Seoul Administrative Court 2013Guhap53950 ( November 07, 2014)

The provision of adding up the same profit within one year does not apply to the transaction between the non-specially related persons on the high-price acquisition;

It is also insufficient to recognize that a sales contract was concluded at a intervals of one year for the purpose of evading gift tax. Therefore, imposing gift tax by adding profit from acquisition of each transaction to acquisition of low-price is illegal because it is insufficient to recognize that a sales contract was concluded at a intervals of one year.

Gift tax under Article 31 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act

Article 26 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act: The method, etc. for calculating profits from a transfer of low price or high price

2014Nu71698 Revocation of Disposition of Imposition of Gift Tax

1.A 2.B

O Head of tax office

July 7, 2015

August 18, 2015

1.The amendments to paragraphs 2 and 3 of the judgment of the court of first instance are as follows:

A. On February 8, 2012, the part that the Defendant imposed on Plaintiff EA on December 31, 2008 on Plaintiff EA, and the part that exceeded the KRW OO in the imposition of the KRW OO in the gift tax on December 31, 2009 and the imposition of the KRW OO in the gift tax on December 31, 2009 is revoked.

B. The plaintiff Lee Dong-A's remaining claims and the plaintiff LeeB's claims are all dismissed.

2. Of the total litigation costs, the costs incurred between the Plaintiff A and the Defendant shall be borne by the Plaintiff A and the remainder by the Defendant respectively, and the costs incurred between the Plaintiff B and the Defendant shall be borne by the Plaintiff B.

1. Purport of claim

The defendant's disposition of imposition of the gift tax on the gift of December 31, 2008 against the plaintiff Lee Dong on February 8, 2012, the disposition of imposition of the gift tax on the gift of December 31, 2008, the part exceeding 2,875,837 won among the disposition of imposition of the OOO of the gift of December 31, 2009, the disposition of imposition of the 1OOO of the gift tax on the gift of December 30, 2010, and the disposition of imposition of the OO of the gift tax on the gift of December 30, 2010 against the plaintiff LeeB is revoked.

2. Purport of appeal

In the judgment of the court of first instance, the part against the defendant shall be revoked, and the plaintiff's claim corresponding to the revoked part shall be dismissed.

1. Scope of the ruling of the political party;

The plaintiffs filed a lawsuit seeking revocation of the imposition of each gift tax stated in the purport of the claim, and the court of first instance dismissed the part of the amount stated in the "amount dismissed" column of attached Table 1, and cited the portion stated in the "amount to be used and the scope of the trial for the party" column, and dismissed the remainder of the claims. Since only the defendant appealed, the subject of the trial for the party is limited to the portion stated in the "amount to be used and the scope of the trial for the party" column.

2. Details of the disposition;

This Court's explanation is based on Article 8 (2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act, since it is identical with Article 8 (1) of the judgment of the court of first instance.

3. Determination on this safety defense

A. The defendant's assertion

The defendant asserts that since the plaintiff Lee Dong-A did not claim the illegality of the first disposition in the tax appeal, the part concerning the first disposition in the lawsuit in this case is unlawful because it did not go through legitimate procedures for the prior trial.

B. Determination

Article 56 (2) of the Framework Act on National Taxes provides that "no administrative litigation against an illegal disposition prescribed in Article 55 shall be filed without making a request for examination or adjudgment under this Act and making a decision thereon, notwithstanding the main sentence of Article 18 (1), Article 18 (2) and Article 18 (3) of the Administrative Litigation Act."

As to this case, the following facts are acknowledged based on Gap evidence Nos. 2 and Eul evidence Nos. 36's overall purport of arguments. ① The plaintiff Lee Dong received each disposition of this case on February 12, 2012. ② The plaintiff Lee Dong submitted a written request for a trial to the Tax Tribunal on May 9, 2012, which is within 90 days from them. The above written request for a trial clearly stated that "OOO's disposition of gift tax in 2008 or 2010" is requested. ③ The purport of the request for a written request for a trial is not to state the imposition of gift tax in 2008 as stated in the above written request for a judgment. However, according to the above written request for a trial, it is reasonable to determine that the plaintiff Lee Dong made a legitimate disposition of gift tax in 2008 or 2010 as "the taxation disposition of this case," and thus, it is reasonable to see that the above written request for a judgment of the Tax Tribunal on the grounds of appeal No. 201 or 2001.

4. Whether the instant disposition is lawful

This Court's explanation is consistent with the reasoning of the first instance court's judgment in addition to the addition of the attached Form 2 to "B" and the attached Form 3, 4, and 5 to "B" and the following sub-paragraph 3 of Article 8 (2) of the Administrative Litigation Act and the main text of Article 420 of the Civil Procedure Act. Thus, this Court shall accept it as it is in accordance with Article 8 (2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

D. Determination

3) As to the argument on the second disposition

A) As to the assertion that aggregate exclusion is excluded

(1) Calculation of the value of donated property in the second disposition of the defendant

Based on Article 2(4) of the former Inheritance Tax and Gift Tax Act and Article 31-10(2)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, the Defendant calculated the value of donated property to the Plaintiff A on December 31, 2009, added up the value of donated property on December 31, 2008, and added the claim that Article 47(2) of the former Inheritance Tax and Gift Tax Act shall apply to the briefs of April 17, 2014 while the lawsuit of the court of first instance is pending, and it is a question whether the said provisions can be added up the value of donated property as above.

(2) Whether Article 2(4) of the former Inheritance Tax and Gift Tax Act is applicable

Article 2(4) of the former Inheritance Tax and Gift Tax Act provides that when a taxpayer undergoes two or more acts or transactions for the purpose of evading taxes, if the taxpayer is taxed at each stage, the economic substance of the transaction would be placed, and thus, it would be inappropriate to impose taxes on the entire transaction, and thus, it shall be deemed that two or more acts or transactions are treated as a single act or transaction which is combined with one another for the purpose of preventing such taxation. For the purpose of applying the above provision, two or more transactions are merely a abusive act or multi-stage act for the purpose of tax avoidance and their economic substance should be deemed to be a single act or transaction which is continuous, and the burden of proof

Therefore, the fact that the share purchase and sale contract was concluded on November 30, 2007, December 31, 2008, and December 31, 2009 with respect to the shares of the company of this case with the same acquisition price per share of the company of this case as the above. However, as long as there is no evidence to know the various circumstances surrounding the share purchase and sale contract, such as the motive for the conclusion of the share purchase and sale contract, the decision of the share purchase and payment period, and the timing and method of payment, it is insufficient to view that the share purchase and sale contract was concluded on an annual basis by dividing the shares between Plaintiff A and thisCC for the purpose of evading gift tax between Plaintiff A and thisCC, but its economic substance is recognized as a single share sale and sale contract, and there is no other evidence to prove otherwise. Therefore, it cannot be taxed by applying Article 2(4) of the former Inheritance Tax and Gift Tax Act to the shares transaction of No. 2.

(3) Whether Article 31-10(2)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act is applicable

Article 31-10(2)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provides for the calculation method of the gains from transfer at a low price under Article 26(1) and the gains from transfer at a high price under Article 31-10(2)1 of the same Enforcement Decree, in cases where there is an identical transaction, etc. within one year retroactively from the date of such transaction, etc., the gains from each transaction, etc. (referring to the difference between the market price and the consideration) shall be added to the corresponding gains, and the amount by each provision (referring to KRW 100 million or KRW 300 million) shall be calculated. In addition, Article 26(1) and (2) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provides for the "low price" or "high price" under each subparagraph of Article 35(1) of the former Inheritance Tax and Gift Tax Act, and Article 26(3) of the former Enforcement Decree of the same Act provides for the calculation method of the gains from transfer to a related person based on the difference under Article 26(3).

Therefore, it is difficult to view Article 26(1) and (2) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act as a general provision applicable to an unrelated party in cases where the transfer of property at a high price or at a low price is an issue. As long as Article 31-10(2)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that only Article 26(1) and (2) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act shall apply to an unrelated party, deeming that the said provision cannot be subject to cumulative taxation by applying the said provision to an unrelated party is consistent with the principle of strict interpretation of the tax law (as regards a transfer at a high price or at a low price by an unrelated party, only in cases where the requirements of Article 2(4)

Therefore, insofar as there is no special relationship with the Plaintiff AA, it cannot be taxed by applying Article 31-10(2)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act to the transaction of the second stocks.

(4) Whether Article 47(2) of the former Inheritance Tax and Gift Tax Act is applicable

Article 47 (2) of the former Inheritance Tax and Gift Tax Act provides that "where the aggregate of the value of donated property received from the same person (if the donor is a lineal ascendant, including the spouse of such lineal ascendant) within ten years before the date of the relevant donation exceeds 10 million won, the value of such donated property shall be added to the taxable value of donated property, and where it is deemed that a series of donated property has been received from the same person within 10 years, the value of donated property shall be added

However, as seen earlier, there is no value of donated property as of November 30, 2007 and that there was no value of donated property as of December 31, 2008, and otherwise, there is no evidence to support that the aggregate of the value of donated property received from thisCC within 10 years prior to the transaction of stocks as of December 31, 2009 is not less than 10 million won, and thus, it cannot be taxed by applying Article 47(2) of the former Inheritance Tax and Gift Tax Act to the transaction of stocks with second stocks.

(5) Sub-committee

Therefore, the Defendant’s calculation of the value of donated property of Plaintiff Lee A on December 31, 2009 is unlawful to add up the value of donated property of December 31, 2008.

B) As to the assertion on tax amount

Since the value of the donated property of December 31, 2009 is calculated as the value of the donated property of December 31, 2009 under Article 35(2) of the former Inheritance Tax and Gift Tax Act and Article 26(7) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, there is an error in calculating the amount of the gift tax by the defendant since the difference [OOOO (OOOO x OO x OOO x OO x) between the market price [OOOOO xOO xO OO x)] [OOO OO(OO -OO -)] is calculated as the amount of the gift tax calculated as the value of the donated property of December 31, 2009 is calculated as the amount of the gift tax by the defendant.

C) Sub-determination

Therefore, this part of the Plaintiff’s assertion is with merit.

4) As to the argument regarding the third and fourth dispositions

A) As to the assertion of cancellation of a stock acquisition agreement

In light of the following circumstances, the Plaintiffs submitted an agreement on the cancellation of the transfer and acquisition of shares (Evidence A5) as evidence on January 10, 201, by asserting that they had rescinded the agreement on the transfer and acquisition of shares with KimD, Kim E-E on January 10, 201, but KimD and Kim E-E thereafter reported the tax base of transfer income tax and securities transaction tax on transfer of 3 and 4 stocks on February 201. ② A corporation with changes in stocks, etc. during the business year, in principle, submitted a detailed statement of changes in stocks, etc. to the head of the district tax office having jurisdiction over the place of tax payment within 3 months from the end of the month to which the end of the business year belongs (Articles 119(1) and 60 of the Corporate Tax Act). In light of the fact that the Plaintiffs asserted that the change in the status of stocks, etc. submitted by the instant company during the business year 2010 were insufficient to recognize that they were transferred to the Plaintiff 3B or 14.101 of the alleged shares.

B) As to the assertion on tax amount

(1) Legal principles concerning scope of specially related persons

Article 13(10)2 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that "an employee (including an employee of a corporation under control by investment; hereinafter the same shall apply) as one of the persons having a special relationship with the contributor in determining the scope of non-taxation in the taxable amount of taxable amount of taxable amount of taxable amount of taxable amount of taxable amount of taxable amount of the donated property by a public-service corporation, etc." (Article 16(2)2 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that "an employee (including an employee of a corporation under control by investment; hereinafter the same shall apply in this subparagraph and Article 19(2)2 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act)" (Article 13(10)2 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that "an employee (including an employee of a corporation under control by investment; hereinafter the same shall apply in this subparagraph and Article 19(2)2 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act), who is not an employee and an employee.

Meanwhile, Article 13(12)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act lists "the corporation controlled by investment" under Articles 13(10)2 and 39(1)2 of the same Act, and Article 19(2)6 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that "one shareholder, etc. and the person under subparagraphs 1 and 5 shall invest more than 30/100 of the total number of outstanding shares, etc." Article 19(2)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that "the relative and his/her spouse within the second degree of relationship and his/her spouse." Article 10 subparag. 1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act and Article 20 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 23592, Feb. 2, 2012; Presidential Decree No. 220

In full view of the language and text of the above provisions and the details of the amendment under Article 13(6)2 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, “employee” under Articles 26(4)1 and 19(2)2 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act includes “employee of a corporation controlled by investment” as the same concept as “employee” under Article 13(10)2 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act. Therefore, it should be deemed that a paternal blood relationship within the second degree of relationship between the transferee and the transferee’s spouse and an employee of a company whose spouse has invested more than 30% (see, e.g., Supreme Court Decision 2011Du6899, Oct. 11, 2012).

(2) In the instant case:

As of December 30, 2010, which was at the time of transfer of 3 and 4 shares in the statements in Nos. 4 and 32 above, if the aggregate of the above evidence and the shares in EF (the father of the Plaintiff’s father), the headG (the mother of the Plaintiff’s mother of this case), and the HaH (the third degree of this case’s portion) are combined with the shares in No. 20 subparag. 1 of the former Enforcement Decree of the Framework Act on National Taxes as of December 30, 2010, in addition to the purport of the entire pleadings in No. 3 and No. 4 and No. 32, the above evidence and the shares in No. 76.88% [this case’s OPO + the headGOOOOO + the headGOOOOOO, the third decimal shareholder of this case’s shares in the relation of the Plaintiff and the vice president of this case’s shares in No. 370% of the former Enforcement Decree of the Framework Act on National Taxes.

According to the above facts, the company of this case is a corporation which has invested not less than 30/10 of the total number of shares issued by the plaintiffs, their relatives and lineal descendants and their spouse, and has invested not less than 30/10 of the total number of shares issued by them, and KimD and KimE are employees of the company of this case, and eventually, KimD and KimE constitute "employee" of the plaintiffs under Articles 26 (4) 1 and 19 (2) 2 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act.

Therefore, on the premise that KimD or KimE constitutes a person with a special relationship with the plaintiffs, there is no illegality in calculating the amount of the defendant's tax calculated under Article 35 (1) of the former Inheritance Tax and Gift Tax Act and Article 26 (3) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act.

C) Sub-determination

Therefore, the dispositions of Nos. 3 and 4 are legitimate, and the plaintiffs' allegation in this part is without merit.

5) Scope of revocation

In a litigation seeking revocation of a taxation, even where it is deemed that a taxation disposition is unlawful because it was erroneous in the process of calculating the amount of tax, when the amount of tax to be imposed lawfully is calculated based on the data submitted by the time the argument in the fact-finding trial is concluded, the court shall not revoke the entire amount of the taxation disposition as unlawful, but shall regard only the portion exceeding the reasonable amount of tax assessment as unlawful (see, e.g., Supreme Court Decision 97Nu19496, Sept.

Since the first disposition does not exist when there is no donated property on December 31, 2008, the entire disposition shall be revoked, and when the second disposition considers the donated property on December 31, 2009 as an OOO member and calculates the value of donated property on December 31, 2009, the reasonable tax amount shall be determined as an OO member as specified in the following table, and only the portion exceeding the OO member in the second disposition shall be revoked.

Gu Sector

Second Measure

Justifiable Tax Amount

Amount of gift tax

OOOE

OOOE

Tax Base

OOOE

OOOE

Tax Rate

20%

10%

calculated tax amount

OOOE

OOOE

Amount of final tax

OOOE

OOOE

Additional Tax on negligent tax returns

OOOE

OOOE

Additional Dues

OOOE

OOOE

Total final tax amount

OOOE

OOOE

Notice Tax Amount

OOOE

OOOE

5. Conclusion

Therefore, the plaintiff's claim for cancellation against the plaintiff's 1's disposition is accepted for the reasons that it is reasonable, and the plaintiff's claim for cancellation against the 2's disposition of this case is accepted for the reasons that it is reasonable to the extent of the above recognition, and all of the claims of this plaintiff's 1's 2's 2's 2's 2's 2's 2's 2's 2's 2's 2's 2's 2's 1's