Cho High-2012-Seoul Government-1953 (29 June 2012)

The title trust shares are subject to tax avoidance purpose.

If listed stocks are owned in their own name, they shall be large shareholders with 3% or more prescribed by the Income Tax Act, and there is a purpose of tax avoidance, such as the omission of capital gains tax by distributed stocks in the name of others.

Legal fiction of donation of title trust property under Article 45-2 of the Inheritance Tax and Gift Tax Act

2012Guhap2552 Revocation, etc. of Disposition of Imposition of Gift Tax

Yellow*

head of Sung Dong Tax Office

2013.03.19

2013.06.20

1. The following dispositions made by the defendant against the plaintiff shall be revoked:

가. 2012. 1. 10.자 증여세 84,400:00◦원 부과처분 중 80,400:000원을 초과하는 부분

B. Of imposition of gift tax (additional tax) on December 7, 2012, the portion exceeding KRW 73,968,000 in excess of KRW 77,648,00.

2. The plaintiff's remaining claims are dismissed.

3. Of the costs of lawsuit, 70% of the costs of lawsuit shall be borne by the Plaintiff and the remainder by the Defendant, respectively.

Cheong-gu Office

Each disposition of imposition of KRW 84,400,000 as of January 10, 2012 and KRW 73,968,00 as of December 7, 2012 against the Plaintiff shall be revoked.

1. Details of the disposition;

(a) Paid-in capital increase process by △△△△△;

(1) On July 16, 2004, Kim Jong-sung entered into an all-inclusive share swap agreement with the listed company * * * * 6,000,00 listed stocks (1.98,000,000 won) in the △△△△△△△△ corporation on March 28, 2005, and changed the trade name to △△△△△△△△△△△△△△△, a non-listed corporation, the purpose of which is the development of cell therapy using stem cells, etc. on June 1, 2005, after the approval of the temporary general meeting of shareholders on July 20, 2005 ******** * 2.2), the corporation of this case changed its trade name to the △△△△△△△△△ corporation on March 20, 2004 (hereinafter referred to as the “corporation”). The company of this case, as the board of directors, made a resolution to correct the shares issued on March 37, 2015, 2001.4.

Table 1 Public Notice on March 3, 2004

Items

Before Specifying

After fixedness

Class and Number of New Shares

common shares 7,905,000

common shares 7,905,000

Method of Capital increase

Article 3 (Method of Third Party Allocation by Public Offering)

Article 3 (Private Offering Method)

Date of payment for shares;

Subsequent Final Judgment

January 26, 2005

3) On January 14, 2005, the instant corporation made the payment date of shares to the board of directors on March 14, 2005, and on February 11, 2005, with the date of the allocation of new shares as of February 11, 2005, 100,000 common shares shares as the method of shareholders allocation, but the forfeited or fractional shares shall be determined by a subsequent resolution of the board of directors, and on the same day, the corporation announced it to the original electronic public disclosure system of the Financial Supervisory Commission (hereinafter referred to as the “public disclosure system”) on the same day.

4) On March 12, 2005, the instant corporation passed a resolution at the board of directors to allocate the actual right shares related to capital increase with capital increase issued on January 14, 2005 to a third party. On the same day, the corporation announced the electronic publication system of the Financial Supervisory Service.

B. Title trust of Kim Jong-tae

The following table 2: (a) Kim Young-chul acquired the shares of the instant corporation in the name of the Plaintiff and 15 and completed the transfer of ownership on each transfer date, through the name account opened through Kim Young-si Kim △△△△ (former Kim ○○), a Dong-in Kim △△△ (former Kim ○), and completed the transfer of ownership on each transfer date; (b) on September 15, 2004, he acquired the shares of 4,417,076 up to February 11, 2005, including the acquisition of 4,30,000 shares in the name of ○○○ on September 15, 2004 (the next table 2, 15,058,912 shares to be allocated to shareholders; and (c) on January 14, 2005, he acquired shares of 18,300 shares with the allocation of forfeited shares to a third party (the next table 20,300 shares, 2301, 25308 shares

No.

title trustee

Transfer Date

Number of shares (number of shares)

The appraised value per share;

Jinay

Original Disposition

Correction Disposition

1

Park*

on 15, 2005

2,500,000

236

Third Party Allocation

2

Song*

on 15, 2005

1,500,000

236

Third Party Allocation

3

An*

on 15, 2005

1,500,000

236

Third Party Allocation

4

Gyeong-gu

December 31, 2004

2,757,576

200

182

Change of Transfer

05.03.15

5,000,000

236

26

Initial Stockholders

December 16, 2005

180,768

3,132

2,812

Change of Transfer

5

05.03.15

2,000,000

236

Third Party Allocation

6

Quantity*

December 31, 2004

180,000

200

182

Change of Transfer

05.03.15

796,484

236

26

Initial Stockholders

7

UN*

December 31, 2004

20,000

200

Change of Transfer

05.03.15

1,460,222

236

Initial Stockholders

8

Doz.

05.03.15

2,100,000

236

Third Party Allocation

9

This △△△△

05.03.15

2,500,000

236

26

Third Party Allocation

10

Dong-ri

05.03.15

1,500,000

236

Third Party Allocation

11

L**

05.03.15

2,700,000

236

Third Party Allocation

12

IsaA

December 31, 2004

323,000

200

182

Change of Transfer

05.03.15

2,123,959

236

26

Initial Stockholders

13

BB

December 31, 2004

311,500

200

182

Change of Transfer

05.03.15

2,190,33

236

26

Initial Stockholders

14

CC

05.03.15

2,000,000

236

Third Party Allocation

15

Hu*

December 31, 2004

85,000

200

182

Change of Transfer

05.03.15

1,227,914

236

26

Initial Stockholders

16

00*

204.09.15

430,000

172

Change of Transfer

1,205.02.11

10,000

237

Change of Transfer

05.03.15

2,260,000

236

26

Initial Stockholders

Total

37,956,756

C. Taxation

1) The director of the Seoul Regional Tax Office, from July 21, 2011 to December 23, 2011, conducted an investigation into the integration of personal and property taxes with respect to Kim Jong-tae, and notified the district tax office having jurisdiction over the district tax (1) of the increase in the amount of contribution following the title trust of the instant shares, and 2) of the interest income and other income (1.5 billion won upon the termination of the contract for transfer of 2,600,000 shares of the company EEEEE), to levy the global income tax.

(2) Accordingly, on January 10, 2012, the Defendant imposed a gift tax of KRW 162,048,00 (including additional tax of KRW 77,648,00) in 205 pursuant to the provision on the constructive gift of trust property under the name of Article 45-2 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter the same shall apply) on the Plaintiff (hereinafter “instant disposition imposing gift tax”). The Defendant revoked the partial portion of penalty in the disposition imposing the gift tax of this case on December 7, 2012, and notified the same amount of penalty tax again.

[Ground of recognition] Facts without dispute, Gap 1 through 5, 9 through 12, 16, 19, 20 evidence, Eul 1 and 2, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

① The purpose of this case is to avoid the obligation to report to the Financial Supervisory Commission or the Exchange, and there was no tax avoidance purpose, and at least over-the-counter trading was already paid with capital gains tax. In addition, when the reason for capital increase, merger, etc. is issued within two months before or after the evaluation base date when the evaluation of the value of stocks under Article 63(1) of the Inheritance Tax and Gift Tax Act and Article 52-2 of the Enforcement Decree of the same Act, the evaluation method varies. The date when the reason for capital increase, merger, etc. occurred should be "the date when the capital increase, etc. occurred", but the evaluation of the value of stocks is illegal without considering it.

Attached Form. The entry in the relevant statutes is as follows.

C. Determination on the imposition of gift tax of this case

1) Purpose of tax avoidance

(A) The legislative purport of Article 45-2(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter “Inheritance Tax and Gift Tax Act”) is to recognize exceptions to the substance-over principle with the purport of effectively preventing the act of tax avoidance by using the title trust system and realizing the tax justice. Thus, only if the purpose of the title trust is not included in the purpose of tax avoidance, the proviso of the same Article can be applied, and if so, the burden of proving that there was no purpose of tax avoidance. Therefore, the title holder who bears the burden of proof can prove that there was no other purpose of tax avoidance. However, the title holder who bears the burden of proof has an obvious purpose of tax avoidance and unrelated to the tax avoidance to the extent that it is recognized that there was no purpose of tax avoidance in the title trust, and the fact that there was no tax avoidance in the future at the time of the title trust party or in the future should be proven to the extent that it does not have an ordinary doubt by objective and supporting evidence (see, 1201 through each evidence).

(1) The instant corporation promoted capital increase with capital increase on January 14, 2005 in order to resolve the problem of capital erosion at KRW -2,304,645,745 in the business year 2005.

(2) The shares of the instant corporation were purchased and sold as shown in the table 6, and the share ratio of the instant corporation to the instant corporation, including the shares held in trust by the Plaintiff and shares held in the name of Kim Young-chul, is as listed in the table 7 as follows.

Details of the purchase and sale of shares of the corporation in this case

Gu Sector

Period of sale

Number of shares (number of shares)

(won) Amount

Purchase

Within the Chapter

August 12, 2005

2,031,200

501,000,000

Paid-in capital

March 14, 2005

37,058,912

3,706,000,000

Sub-committees

39,090,112

4,207,00,000

Sale

Within the Chapter

September 17, 2004 - September 14, 2005

18,425,910

10,087,00,000

Over-the-counter (H*)

June 1, 2005, July 2005

16,000,000

4,800,000,000

Theft

March 31, 2005

4,300,000

Sub-committees

20,300,000

14,887,00,000

Profit Profit Profit

10,680,000,000

Table 7 Kim Jong-tae's share details (including borrowed-name shares)

Reference Date

Number of shares owned (States)

Total issued shares (States)

Maximum shares (%)

December 31, 2004

Total Stocks

4,400,876

15,066,200

29%

name of principal

40,010

2.92% by mass

December 31, 2005

name of principal

1,012,768

62,140,740

1.62%

(3) Kim Jong-chul reported and paid capital gains tax and securities transaction tax as shown in Table 8 on the stocks sold outside the country without going through the securities market.

8] Return and payment details of capital gains tax

title trustee

Number of shares (number of shares)

Transfer Income Tax (including local income tax)

Securities Transaction Tax (won)

Date of Payment

Amount (won)

Date of Payment

Amount (won)

L**

2,700,000

November 08, 2005

52,811,550

205.08.10

4,050,000

Song*

1,500,000

November 30, 2005

29,229,750

2,250,000

This △△△△

2,500,000

November 28, 2005

48,881,250

3,750,000

Doz.

2,100,000

November 18, 2005

41,020,650

3,150,000

CC

2,000,000

November 25, 2005

39,055,500

3,000,000

An*

1,500,000

November 30, 2005

29,229,750

2,250,000

2,000,000

November 10, 202

39,055,500

3,000,000

14,300,000

Total

279,283,950

Total

21,450,000

(4) In relation to the shares of this case, the omission of capital gains tax for the year 2005 is listed in Table 9)

The same shall apply.

【Omission of Reporting Transfer Income Tax in Table 9】

Title holder

Number of shares (number of shares)

Transfer Value

Acquisition Value

Necessary expenses

Transfer income (won)

(cost) The amount paid at a fixed period.

Gyeong Kim

4,995,500

1,273,195,000

853,163,500

6,171,922

413,859,578

Hu*

1,412,914

214,997,530

152,497,100

1,868,482

60,631,948

Dong-ri

1,500,000

352,000,000

150,000,000

2,812,000

199,188,000

Kim*

2,700,000

2,701,374,150

270,000,000

10,425,661

2,420,948,489

Quantity*

1,272,074

375,904,130

211,607,750

563,958

163,732,422

UN*

1,733,292

1,001,724,050

191,406,150

3,157,080

807,160,820

IsaA

2,514,590

320,731,400

263,346,400

2,587,792

54,797,208

BB

2,529,963

3,014,868,035

273,176,150

12,113,332

2,729,578,553

Park*

1,765,957

2,366,100,850

250,000,000

18,057,379

2,098,043,471

00*

2,797,130

461,236,350

300,550,150

4,078,825

156,607,375

Song***?5

14,300,000

4,290,000,000

1,430,000,000

21,450,000

2,838,550,000

253,894,500

Gyeong-gu

2,245,952

5,267,250,750

1,097,919,903

4,128,018,458

41,312,389

456,788,398

Total

39,767,372

21,639,382,245

5,443,667,103

4,211,304,889

11,984,410,253

710,682,898

(C) Article 94 (1) 3 of the former Income Tax Act (amended by Act No. 7837, Dec. 31, 2005; hereinafter the same shall apply) and Article 157 (4) of the Enforcement Decree of the same Act are as follows: (a) even if listed stocks are owned by a major shareholder, i.e., one shareholder who owns the corporation’s stocks, etc., and his relatives or persons with special relations, own 3% or more of the total amount of the corporation’s stocks as of the end of the fiscal year immediately before the fiscal year in which the transfer date of the stocks, etc. belongs; (b) if one shareholder and other shareholders or other shareholders owned by the corporation were to own more than 10 billion won, it is difficult to conclude that the market value of the corporation’s stocks, etc., which were transferred within the scope of 10 billion won by means of sale of the corporation’s stocks, are subject to imposition of capital gains tax on transfer income tax, and (c) if so, to acquire profits from sale of the corporation’s stocks.

2) Calculation of the value of donation

A) Article 60 of the Inheritance Tax and Gift Tax Act provides that the value assessed by the method of assessment under Article 63(1)1 (a) and (b) of the Inheritance Tax and Gift Tax Act shall be deemed the market price, and Article 63(1)1 (a) of the Inheritance Tax and Gift Tax Act shall be deemed the average value of the Korea Stock Exchange every two months before or after the evaluation base date, respectively: Provided, That in the calculation of the average amount, where it is inappropriate to use the average amount due to a cause of capital increase or merger, etc. during two months before or after the evaluation base date, the average amount of the period calculated under conditions prescribed by Presidential Decree shall be deemed to be the market price during two months before or after the evaluation base date, and Article 52-2 subparagraph 1 (b) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act shall be deemed to be the average amount of securities, etc. during the period from the day after the date when the cause of capital increase, merger, etc. occurred to the day before the evaluation base date until the date when two months have passed after the evaluation base date.

As above, the assessment value of listed stocks is calculated from the date following the date of the occurrence of the cause of increase or merger, etc. in cases where the cause of increase or decrease occurred prior to the date of appraisal under the proviso of Article 63(1)1 of the Inheritance Tax and Gift Tax Act and Article 52-2 of the Enforcement Decree of the same Act, considering that the issue of new stocks due to such causes as increase or merger has a significant impact on the formation of future stock prices due to the price increase or decrease in rights and subsequent changes in stock prices (see Supreme Court Decision 2003Du5358, Jan. 13, 2005). In other words, in order to promote a balance in assessment following price fluctuations, stocks of a stock-listed corporation with the securities market shall be assessed by reflecting the average average value for the two preceding months and four months following the appraisal base date, and it shall be deemed that the stocks are identical to the stocks subject to appraisal as of the base date of appraisal before the increase or decrease, and that there is an unreasonable cause after the increase or decrease in rights.

However, there is a method of allocating shareholders and allocating capital through the issuance of new shares, and there is a variety of stages such as the resolution of the board of directors on the issuance of new shares and the public announcement of the capital increase, the plan and the basic date of the issuance of new shares, the resolution of the board of directors on the third party allocation, the payment of stock price and the registration of the capital increase, so there is a difference in the evaluation period. Accordingly, there is a difference in the evaluation period. Accordingly, there is a conflict between the opinion that the plaintiff's payment date of stock price, the right cancellation date in the case of the method of allocating shares, the third party allocation date in the case of the method of allocating shares, and the date of the resolution and public announcement

As a matter of principle, given that there is a public announcement of capital increase, the parties who trade shares, taking into account the price decline following the increase of shares, the public announcement of capital increase is likely to have reached a considerable impact on the formation of the stock price. However, in the case of stock allocation, there is a right to determine preemptive rights, and to participate in the allotment of shares on the basic date. On the other hand, in the case of listed corporations, there is a right to participate in the purchase of shares by two days before the basic date, and even if shares are purchased on the first day before the basic date, the value of shares per day before the basic date is lower than the value of shares before the basic date because the purchase of shares is no right to participate. The beginning price of shares on the first day after the basic date is determined within a certain period of time prior to the issuance of preemptive rights after the 3th day prior to the date of stock increase (the average price per day before the first day after the issuance of preemptive rights is no longer than the 9th day before the basic date of stock increase).

In the case of capital increase by the method of shareholder allocation, where a third party is allocated only for the forfeited stocks, the number of new stocks and capital increase related to the capital increase has already been publicly announced due to the public announcement of capital increase, and the stock price is newly formed due to the actions of stock increase by the method of shareholder allocation, so the resolution of the board of directors for the subsequent third party allocation would not have any special effect on the stock price already formed. Therefore, even in this case, it is reasonable to see that the third party allocation method is "the day following the date on which the cause, such as the person who has increased the rights, etc.

The issue of capital increase in the third party allotment method is limited to cases where it is necessary to achieve the managerial purpose of the company, such as the introduction of new technology, improvement of financial structure, etc., inasmuch as the issuance of new shares by a third party is considerably affected by the time when the company is acquired by a third party other than the shareholder, the company control right held in proportion to the shares held by the shareholder is weakened, and the net asset value of the shares or shares formed through the new and old shares are made by the combination of new shares, and the effect of dilution is shown below the previous value of the shares (see Article 418(2) of the Commercial Act). Therefore, since the issue of capital increase in the third party allotment method is determined by the board of directors and the public announcement is considerably affected by the formation of shares price, the issue of capital increase in the third party allotment method is to be considered as the date when the reasons such as the increase in the board of directors' resolution and public announcement date have occurred, in principle, based on the date of payment of capital increase in the third party allotment method of Article 29(3).

E) As to the instant case, the capital increase by the initial shareholder and the third party in relation to the title trust shares held on March 15, 2005, all of which were the date of the revocation of rights within the two months before the base date of appraisal as of March 15, 2005, and should be seen as the day following the date on which the cause of the revocation of rights occurred, such as the capital increase in rights, etc. As such, the period of evaluation is from February 7, 2005 to May 15, 2005, and the assessment per share is 226 won.

Unlike the initial allotment to shareholders, the defendant takes the period subject to evaluation from January 17, 2005 to May 15, 2005 (from January 15, 2005, January 16, 2005) (from January 15, 2005, January 16, 2005) as the date following the resolution by the board of directors on January 14, 2005, unlike the initial allotment to a third party among the title trust held on March 15, 2005. Thus, it is unreasonable to consider both the previous and the subsequent average amount as well as the capital before and after the occurrence of a cause such as capital increase, etc. before the evaluation base date. Therefore, the period subject to evaluation

Therefore, when calculating the amount of gift tax, which was determined as KRW 226 per share against the Plaintiff, the amount of legitimate gift tax is KRW 80,400,000 [The amount of tax base = KRW 452,00,000,000 of the number of shares = KRW 2,000,000 of the tax base + KRW 80,400,000 of the tax amount + KRW 10,000 of the tax amount + (452,000,000-10,000), + 20%).

D. Determination on the imposition of additional tax

1) If the purport of the entire argument is added to the evidence No. 2 No. 2, the Defendants are recognized as not having stated the type of additional tax and the grounds for calculation in the imposition and notice when disposing of the instant global income tax and gift tax.

However, the Defendant’s revocation of the imposition of additional tax on global income tax and gift tax in the instant global income tax and gift tax, and the fact that the Defendant again imposed and notified the same amount as the additional tax on global income tax and gift tax by stating the type of and the basis for calculation of additional tax. Therefore, the Plaintiff’s assertion on this part on the premise that there was an error of law that did not state the type of additional

2) If the gift gains are calculated by calculating the assessed value per share of 226 won among the disposition imposing the gift tax in this case, the justifiable additional tax is KRW 73,968,00 (=additional tax on negligent tax returns + KRW 16,080,000 + KRW 57,88,000).

3. Conclusion

Thus, the plaintiff's claim against the defendant is justified within the above scope of recognition, and the remaining claims are without merit, and they are dismissed. It is so decided as per Disposition.