The provision on deemed donation of profits accrued from the listing of stocks or investment shares under Article 41-3 (1) of the Inheritance Tax and Gift Tax Act may not apply to the act of receiving equity shares from a new

In case where shares are subscribed to as promoters or subscribers at the time of incorporation, barring special circumstances such as the company received free donation, it cannot be evaluated as having been actually realized above the par value, but there is no economic benefit omitted from the taxable object. Since it is a company during its incorporation, there is no room for the application of Article 41-3 (1) of the Inheritance Tax and Gift Tax Act as well.

2013Guhap10666 Revocation of Disposition of Imposition of Gift Tax

leAA

Daejeon Head of the District Tax Office

April 30, 2014

August 13, 2014

1. The Defendant’s disposition of imposition of KRW 2,464,709,180 against the Plaintiff on February 4, 2013 is revoked.

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

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. The Plaintiff, who was the head of the factory factory of BB Co., Ltd. (hereinafter referred to as “B”), participated as promoters ofCC, acquired ○○○ (the face value is KRW 0,000,000) out of 1.6 million of the shares to be issued at the time of incorporation. Around December 2005, the Plaintiff received ○0,000 won from the Kim Reserve Bank, which was the controlling shareholder of BB, and paid the said money as the said capital invested amount. After its incorporation on December 29, 2005, CC merged D with 'D' on January 2, 2007, and 'B' on August 31, 2007, and changed 'D' to 'D' (hereinafter referred to as 'BD').

B. The above shares were subsequently divided into par value and increase without consideration by ○○○○○○○, and the number of shares became ○○○○○○○○○ upon the expiration of 2009. D shares were listed on the Korea Stock Exchange on January 28, 2010, within five years from the date of the Plaintiff’s acquisition of shares.

다. 피고는 2011. 1. 3. 원고에게, 원고가 EE로부터 증여받은 돈으로 취득한 DD 주식이 상장됨에 따라 그 취득가액을 초과하여 이익을 얻었다는 이유로, DD의 주식상장일인 2010. 1. 28.로부터 3월이 되는 날인 2010. 4. 28.을 증여시기로 보아 증여이익을 계산한 다음, 상속세 및 증여세법 제41조의3 제2항에 근거하여, 2010년 귀속증여세로 ◊◊◊원을 부과하였다.

D. On February 4, 2012, the Plaintiff appealed and filed a request for an adjudication on February 4, 2012, and the Tax Tribunal revoked the said disposition on the ground that the Defendant erroneously reported the time of donation and imposed gift tax.

E. On December 31, 2005, the Defendant considered the time of donation as the date of stock listing of DD on April 28, 2010, which was the date of settlement of the last price of the exchange price (○○○○ per share) published for two months before and after the base date, evaluated the value of listed stocks as the average amount of the last price of the daily exchange prices (on April 28, 2010, which was published for three months before and after the base date. On February 4, 2013, the Defendant issued the instant disposition imposing the Plaintiff KRW 00,000, additional tax, and total amount of KRW 00,000,000.

F. On April 8, 2013, the Plaintiff, who was dissatisfied with the instant disposition, requested an inquiry to the Tax Tribunal, but was dismissed on September 12, 2013.

[Ground of recognition] A without dispute, Gap evidence Nos. 1 through 4, Eul evidence Nos. 1, 2, 4 through 6 (including paper numbers), the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

1) Illegal in interpreting and applying the law

Article 41-3(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828 of Dec. 31, 2007; hereinafter referred to as the "former Inheritance Tax and Gift Tax Act") applies only to cases where a person who has a special relationship with the largest shareholder, etc. (the largest shareholder or largest investor) who is already established and is entitled to use nonpublic information concerning the management, etc. of a company receives stocks, etc. (stocks or equity shares) from the largest shareholder, etc. or acquires stocks, etc. of the relevant corporation as donated to the largest shareholder, etc. or donated to the largest shareholder, etc., and does not apply to cases where a person acquires stocks,

Article 41-3(1) of the former Inheritance Tax and Gift Tax Act is not applicable to the Plaintiff, since the Plaintiff acquired shares by investing in a newly established corporation, not the existing corporation, but the money donated by E, which is the largest shareholder of the newly established corporation. Therefore, the disposition of this case imposing gift tax based on the said provision is unlawful.

(ii)the illegality in the calculation of the proceeds of donation;

As a matter of principle, the standard time for taxation on income is when income accrues, it is based on the stock listing.

As a matter of principle, the assessment of property under the Inheritance Tax and Gift Tax Act is based on the date of listing stocks. The public offering price at the time of listing stocks is the most accurate stock price determined by reflecting the objective assessment of the value of the specialized institution and the demand forecast result of the majority of the institutional investors. Thus, in calculating the value of listed stocks, Article 41-3(2) of the former Inheritance Tax and Gift Tax Act provides that the calculation of the value of listed stocks shall be based on the date on which three months elapse from the date of listing the relevant stocks, etc., and thus, it violates Article 23(1) of the Constitution because the taxpayer’s property right is unfairly infringed. Therefore, the Defendant’s imposition of gift tax is unlawful by deeming D’s price as ○○ won, which is not the public offering price per share at the time of listing stocks, not the ○○ won per share, which is the unconstitutional law of Article 41-3(2) of the former Inheritance Tax and Gift Tax Act.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

1) As to the allegation of illegality in the interpretation and application of the law

Inheritance tax and gift tax amended by Act No. 6048 of December 28, 1999 and enforced January 1, 2000

The tax law introduced the provision of Article 41-3 (Presumption of Donation of Benefits Following Listing of Stocks or Equity Shares) in order to block inheritance of the changing group of high-property property by imposing appropriate taxation on listed profits in case where unlisted stocks are donated or acquired with a view to gaining enormous marginal profits from listing or registration by using undisclosed information. This is a provision that considers the term of donation as "the case where a person with a special relationship donates or transfers unlisted stocks between the persons with a special relationship" and imposes tax by recognizing the economic benefits omitted from taxable objects as a donation because it has been realized at the time of donation through the change of the owner, but has not been evaluated as having been performed at the time of donation."

at the time of introduction, Article 41-3 (1) of the Act provides that "not disclosed about the management, etc. of a company"

As the largest shareholder or largest investor under Article 22 (2) (hereinafter referred to as the "large shareholder, etc.") donates or transfers the stocks or equity shares (hereinafter referred to as "stocks, etc.") of the relevant corporation to a person in a special relationship prescribed by the Presidential Decree, and the stocks, etc. are listed or registered, if the value of the stocks, etc. increases, the profits acquired in excess of the original taxable amount of gift taxes or the acquisition value of the stocks, etc. shall be deemed to have been donated to the largest shareholder, etc.

In order to prevent the attempt to avoid the application of the above provision on December 18, 2002, inheritance tax and donation

The tax law was amended by Act No. 6780 (the former Inheritance Tax and Gift Tax Act). The revised law, without directly transferring or taking over the unlisted stocks from the largest shareholder, etc., did not directly donate or take over the unlisted stocks, etc. from the largest shareholder, etc., and added the assets to the case of bypassing the stocks of the unlisted corporation from the person other than the largest shareholder, etc. by using them. In order to increase the scope of the "acquisition of stocks, etc." of Article 41-3(1) of the former Inheritance Tax and Gift Tax Act, the revised law also added the provision to the case of acquiring new stocks, etc

On the other hand, Article 41-3 (1) of the former Inheritance Tax and Gift Tax Act provides that "the largest shareholder shall have a special relationship"

After acquiring the stocks, etc. of the relevant corporation from a person other than the largest shareholder, etc. who received a donation of the stocks, etc. of the relevant corporation from the shareholder, etc. or received or donated for compensation (referring to the property donated to the largest shareholder, etc. within 3 years retroactively from the date of acquisition for compensation for the stocks, etc.; hereafter the same shall apply in this Article and Article 41-5), the relevant stocks, etc. were listed on the Korea Stock Exchange or registered with the Korea Securities Dealers Association under the Securities and Exchange Act, and where the value of the relevant stocks, etc. increased, the amount equivalent to the relevant profits shall be deemed to be the value of the property donated to the person who received the relevant profits."

In full view of the legislative intent, process of amendment, and the language and text of the above provision, in a case where shares are acquired as promoters or subscribers at the time of incorporation of a corporation, barring special circumstances such as the company received free donation, there is no "economic benefits omitted from taxation because the shares acquired are de facto realized but cannot be evaluated," and there is no "large shareholder, etc." as it is a company during incorporation. Thus, there is no room to apply Article 41-3 (1) of the former Inheritance Tax and Gift Tax Act.

In the instant case, the Plaintiff acquired D's shares as promoters upon donation of KRW 00,000 from EE, and D's shares were registered on December 29, 2005.

In light of the above circumstances, before December 29, 2005, the date of the incorporation of a company, the gift tax is not imposed on the Plaintiff's acquisition of DD stocks by applying Article 41-3 (1) of the former Inheritance Tax and Gift Tax Act to the Plaintiff's acquisition of DD stocks, and at the time of the above donation of KRW 00,000 and acquisition of DD stocks, EE was not the largest shareholder of DD. It is difficult to view that there was any economic benefits omitted from the taxable object because it was actually realized of DD's stocks during the establishment, but it was not evaluated. Therefore, the Plaintiff

2) Whether the instant disposition is unlawful

Ultimately, the Plaintiff is subject to Article 41-3(1) of the former Inheritance Tax and Gift Tax Act.

Since gift tax was imposed on the Plaintiff, the Plaintiff’s second argument is unlawful without having to examine the second argument.

3. Conclusion

Therefore, the plaintiff's claim is reasonable, and it is so decided as per Disposition.

(c)