Seocho 208west 1014 ( December 31, 2008)

Whether an officer who does not participate in the business in deemed donation due to a low-price transfer should be excluded from a related party.

Since there is no circumstance that an executive officer of a corporation has actually been engaged in the duties of the corporation, such as actual work and receiving remuneration, it is not a circumstance to determine whether or not he/she has a special relationship, an executive officer who does not participate in the duties in the donation

The contents of the decision shall be the same as attached.

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of KRW 121,880,640 against the Plaintiff on December 1, 2007 is revoked.

1. Circumstances of the disposition;

A. On April 10, 2002, the Plaintiff acquired 4,500 shares of the non-party company from the non-party company to the non-party company from the non-party company to the non-party company from the non-party company to the non-party company to the non-party 10,000 won per share (hereinafter referred to as the "the shares of this case").

B. On December 1, 2007, the Defendant: (a) determined and notified the Plaintiff of KRW 250,96,410,410 as gift tax on the gift tax to the Plaintiff, after deducting KRW 100,000 under Article 26(3) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17828, Dec. 30, 2002; hereinafter “Enforcement Decree of the Act”) from the difference between the market value calculated by adding the appraised value per share as of the date of the instant stock transfer to KRW 209,469.

C. On April 11, 2008, the Defendant confirmed that the appraised value per share as of April 11, 2008 as of the date of the transfer of the instant shares was excessive in KRW 107,742, and corrected ex officio the amount of gift tax to the Plaintiff by reducing the amount of gift tax to KRW 121,880,640 (hereinafter “the disposition imposing the corrected gift tax”).

[Reasons for Recognition: Facts without dispute, Gap evidence 1-3, evidence 4-2, 5-2, Eul evidence 2-1 and 2-2, the purport of the whole pleadings]

2. Whether the disposition is proper; and

A. The parties' assertion

(1) The defendant's assertion

(A) Since Park Dong-won is a director of a non-party company, who is an officer of a corporation under the control of the Plaintiff by investment, it constitutes a person with a special relationship under Article 35 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 7010 of Dec. 30, 2003; hereinafter referred to as the “Act”) and Articles 26(4) and 19(2)2 of the Enforcement Decree of the Act. Therefore, the transfer of the instant shares between Park Dong-won, Do-won and the Plaintiff is subject to Article 35(1)1 of the Act.

(B) Even though Park Dong-won is not an executive officer of the non-party company, the plaintiff is an executive officer of the non-party company, and Park Dong-won is controlled by the non-party company by the investment of the non-party company, and the plaintiff and Park Dong-ri constitutes a person with a special relationship. Thus, the transfer of the shares between the plaintiff and Park Dong-ri is still subject to Article 3

(2) The plaintiff's principal

(A) Park Dong-ri, △△, actually did not receive remuneration while participating in the management of the non-party company or serving as a director, and only was registered as a director on the register after investing in the non-party company upon the Plaintiff’s recommendation. In other words, Park Do-ri is not an officer of the non-party company, and it does not constitute the Plaintiff

(B) Article 35(1) of the Act provides that where a person acquires an asset at a price lower than the market price from a person in a special relationship under subparagraph 1, a person who acquires the asset shall be a taxpayer for gift tax, and where a person in a special relationship under subparagraph 2 transfers the asset at a price higher than the market price to a person in a special relationship, the transferor shall be a taxpayer for gift tax. In light of the form of the above provision, Article 35(1)1 of the Act is to be applied, the transferor shall be a person who has a special relationship as an officer of a corporation controlled by the transferor by investment. In this case, the transferee shall be a person who has a special relationship, and Article 35(1)1 of the Act shall not be applicable.

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact of recognition;

(1) At the time of January 10, 2002, the non-party company owned 4,500 shares out of 9,000 shares issued by the non-party company, which were owned by the Plaintiff’s wife Kim Il-young and the rest of 4,500 shares against the non-party company.

(2) From November 11, 1997 to November 22, 2000, from January 16, 2001 to April 8, 2005, a director was registered as a director in the corporate registry of a company outside the country, and on April 2002, the director of the company outside the country was only three of the plaintiff, the whole-in company, and the company in the Si/Gun/Eup/Myeon.

(3) On April 10, 2002, the Plaintiff acquired the shares of this case from Park-ri, Do-ri, Seoul, to the face value (10,000 won per share). The assessed value per share of the shares of this case at the time is 107,742 won.

[Reasons for Recognition: Facts without dispute, Gap 2, 6 evidence, Eul 3-1, and 2; the testimony of △△△△ in both witnesses and the purport of the whole pleadings]

D. Determination

(1) The legislative intent of Article 35(1) of the Act

In order to avoid gift tax among persons closely related with each other, it is highly probable that the transfer at a lower price and the highest price will be made through a prior or ex-post collusion. Article 35(1)1 of the Act provides that where property is acquired by a person having a special relationship at a lower price than the market price, the transferee of the property shall be deemed the transferor of the property, and where property is transferred to a person having a special relationship at a higher price than the market price, the amount equivalent to a certain profit shall be deemed as a donee, and where property is donated to the person having a special relationship at a higher price, such as transfer at a lower price and high-priced purchase among persons having a special relationship, although the form of donation is not in the form of donation, in fact, if the transaction is not in the form of donation, but a free transfer of profit is actually made, it is intended to ensure taxation and prevent tax evasion by imposing a gift tax on the transferee or transferor who has acquired the economic profit free of charge at the market

(2) Determination as to the assertion that a director who was not actually involved in the business does not constitute a specially related person

With regard to the scope of "a person in a special relationship" under Article 35 (1) 1 and 2 of the Act, the Enforcement Decree of the Act provides for a transferor or transferee and a person in a special relationship with an employee, and in this case, the private words include an officer of a corporation controlled by the transferor or transferee by investment (Article 26 (4) 1, Article 19 (2) 2, and Article 13 (6) 2 of the Enforcement Decree of the Act), and in the case of a person who does not actually participate in the business of a corporation, it is problematic whether he/she constitutes a person in a special relationship on the ground that he/she is an officer of a corporation.

In light of the legislative intent of Article 35(1) of the Act, it is important to determine whether a person has a close personal relationship with a transferee, etc., and the Enforcement Decree of the Act stipulates "executive of a corporation controlled by investment" as a person with a special relationship. In such cases, it is time when it appears that there is a high probability of collusion using close personal relations and transfer at the lower price, which is the most probable. Therefore, it is not a circumstance to determine whether an executive of a corporation has actually been engaged in the duties of a corporation, such as actual work and payment.

In this case, Park Young-ri, a person who has invested in the non-party company and owns 50 percent of the total shares of the non-party company, and was registered as a director in the corporate register. Thus, even if the non-party company did not actually perform its director's duties, it cannot be said that the transferee, a person with a special relationship, does not constitute an officer of the corporation controlled by the investment. The plaintiff's assertion on this is without merit.

(3) Determination as to the assertion that whether a person with a special relationship should be determined on the basis of the transferee

Even if Park-ri, a director of Park-ri, a corporation under the control of Park-ri, a corporation under the control of Park-ri, and the plaintiff is a representative director of the non-party company, and the plaintiff is an officer of the non-party company, a corporation under the control of Park-ri, Park-ri, and the plaintiff is a person in a special relationship with Park-ri, so Article 35 (1) of the Act shall apply to the transaction between the plaintiff and Park-ri, Park-ri, a corporation

Since Article 35(1) of the Act intends to regulate the act of tax avoidance using close relations among the parties to a transfer and acquisition, one of the parties to a transfer and acquisition is right and wrong to regard the other party as an employee (including an officer of a corporation controlled by investment), and in the case of a transfer at a low price as alleged by the plaintiff, it is only the case where the transferor is an employee, and it does not constitute the case where the transferee is an employee. The plaintiff's assertion on this is without merit.

3. Conclusion

Inasmuch as the plaintiff's claim is groundless, it is dismissed.