Donation of profits following the listing, etc. of stocks or equity shares;

The stock option, which was renounced for the initial acquisition of shares, should have been in a quid pro quo relationship with the acquisition of shares, but did not calculate the registration benefits of shares, including the acquisition value, and the original disposition is revoked due to the lack of reasonable calculation details by the closing of the arguments at

Article 41-3 of the Inheritance Tax and Gift Tax Act / [Presumption of Donation of Benefits from Listing of Stocks or Equity Shares]

1. The Defendant’s imposition of gift tax of KRW 5,542,38,930 against the Plaintiff on August 1, 2007 shall be revoked.

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

The same shall apply to the order.

1. Details of the disposition;

The following facts may be acknowledged either in dispute between the parties or in combination with the whole purport of the pleadings in each entry in Gap1, 2, 3, 6, Eul 1, 2, Eul 4-1 through 4, and Eul 7:

A. ○○○ Co., Ltd. (hereinafter “Nonindicted Company”) is a corporation established on April 2, 1998 for the purpose of designing, manufacturing, and selling semiconductor chips and related products.

B. On November 1, 2002, the number of ○○, the representative director of the non-party company, and the largest shareholder, transferred 30,000 shares (e.g., 5,000 won per share; hereinafter referred to as “the shares of this case”) among the shares owned by himself, to the Plaintiff, who was in office as the vice president of the non-party company, and was in office as the vice president of the non-party company, at KRW 1,00 per share. The shares of the non-party company were divided into 5,00 to 10 shares per share on January 21, 2004. The shares of the non-party company were registered with the Korea Securities Dealers Association on August 13, 2004.

C. As of November 13, 2004, when three months have passed from the date of the registration of the shares of the non-party company, the Defendant deemed that the Plaintiff received benefits from the registration of the above shares pursuant to Article 41-3(1) of the Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002; hereinafter referred to as the “Inheritance Tax and Gift Tax Act”) on the ground that the difference after deducting the total amount of profits from the initial acquisition value and the actual increase in corporate value from the value of the shares of this case was increased by not less than 30% of the initial acquisition value, and that on August 1, 2006, the Defendant corrected and notified the Plaintiff of KRW 5,542,38,930 for gift tax for 204 calculated as follows (hereinafter referred to as the “instant disposition”).

D. On November 6, 2006, the Plaintiff appealed to the National Tax Tribunal, but was dismissed on July 30, 2007.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff asserts that the disposition of this case is unlawful for the following reasons.

(1) Article 41-3 of the Inheritance Tax and Gift Tax Act provides, without any connection, that gift tax shall be imposed uniformly on a stock transaction that is not a gift for the purpose of donation in essence by stipulating that a transaction between the largest shareholder of a company and an executive officer's stock transaction shall be made for the purpose of donation without any connection with the purpose of preventing an irregular change in the value of high-value property, and without any connection with it, it violates the principle of excessive prohibition under the Constitution and infringes on citizens' property rights. Article 31-6 (5) of the Enforcement Decree of the same Act delegated by Article 41-3 of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17791 of Dec. 5, 202) provides, where the acquired stocks are non-listed stocks, it shall be calculated uniformly on the basis of net profit and loss in calculating profits from substantial increase in the value of the company. Accordingly, ○○○ start-up investment company (hereinafter referred to as "KB investment company") was changed to its mutual investment method, which does not correspond to the actual value of the investment method.

(2) The Plaintiff did not acquire the instant shares with an internal government for the purpose of gaining the profit from the market price by making use of the internal government (in light of the circumstances of the non-party company at the time of the transfer of the instant shares, the number of ○○ does not constitute “the largest shareholder, etc. who is deemed to be in the position of using the non-public information as to the management, etc. of the company” under Article 41-3(1) of the Inheritance Tax and Gift Tax Act at the time of the transfer of the instant shares, and the value of the instant shares increases due to the registration of the shares of the non-party company as a result of efforts by its officers and employees including the Plaintiff

(3) On March 31, 2003, the Plaintiff transferred 1,000 shares of the instant shares to ○○○ Investment, and did not own them at the time of registration and did not gain any profit from the registration. Therefore, the amount equivalent to the gift tax on this portion is unfairly imposed.

(4) As the Plaintiff renounced 5,500 shares of stock option 5,750 shares already granted on the condition of acquiring the instant shares from Yellow Water, the Plaintiff had to exclude the above 5,500 shares from the above 30,000 shares in calculating the registration profit. However, the Plaintiff calculated the registration profit based on the entire shares of this case.

(b) Related statutes;

Article 22 (Inheritance Deductions of Financial Property)

Article 41-3 (Presumption of Donation of Benefits from Listing, etc. of Stocks or Equity Shares)

Article 63 (Appraisal of Securities, etc.)

Article 19 (Inheritance Deductions of Financial Property)

Article 31-6 (Presumption of Donation of Benefits from Listing, etc. of Stocks or Equity Shares)

Enforcement Decree of the Inheritance Tax and Gift Tax Act (the method of calculating net profit and loss for the latest three years per share)

(c) Fact of recognition;

The following facts are not disputed between the parties, or can be acknowledged by comprehensively taking into account the following facts: Gap evidence 3, Gap evidence 5-1 through 8, Gap evidence 5-11, Gap 20, 21, 22, 25, and 26, Gap evidence 30-1, 2, Gap evidence 34-1 through 22, Eul evidence 35-1 through 9, Eul evidence 2, 35-2, Eul evidence 4-1 through 4, Eul evidence 5-1, 2, 3, Eul evidence 7, and some testimony of the number of witnesses 0.

(1) On April 2, 1998, the non-party company was established as capital of KRW 2.2 billion for the purpose of carrying on the design, manufacture, and sale of semiconductor chips and related products, and had been engaged in 2.29 million capital as of the end of 2002 after several capital increase. However, on the basis of the end of 2002, the non-party company was faced with a situation where it is difficult to reach 2.29 million capital due to repeated losses, such as where there was a net loss of KRW 81.9 billion on April 2, 2001, and approximately KRW 1.5.66 million on April 2, 2001.

(2) On November 1, 2002, the number of YO, the representative director and the largest shareholder of the non-party company, transferred 68,300 shares of the non-party company, including the plaintiff, to 12 executive officers and employees of the non-party company including the plaintiff, at KRW 1,00 per share in order to encourage them to work desire and register. In order to secure the amount of stock options to be distributed to the executive officers and employees recognized as additional contributions at the time, or to the executive officers and employees who will be employed in the future, the number of YO, the largest shareholder of the non-party company, was demanded to waive the stock options already granted to them at the time of the above transfer, and was prepared and submitted a written confirmation thereon.

(3) Accordingly, on November 1, 2002, the Plaintiff acquired the instant shares from Yellow Water in KRW 1,000 per share. On December 29, 2000, the Plaintiff prepared a written confirmation to waive 5,500 shares out of KRW 5,750 already granted from the non-party company and submitted it to the non-party company.

(4) Meanwhile, the contents of the stock option agreement concluded on December 29, 200 between the Plaintiff and the Nonparty Company are as follows.

Article 4 (Details of Exercising Stock Options)

The details of exercise of stock options shall be as follows:

(a) The subject shares: Registered common shares of the non-party company;

(b) Quantity granted: 5,750 shares;

3) Method of granting: The board of directors shall determine the difference between the delivery of new stocks, the delivery of treasury stocks, the exercise price of stock option and the market price of treasury stocks at the time of exercising the stock option in cash or as treasury stocks

4) Exercise price: 7,500 won on the basis of par value 5,000 won.

5) The duration of exercise and the number of events are as follows:

(1) The period of compulsory possession shall be three years from December 29, 2000 to December 28, 2003.

(2) The duration of exercise shall be five years from December 29, 2003 to December 28, 2008, and in case of the quantity of exercise, 20%, 30%, and 50%, respectively, of the total number of exercise events may be exercised during the first year, second year, and third year, respectively, and the remainder of exercise period after the third year, may be exercised within the end of the duration of exercise.

(3) If a person retires after three years have elapsed in the events referred to in the preceding item, he/she shall exercise the rights within three months from the date of his/her retirement.

6) Extinguishment of rights

In the exercise of authority under paragraphs (2) and (3), stock options not exercised after the expiration of the period for exercise shall be deemed extinguished.

(5) Meanwhile, as of January 1, 200, the Plaintiff owned 6,720 shares of the non-party company. On January 31, 2002, the Plaintiff acquired 4,000 shares of the non-party company from Yellow Water. On March 31, 2003, the Plaintiff transferred 1,000 shares of the non-party company to ○○ Investment at KRW 40,000 per share (including taking over the above shares from the plaintiff around 2003, the Plaintiff acquired 20,00 shares of the non-party company from an officer or employee of the non-party company at KRW 40,00 per share).

(6) However, upon the Plaintiff’s transfer of 1,00 shares on March 31, 200, the Plaintiff reported and paid 3,285,000 capital gains tax to the Defendant on April 18, 2003, by transferring 1,00 shares of the company outside the country to KRW 1,000 per December 15, 1999 and transferring 40,000 per share on March 31, 2003.

(7) The Seoul Regional Tax Office conducted a tax investigation on corporate stock changes with respect to the non-party company from March 20, 2006 to May 31, 2006, and notified the Defendant of this fact on November 1, 2002, which was within three years prior to the registration of the shares of the non-party company in the Korea Securities Dealers Association.

(8) In calculating the gift tax on the Plaintiff’s registered profits of this number of stocks, the Defendant calculated the assessment value per share as of the date of settlement (3 won after registration, and November 13, 2004) as at the base date of the Korea Securities Dealers Association in February before and after the base date under Article 63 of the Inheritance Tax and Gift Tax Act. The substantial increase in corporate value per share was calculated as at KRW 35,431, which is the base price of the Korea Securities Dealers Association in February, respectively. Under Articles 36-6(5) and 56(3) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, the actual increase in corporate value per share was calculated as at KRW 5,00 on the basis of the net profits and losses of the Nonparty company, which were submitted by the Nonparty

D. Determination

(1) Determination on the first argument

(A) The purpose of Article 41-3 of the Inheritance Tax and Gift Tax Act is to make it possible for the largest shareholder, etc. to make it possible to make an illegal division of profit by donating or transferring for consideration stocks to his/her children, etc. to related parties, or to keep the donee or the acquisitor without transferring them, and to solve the problem of controlling the affiliate without any tax burden. In this case, the expected amount of profits for listing or registration in the future cannot be assessed at the time of donation of non-listed stocks at the time of listing or registration, and it is possible to do so after listing or registration, and thus, it is a system that evaluates the evaluation of profits, and evaluates the accuracy after listing or registration, and then adjusts the amount of non-listed stocks at the first time to the appraised value of the non-listed stocks as listed stocks.

(B) Therefore, in line with the purport of this Act, the above provision is limited to the case where the largest shareholder, etc., who is entitled to use information that is not open to the public regarding corporate management, etc., is donated or transferred within the scope of the donor. The largest shareholder, etc., also between the largest shareholder, etc. and the executives, are not likely to undermine the sound corporate management by making a donation of unlisted stocks before listing or registration, or by making a public announcement of affiliate management without tax burden by transferring salt to salt, and thus, it cannot be deemed as a legislation that violates the principle of proportionality under the Constitution by infringing the legitimacy of the legislative purpose and appropriateness of the means.

(C) In addition, in calculating the listing or registration profit, it should be calculated by deducting the taxable value or acquisition value of the gift tax of unlisted stocks from the appraised value of the relevant stocks as of the date of liquidation. However, in a case where the listing or registration of unlisted stocks requires considerable time from the donation or acquisition of unlisted stocks to the listing or registration, the substantial increase in the corporate value may be included in the period, such as the improvement of the business performance of the corporation that issued stocks during the period. Therefore,

However, Article 31-6(5) of the Inheritance Tax and Gift Tax Act provides that the calculation of profits from a substantial increase in corporate value shall be based on the amount of net profits and losses of the relevant company in principle. This is considered to be a relatively fair and objective assessment of corporate value, based on the materials, such as financial statements reflecting the business performance of the relevant company. As such, it cannot be deemed that the calculation method of profits under the above Enforcement Decree is an unreasonable calculation method that does not correspond

Therefore, this part of the plaintiff's assertion is without merit.

(2) Judgment on the second argument

The phrase “a person who is deemed to be in a position to use undisclosed information pertaining to the business management, etc. of a company” under Article 41-3(1) of the Inheritance Tax and Gift Tax Act means a person who needs to have learned of information within the company regarding the business management, etc. in light of his position and duties, shareholder status, corporate governance, etc., and does not require that person to actually use such information, in particular, whether there was a specific plan or information pertaining to the business disclosure, or whether there was a real use of such information.

Unlike the plaintiff's assertion, there is no special reason to interpret the meaning of a donor as stipulated in the above provision as a person who has learned of important information such as a plan for listing registration or a change in the value of the company's stocks, and such interpretation also goes against the principle of strict interpretation under the tax law.

Therefore, inasmuch as the number of yellow ○ at the time of transfer of the instant shares to the Plaintiff is recognized as the largest shareholder of the non-party company and the representative director, who was directly involved in the management of the non-party company, and was in a position to have easily known and used the inside information of the non-party company, the number of yellow ○○, the largest shareholder, at the time of the Plaintiff’s assertion, could not easily anticipate the registration of the non-party company’s shares, even though the number of yellow ○ does not constitute “the largest shareholder, etc. recognized as in a position to be in a position to use undisclosed information concerning the management, etc

Therefore, the plaintiff's assertion on this part is without merit.

(3) Judgment on the third argument

In general, the burden of proving the facts of taxation requirement in a lawsuit seeking revocation of disposition imposing tax shall be borne by the imposing authority. However, if it is revealed that the facts of taxation requirement have been presumed in light of the empirical rule in the course of a specific lawsuit, it cannot be readily concluded that the other party is an unlawful disposition that fails to meet the taxation requirement, unless the other party proves that the facts in question were not eligible for application of the empirical rule (see Supreme Court Decision 97Nu13894, Jul. 10, 1998).

However, according to the above facts, when transferring 1,00 shares of March 31, 200, the plaintiff submitted a transfer income tax report to the defendant on April 18, 2003 to the effect that "the defendant shall acquire 1,000 shares of the non-party company from 1,000 won per December 15, 1999 and transfer 40,000 won per March 31, 2003" while the plaintiff failed to sufficiently prove the circumstances that the facts in question are not eligible for application of the rule of experience. Thus, it is legitimate to calculate profits from the registration of the shares of this case without excluding 1,00 shares out of the shares of this case.

Therefore, the plaintiff's assertion on this part is without merit.

(4) Judgment on the fourth argument

(A) According to the above facts, it is reasonable to view that the Plaintiff acquired the instant shares from Yellow Water on the condition that the Plaintiff renounced the stock option of 5,500 shares to the non-party company. However, the waiver of the right to share purchase agreed between the Plaintiff and Yellow Water was merely a consideration for taking over the instant shares at a price lower than the market price at the time of the instant shares (it is in a relationship with the non-party company although the Plaintiff’s waiver of the stock option was in a relationship with the non-party company, this is due to the demand of Yellow Water, and it is deemed that there was a quid pro quo relationship based on the economic rationality and acquisition of the instant shares). It does not seem to have been made

Therefore, the plaintiff's assertion that in calculating the registration profit of the shares of this case, when the defendant acquired the shares of this case without a condition to waive the stock option, the difference between the registered profit when he acquired the shares of this case by waiver of the stock option and the registered profit when he acquired the shares of this case shall be deducted from the registered profit (this conclusion is the assertion that the above 5,500 shares should be excluded from the registration profit of the shares of this case) is groundless.

(B) However, Article 31-6 (3) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act adopts the method of deducting the acquisition value per share as of the date of acquisition from the appraised value per share as of the date of settlement of accounts. As seen earlier, the Plaintiff renounced the stock option, which is an intangible property right with property value, to acquire the instant shares, and the waiver is in substantial quid pro quo relationship with the acquisition price of the instant shares. Thus, this also should be included in the "acquisition value" under Article 31-6 (3) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, along with the acquisition price paid by the Plaintiff (in the current Income Tax Act where the confirmation principle of rights is adopted, the difference between the market price of the relevant shares and the exercising price of the stock is determined or realistic by acquiring the shares by exercising the stock option, and it is reasonable to view that the income accrued at the time of the above exercise has a fair taxation balance by preventing the income of the taxable year by the person liable for taxation, and as a result, it is reasonable to view the legislative intent of the Income Tax Act as well as an economic right to secure profit based on the stock option.

Therefore, although the defendant calculated the fair market value of the stock option that the plaintiff waived at the time of the transfer of the stock in this case and calculated the registration profit of the stock in this case by reflecting it as an element for calculating the registration profit of the stock in this case, the defendant's disposition of this case otherwise reported is unlawful (the legality of the disposition in the disposition revocation suit is determined depending on whether it exceeds a legitimate tax amount. As such, the parties can submit arguments and materials supporting objective tax base and tax amount until the closing of argument in the fact-finding proceedings. When computing the legitimate tax amount to be imposed lawfully by such materials, only the portion exceeding the legitimate tax amount must be revoked. However, in this case, the legitimate tax amount cannot be calculated because there are no particular materials to calculate the fair market value of the stock option at the time of the transfer of the stock in this case, and therefore the entire disposition

3. Conclusion

Therefore, the plaintiff's claim of this case is justified, and it is so decided as per Disposition.