7 as a whole, it is insufficient to clearly recognize that ○○○ received reasonable payment from the Plaintiff and transferred the instant shares, solely based on the evidence submitted by the Plaintiff.

The above assertion shall not be accepted without examining the remaining arguments of the plaintiff.

① At the time of the instant transaction, the Plaintiff appears to have no sufficient economic ability to purchase the instant shares under the student status of 22 years of age (in this case, the Plaintiff appears to have asserted that the Plaintiff received KRW 26,112,000 deposited in the instant account from his parent).

② At the time of the preparation of the instant sales contract, the Plaintiff was staying in a foreign country as a student, and the instant sales contract appears to have been made by the Plaintiff’s mother △△△△△△. (On the other hand, the Plaintiff was made at the time of departure from Korea even when the Plaintiff’s subscription passbook was made under the name of the Plaintiff), and there was no objective data, such as the power of representation, etc. (de

③ The instant shares were issued at KRW 10,000 per share on April 14, 1998. At the time of the instant transaction, all of the shareholders of ○ Trade Co., Ltd. were the Plaintiff’s relatives [the share ratio: 45% of △△△, 35% of △△△△, 6.67% of △△△△, and 13.3% of ○○○ 13.33% of the instant shares (2,00 shares subject to the instant transaction)].

○○ transferred all the ○○ trade shares owned by ○○ to the Plaintiff without any particular motive (no objective material exists regarding the motive for repayment of the existing debt or preparation of living expenses as seen below) at the time when about 14 years elapsed from that date. The Plaintiff did not explain a reasonable motive for the purchase of the shares at the time.

④ While the Plaintiff asserted that he received KRW 26,112,00 from his parent (Seoul △△△△△△△△△△△△△△△△△△△△△△△) on four occasions, there was a circumstance that the Plaintiff was actually in charge of managing and using the instant account while operating his personal business entity ○○○○○○○○○,” and there is a little doubt as to whether the Plaintiff was the head of the bank in charge of actually managing the instant account (or, in light of its unit, it is somewhat doubtful whether the Plaintiff was the head of the bank in charge of making deposits of the money owned by the Plaintiff) from the tax trial process (the assertion that the Plaintiff was the mother or parent) to the instant court (the Plaintiff expressed that the Plaintiff was the head of the Tong △△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△).

⑤ The amount of cash withdrawal in the Suhion Account prior to and after the instant transaction date is close to the instant transaction amount. However, the Plaintiff asserted that ○○○○ was used in the course of debt repayment and living expenses, etc., and did not submit any objective data. On the other hand, comparing the accounts of the Plaintiff and ○○○○ and △△△△△△△ (Korean bank) with the accounts of △△△△△△, the possibility that the amount deposited in the instant account under the Plaintiff’s name after the instant transaction date and immediately after the instant transaction date can not be ruled out (2 million won + 13 million won) is the amount deposited in the instant account under the Plaintiff’s name of ○○○. (The Plaintiff asserted that △△△△△△ was paid KRW 15 million to ○○○ account, but no objective data is required).

④ In light of the fact that: (a) KRW 30,000,000, which is the transfer price of the instant shares, reflects the objective exchange value of the instant shares; (b) on the other hand, ○○ Trade Co., Ltd. appears to have occurred from 2010 to 2012; (c) based on this, the price of the instant shares deemed to be lawfully assessed by the Defendant according to the supplementary assessment method reaches KRW 593,03,032,00; and (d) the instant transaction amount appears to be an exceptional transaction that is not a special relationship between lineal ascendants and descendants, but is difficult to find in ordinary transactions, it is difficult to see KRW 30,00,000 as a justifiable price.

7) In light of the above circumstances, it is difficult to see that the Plaintiff’s transfer price of 30 million won at the value of the income or gift tax imposed or reported by the Plaintiff at the time is obvious, and the Plaintiff’s parent or parent, who is a controlling shareholder of ○ trade, is likely to be the most donated by △△△△△△△.

(2) Judgment on the second argument

According to Article 4(3) of the former Inheritance Tax and Gift Tax Act, in order for a donee, who is a resident or a non-resident, to be exempted from the obligation to pay all or part of the gift tax equivalent thereto, the transaction concerned shall fall under the transaction under Articles 35, 36, 37, and 41-4 of the former Inheritance Tax and Gift Tax Act. In other words, the provision that the gift tax should not be imposed on the donee, who is not capable of paying the gift tax, in exceptional cases where the donee is exempted from the obligation passively (Article 36), the difference between the market price following a transfer at a low price and the actual price (Article 35), or where the donee obtains a gratuitous use of real estate or money (Articles 37 and 41-4) or obtains a benefit equivalent to the lending of real estate or money without compensation, is excessively harsh.

However, as seen earlier, the instant transaction constitutes the transaction under Article 44(1) of the former Inheritance Tax and Gift Tax Act (Presumption of Donation of Property that is Transferred to Spouse, etc.). However, there is no evidence to support that on February 16, 2012, on the date when the obligation to pay the gift tax was established, the Plaintiff was in excess of the obligation or was incapable of paying the gift tax of this case.

On a different premise, the Plaintiff’s assertion on this part is rejected without examining the remainder of the Plaintiff’s non-resident.

3. Conclusion

The plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.