Seoul High Court-2014-Nu-5652 ( October 13, 2015)

Seocho 2012Seoul Northern 4270 (2013.08.14)

In title trust, the absence of the purpose of tax avoidance has the burden of proof against the plaintiff.

(As in the original case) In the title trust, the absence of the purpose of tax avoidance has the burden of proof for the plaintiff, and the plaintiff did not prove it.

Article 45-2 of the Inheritance Tax and Gift Tax Act

2015Du38238 Revocation of Disposition of Imposition of Gift Tax

New○○ et al.

○ Head of tax office

February 08, 2018

1. All appeals are dismissed.

2. The costs of appeal are assessed against the plaintiffs.

The grounds of appeal are examined.

Article 45-2 (1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 11130, Dec. 31, 2011) provides that "where the actual owner of the property necessary to transfer or exercise the right and the title holder are different, the value of the property shall be deemed to have been donated to the actual owner on the date when the property is registered, etc. to the title holder, notwithstanding Article 14 of the Framework Act on National Taxes," and Article 45-2 (2) of the same Act provides that "where the title holder registers the property under another person's name without the purpose of tax evasion, the same shall not apply to cases where the property is registered, etc. under another person's name without the intention of tax evasion."

After finding the facts as stated in its reasoning, the lower court rejected the Plaintiffs’ assertion that the title trust in the instant title trust was not subject to the legal fiction of title trust donation because there was no proof as to the absence of tax evasion at the time of the title trust in the instant title trust, and that the instant title trust in the process of the capital increase with capital increase in proportion to the equity ratio of the shares under the initial title trust, on the grounds that

Examining the record in light of the aforementioned provisions and relevant legal principles, the lower court did not err in its judgment by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the legal doctrine on the purpose of tax evasion on the legal fiction of title trust donation.

Therefore, all appeals are dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.