It is insufficient to view that the title trust was made at will without the consent or consent.

In full view of the fact that if the seal imprint, etc. was stolen, it would have been known in advance in light of the status of the company or the duties in charge, but did not take civil and criminal measures, it is insufficient to view that the title trust was made at will without the Plaintiff’s consent or consent.

2013Guhap17039 Revocation of Disposition of Imposition of Gift Tax

KimA

Head of Geumcheon Tax Office

October 18, 2013

November 8, 2013

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s imposition of gift tax for the Plaintiff on June 5, 2012 is revoked in all of the imposition of the gift tax for the Plaintiff in 1997, the OOOO in 199, the OOOO in 199, and the OOOO in 202.

1. Details of the disposition;

A. On June 25, 1997, the Plaintiff entered BB General Construction Co., Ltd. (formerly:CC General Construction Co., Ltd.; hereinafter referred to as “B Construction”) in its name and transferred 17,000 shares of BB Construction (21.25%) to its own name, and thereafter, increased shares in its name during the 3-time capital increase process conducted by BB Construction (hereinafter referred to as “the shares in this case”).

No.

first day; and

For internal purposes

Total amount of capital increase

The number of shares of the plaintiff increased

1

June 25, 1997

Establishment

OOOE

17,000 Shares

2

August 9, 1999

1. Initial capital increase

OOOE

4,250 Shares

3

June 5, 2002

Second, Paid-in capital increase

OOOE

4,250 Shares

4

November 7, 2002

3rd Paid-in capital increase

OOOE

14,875 Shares

Consolidateds

OOOE

42,500 Shares

C. As a result of the on-site investigation from April 2, 2012 to May 16, 2012, the Defendant: (a) determined and notified that, pursuant to Article 43 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 5582, Dec. 28, 1998); and (b) Article 41-2 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 2002; hereinafter collectively referred to as “the instant disposition”), the Defendant determined and notified the total amount of OOOO gift tax (including additional tax; hereinafter the same shall apply) as follows (hereinafter referred to as “the instant disposition”).

[Ground of recognition] Facts without dispute, Gap evidence 1-1 to 4, Gap evidence 2-1, 2, Gap evidence 6, Eul evidence 1-1 to 4, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The Plaintiff is merely entrusted with the name of the instant shares under a business order or instruction issued by DoD, which is the actual shareholder of BB Construction, and the representative director, and there was no record that it was involved in the process of capital increase. Therefore, the instant shares cannot be deemed subject to taxation under the deemed donation provision, since DoD unilaterally transferred its name without the Plaintiff’s consent.

2) Even if a title trust agreement between the Plaintiff and DoD is recognized, the purpose of tax avoidance cannot be recognized, since the title trust agreement actually results in, or there was no possibility of, the result of, tax avoidance.

3) Therefore, the instant disposition on a different premise is unlawful and thus ought to be revoked.

B. Relevant statutes

Attached Form is as shown in the attached Form.

(c) Fact of recognition;

1) In around 1976, the Plaintiff joined EE, a management office, and became aware of Does who were employed in the same company as a technical post in around 1977, and he was able to become friendly for about 10 years while working together.

2) In around 1993, the Plaintiff received a proposal from the FF Comprehensive Construction Co., Ltd. as a regular manager, and worked together with FF Comprehensive Construction Co., Ltd for about four years from around that time to March 1997.

3) On June 25, 1997, AD acquired BB Construction (hereinafter referred to as "CC Comprehensive Construction Co., Ltd. at that time"), and acquired 50% (40,000 shares out of 80,000 shares) in its own name. The remaining shares were divided, and 21.25% (17,00 shares) in the name of the Plaintiff, 20.25% (16,200 shares) in the name of the Plaintiff, H H, respectively, and 8.5% (6,80 shares) in the name of the Plaintiff.

4) After that, DoD received and expanded its business operations from BBFT Co., Ltd. (hereinafter referred to as BBFT), III, and JJ Co., Ltd. (hereinafter referred to as “JJ”). From June 25, 1997 to May 2006, the Plaintiff served in BB Construction as the managing director, directors (e.g., promotion on January 1, 2002), and executive directors (e.g., promotion on January 1, 2006). From June 2006 to August 2007, the Plaintiff served as the managing director of BBFE from September 2006 to the managing director of JJ from June 207.

5) On December 28, 2006, AD transferred the entire shares of this case to BBOO to BBO, the Plaintiff prepared a share transfer contract, and deposited the KRW OO into the account under the Plaintiff’s name. On the following day, the Plaintiff transferred the said KRW OO to HuK, YL, and MaM’s account according to the instructions of AD. However, as the capital gains tax and resident tax were delinquent, the apartment owned by the Plaintiff was seized on August 22, 2007.

6) On December 26, 2007 and March 4, 2008, the Plaintiff submitted to the tax authority a written report and a written application for tax grievance settlement, stating that DoD, a real owner and manager of BB Construction, distributed its shares in the name of several employees to avoid sanctions against oligopolistic shareholders.

7) Meanwhile, the BB Construction was due to financial difficulties since 2007, and was in arrears with the tax of approximately KRW OOOO (this, the head of Sungnam District Tax Office designated DoD as the secondary taxpayer for BB construction). Ultimately, the BB Construction was closed on or around December 27, 2007, and there was no separate distribution to shareholders prior to the closure of business.

[Ground of recognition] Facts without dispute, Gap evidence 2-1, 2, Gap evidence 3-16, Gap evidence 17-1, 2, 3, Eul evidence 2-3, and the purport of the whole pleadings

D. Determination on the first argument

1) The provision on deemed donation applies to property that requires registration, etc. for the transfer or exercise of rights, where the actual owner and the nominal owner agree or communicate and make registration, etc. in the future of the nominal owner. As such, where a registration, etc. is made unilaterally using the name of the nominal owner regardless of the intent of the nominal owner, it may not be applied. In such a case, the tax authority must establish only the fact that the actual owner is different from the nominal owner, and the verification that the registration, etc. of the nominal owner was made by the unilateral act of the actual owner regardless of the intent of the nominal owner should be made by the nominal owner (see, e.g., Supreme Court Decision 2007Du15

2) The following circumstances can be acknowledged by comprehensively taking into account the overall purport of the pleadings as to the instant case’s health class, the entire purport of the pleadings, namely, ① the Plaintiff stated that DoD distributed shares to avoid sanctions against oligopolistic shareholders in the course of its tax investigation; ② the Plaintiff has a long-term relationship with DoD in the process of expanding DoD’s business; and ② promotion was made in order to the head of division, director, executive director, managing director, and representative director in cooperation. In light of the relationship with the Plaintiff, DoD, or the Plaintiff’s status, etc., it is difficult to deem that DoD arbitrarily entrusted the title of the instant shares against its intent without the Plaintiff’s consent or consent; ③ since Do was a director of BB Construction from January 1, 202 to B Construction, the Plaintiff could have been aware of the instant shares issued in its account during the process of undergoing a resolution of the board of directors; ④ the Plaintiff’s transfer of shares to Do’s own account, without the Plaintiff’s prior consent to the instant shares transfer of Do’s shares under its name.

E. Judgment on the second argument

1) The legislative purport of the provision on deemed donation is to recognize an exception to the principle of substantial taxation by effectively preventing the act of tax avoidance using the title trust system. Thus, if it is recognized that the title trust was made for any reason other than the purpose of tax avoidance, and only a minor reduction of tax incidental to the title trust occurs, it cannot be readily concluded that there was such a purpose of tax avoidance. However, in light of the legislative purport as seen above, it cannot be deemed that there was a deemed donation only when the purpose of the title trust is not included in the purpose of tax avoidance, and if it is deemed that there was an intention of tax avoidance, it cannot be deemed that there was no other purpose of tax avoidance, and in this case, the burden of proving that there was no purpose of tax avoidance, 207Du1931, Apr. 9, 2009; 2007Du17175, Sept. 8, 2011; 2006.

2) Regarding the instant case, comprehensively taking account of the following facts and the purport of the entire pleadings.

In other words, the following circumstances are as follows: ① If the shares of the Plaintiff were combined with those of this case in the name of the Plaintiff, the shares of this case in the BB Construction exceed 50%, which is likely to be subject to secondary tax liability as oligopolistic shareholders; ② BB Construction is in arrears with a considerable amount of tax after the management status was omitted and thus the tax authority designates Dod as the secondary taxpayer; ② The purpose of tax avoidance is to determine at the time of title trust: (i) even if BB Construction actually distributes dividends, it cannot be readily concluded that the Plaintiff did not bear the liability to pay global income tax on the future dividend income at the time of title trust; (iii) Dod has not been able to avoid taxation such as deemed acquisition tax under the Local Tax Act and capital gains tax on non-listed stocks by title trust (in fact, transfer income tax on the shares of this case was imposed on the Plaintiff, the nominal owner, not on the Framework Act on the Construction Industry); and (iv) The Plaintiff did not have any specific reasons to acknowledge that the Plaintiff did not have any other reasons for the Plaintiff’s share in the name loan from the financial institution.

3. Conclusion

The plaintiff's claim is dismissed and the costs of lawsuit are assessed against the losing party. It is so decided as per Disposition.