Suwon District Court 201Guhap1639 ( October 11, 2011)

Early High Court Decision 201Du0065 ( October 29, 2011)

title trust with the purpose of tax avoidance

(1) In light of the fact that there is no special reason for the title trust, and rather, the purpose of evading the tax burden, etc. as an oligopolistic shareholder is to achieve the evaluation of donated property by the supplementary evaluation method, and the propriety of the evaluation of donated property by the supplementary evaluation method, in light of the fact that the title trust goes beyond the obligation of oligopolistic shareholder, such

2011Nu39631 Revocation of Disposition of Imposition of Gift Tax

XX Kim

Head of Namyang District Tax Office

District Court Decision 2011Guhap1639 Decided October 11, 2011

May 10, 2012

May 31, 2012

1. The plaintiff's appeal is dismissed.

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

The decision of the first instance court shall be revoked. Each disposition of the first instance court against the Plaintiff on September 1, 2010, which the Defendant imposed on the Plaintiff on September 1, 2004, KRW 000, KRW 000, and KRW 000,00, respectively, for the gift tax for the year 2005, and KRW 200,00,000, shall be revoked (the above tax

1. Quotation of judgment of the first instance;

This Court's reasoning is as follows: (a) the part of the argument that there was no purpose of tax avoidance between Chapters 4, 12, 6, and 2 in the reasoning of the judgment of the first instance is the same as the reasoning of the judgment of the first instance, except as stated in the second instance court's reasoning, and thus, (b) the same shall be cited in accordance with Article 8 (2) of the Administrative Litigation Act and the main text of Article 420 of the Civil Procedure Act.

2. The part of the wife;

C. Determination

1) As to the assertion that there was no purpose of tax avoidance

(A) Relevant legal principles

The legislative purport of Article 45-2(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter the same) which applies to the disposition of this case is to recognize an exception to the substance over form principle in the purport that the act of tax avoidance using the title trust system is effectively prevented, thereby realizing the tax justice. Thus, if it is recognized that the title trust was made for any reason other than the purpose of tax avoidance, and that a minor reduction was generated as an incidental to the said title trust, it cannot be concluded that there was the purpose of tax avoidance. However, in light of the legislative purport above, it cannot be concluded that there was the purpose of tax avoidance in the title trust only if the purpose of the title trust is not included in the purpose of tax avoidance. Thus, it cannot be deemed that there was no purpose of tax avoidance, and in this case, it cannot be deemed that there was no intention of tax avoidance.

In addition, as the nominal owner who bears the above burden of proof, there was an obvious objective irrelevant to the tax avoidance to the extent that it is recognized that there was no tax avoidance purpose in the title trust, and the fact that there was no tax avoidance at the time of the title trust or at the time of the future has to be proven to the extent that the ordinary person is not doubtful if there was no doubt based on objective and reasonable evidence (see Supreme Court Decisions 2004Du1220, Sept. 22, 2006; 2010Du23569, Feb. 24, 201).

Furthermore, barring any special circumstance, whether there was a purpose of tax avoidance or not shall be determined as at the time of the title trust of the pertinent property, which is the issue of whether the pertinent property was deemed donated under the title trust, and it is reasonable to view that it should not be determined as at the time of actual evasion of any tax after the title trust (see Supreme Court Decisions 2003Du4300, Jan. 27, 2005; 2004Du11220, Oct. 29, 2009; 2009Du11348, Oct. 29, 2009).

(B) Determination as to the assertion that there exists a separate purpose irrelevant to tax avoidance

A) The assertion that the requirements of three or more promoters required under the Commercial Act are to be met

The Plaintiff’s husband’s acquisition of shares under the pertinent provisions of the Commercial Act, such as the Plaintiff’s husband’s 3 or more promoters. Thus, the Plaintiff asserted that there exists a separate purpose of tax avoidance. However, the Plaintiff’s acquisition of shares under the pertinent provisions, but the following circumstances, i.e., the Defendant’s tax investigation on July 2010, based on her husband’s 5,00 shares of the XX industry, and 5,00 shares for the purpose of this case’s establishment of title trust under the amended Commercial Act were not based on the following facts: (i) the Plaintiff’s 6th anniversary of its establishment of title trust under the instant law; (ii) the Plaintiff’s 6th anniversary of its establishment of title trust under the instant law; and (iii) the Plaintiff’s establishment of title trust under the instant law, based on the following facts: (i) the Plaintiff’s 6th anniversary of its establishment of title trust and the Plaintiff’s 4th anniversary of its establishment of the instant shares; and (iii) the Plaintiff’s establishment of title trust business under the instant provisions on title trust agreement.

B) The assertion that the issuance of preemptive rights only maintains the existing share ratio.

Accordingly, the plaintiff asserts that in 2004 and 2005, 5,000 shares of the XX industry, each of the shares held in title trust in the plaintiff's future, is merely an acceptance of new shares under the name of the plaintiff in accordance with the ratio of previous ownership in accordance with the Commercial Code, and that there was no independent purpose of tax avoidance.

In light of the above legal principles, the Plaintiff, who bears the burden of proving that the title trust of the instant shares was not superior to the tax avoidance rate of the Plaintiff, should assert and prove an obvious purpose irrelevant to the tax avoidance rate of 5,00 shares of the XX industry as of December 204 and the date of acquiring shares of the instant industry under the name of the Plaintiff. However, it cannot be seen that it was impossible to allocate new shares to the instant title trust, the title trustor, in 204 and 205, in view of the fact that the Plaintiff’s new shares were distributed to the Plaintiff under the name of 0-B-1, the Plaintiff’s new shares were not clearly separate from the tax avoidance rate of 0-B-1, 200, based on the following facts: (i) the Plaintiff’s new shares were issued under the name of 0-B-1, 200, and that there was no need for a small-scale method of acquiring shares under the name of the Plaintiff’s 20-A-2, 2014.

C) The assertion that the title trust in 2007 was merely changed in the form of title trust

In addition, the Plaintiff’s title trust of the shares of XX industry in the year 2007 for the Plaintiff’s future title trust was made under the name of the Plaintiff upon the refusal of title trust with the former’s punishment, who is the former, and the former, BB and thisCC’s refusal of title trust. However, the Plaintiff’s assertion that it was a mere change of the type of title trust was made under the latter’s name. However, the foregoing circumstance alleged by the Plaintiff cannot be deemed to have a clear purpose of tax avoidance to the extent that it is recognized that there was no other purpose of tax avoidance in the title trust with respect to the shares of the XX industry, etc. among the instant shares in the year 2007, and there is no evidence to acknowledge this differently. Therefore, the Plaintiff’s assertion on this part

(C) Determination as to the assertion that there is no tax actually avoided

A) The plaintiff's assertion

The second tax liability and deemed by oligopolistic shareholders through title trust on the shares of this case

With respect to acquisition tax, there is no tax evaded, and with respect to other taxes, there is only a simple possibility of tax avoidance or a minor reduction of tax.

B) Determination

As seen earlier, whether there was a tax avoidance purpose or not should be determined at the time of title trust. ① In light of the evidence submitted by the Plaintiff alone, it is insufficient to readily conclude that this case’s shares were not liable to pay global income tax on dividend income from holding the shares in the future at the time of title trust to the Plaintiff, on the sole basis of the fact that this case’s shares were not subject to the Plaintiff’s liability to pay global income tax on the dividend income from holding the shares in the future at the time of title trust, it cannot be readily concluded that this case’s shares were not subject to tax avoidance purpose even at the time of title trust (see Supreme Court Decision 2009Du11348, supra). ② In addition, in light of the aforementioned evidence No. 2 and evidence No. 6-5, and the purport of the entire pleadings, the Supreme Court’s decision that the Plaintiff did not have any gross amount of tax on the dividend income in the instant case’s name, or that the Plaintiff did not have any disadvantage in the instant shares in the name of 201, see the Supreme Court Decision 20010Du294.

Therefore, this part of the Plaintiff’s assertion is without merit [to the effect that Article 45-2 of the former Inheritance Tax and Gift Tax Act on the constructive gift of title trust property, which serves as the basis of the instant disposition, is unconstitutional, and in light of the legislative purport of the system on the constructive gift of title trust property as seen earlier, it is difficult to accept the Plaintiff’s assertion (see, e.g., Supreme Court Order 2010Hun-Ba54, Sept. 30, 201; Constitutional Court Order 2004Hun-Ba40, Jun. 30, 2005)].

3. Conclusion

If so, the plaintiff's claim of this case is dismissed due to the lack of reason, and the judgment of the court of first instance is just in conclusion, and the plaintiff's appeal is dismissed.