The legitimacy of the assertion that the assessment of unlisted stocks by supplementary assessment methods violates the market price principle.

Although the Enforcement Decree of the Inheritance Tax and Gift Tax Act on the supplementary valuation method of unlisted stocks has been amended, it is aimed at calculating the market price that can reflect the current business value objectively and reasonably, so it does not violate the market price principle.

Article 87 of the former Corporate Tax Act: Scope of Market Price

Article 54 of the Enforcement Decree of the former Inheritance Tax and Gift Tax Act

The appeal is dismissed.

The costs of appeal are assessed against the Plaintiff.

In comparison with the records of this case and the judgment of the court below, the allegation in the grounds of appeal cannot be accepted in accordance with Article 4 of the Act on Special Cases Concerning the Procedure for Appeal.

Therefore, the appeal is dismissed in accordance with Article 5 of the Act. It is so decided as per Disposition by the assent of all participating Justices.

[Seoul High Court 2007Nu30514 (2008.03)]

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The defendant shall revoke the disposition of imposition of corporate tax of KRW 7,502,524,490 on April 1, 2006 against the plaintiff for the business year of 2002.

1. Quotation of judgment of the first instance;

The reasoning for the court's explanation on this case is as follows: "from December 26, 2006," "from December 26, 2005," "from December 26, 2005," 4, 9, and 10 of the fourth 8th 8th son's decision of the court of the court of the court of the court of the court of the court of the first instance, "le-type ○, which was the representative director of the plaintiff, the shareholder of the plaintiff and the representative director of the plaintiff," "le-type ○, who is the representative director and the representative director of the plaintiff, the plaintiff's shareholder of the plaintiff," and "le-type ○" of the sixth 15th son as the relative of the plaintiff, the shareholder of the court of the court of the first instance," and "le-type ○" is as stated in the reasoning of the court of the first instance except for the addition of the judgment as stated in the second 2th 2th son's judgment.

2. Additional matters to be determined;

A. The plaintiff's assertion

Article 52(2) of the former Corporate Tax Act provides that the market price is applied or deemed applicable to sound common sense and commercial practice and ordinary transactions between unrelated parties, and Article 52(4) of the former Enforcement Decree of the Corporate Tax Act provides that matters necessary for the assessment of the market price shall be prescribed by the Presidential Decree. Accordingly, Article 89(2)2 of the former Enforcement Decree of the Corporate Tax Act provides that where the market price of unlisted stocks is unclear, the market price of unlisted stocks shall be appraised by applying mutatis mutandis Article 63 of the former Inheritance Tax and Gift Tax Act. Even if the method of assessment is changed at a price that is recognized as objectivity and rationality, the difference in the market price shall not occur in essence. Article 63(1)1(c) of the former Inheritance Tax and Gift Tax Act provides that Article 54 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act that provides for the supplementary method of assessment of unlisted stocks shall be revised after the date of the disposition of this case and the difference in the valuation value under each provision before and after the amendment. Thus, Article 89(2) of the former Enforcement Decree of the Corporate Tax Act is unlawful.

B. Determination

(1) The market price under Article 52 (2) of the former Corporate Tax Act refers to an objective exchange value formed through a general and normal transaction, and this includes the price assessed in an objective and reasonable manner. Article 52 (2) of the former Corporate Tax Act delegates matters necessary for market price assessment, etc. to the Enforcement Decree, since the definition of market price alone does not clarify the scope of market price.

(2) Article 54(1) and (2) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 20148, Apr. 1, 2011; Presidential Decree No. 20148, Apr. 21, 2011; Presidential Decree No. 20135, Apr. 21, 2011; Presidential Decree No. 20145, Feb. 201; Presidential Decree No. 20135, Feb. 31, 2011; Presidential Decree No. 2010, Feb. 31, 2011; Presidential Decree No. 201358, Feb. 31, 2011; Presidential Decree No. 201477, Feb. 23, 2011; Presidential Decree No. 201358, Feb. 2, 201; Presidential Decree No. 20130, Feb. 3, 20101).

(3) Therefore, Article 89(2)2 of the former Enforcement Decree of the Corporate Tax Act, whose market value of unlisted stocks is appraised by applying mutatis mutandis Article 63 of the former Inheritance Tax and Gift Tax Act, is contrary to the market value principle under Article 52(2) of the Corporate Tax Act, and thus, it cannot be deemed unlawful by deviating from the scope of delegation by the mother

3. Conclusion

Therefore, the judgment of the court of first instance is legitimate, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.

[Seoul Administrative Court 2007Guhap10952 ( October 12, 2007)]

1. The plaintiff's claim is dismissed.

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

The defendant revoked the disposition of imposition of corporate tax of KRW 7,502,524,490 for the business year of 2002 against the plaintiff on April 1, 2006.

1. In cases of imposition:

A. From December 17, 1999, the Plaintiff acquired 5,900 shares issued by OOO Co., Ltd. (hereinafter “OOO”) from OO on October 15, 2002, 8,005 shares including 5,90 shares and 2,105 shares per share (hereinafter “the shares of this case”).

B. From December 26, 2005 to February 10, 2006, the director of the regional tax office of theOO conducted a tax investigation with respect to the transfer of shares to the plaintiff and OOOO, and as a result, the actual owner of the shares of this case was the plaintiff's major shareholder and OO's representative director, and the plaintiff purchased the shares of this case from OO at low price.

C. On April 1, 2006, the Defendant: (a) calculated by the supplementary evaluation method stipulated in Article 15(2)1 of the Corporate Tax Act; (b) Article 89(2)2 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 17826, Dec. 30, 2002; hereinafter referred to as the “former Enforcement Decree of the Corporate Tax Act”); and (c) Article 63 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 2002; hereinafter referred to as the “former Inheritance Tax and Gift Tax Act”); (d) KRW 2,151,762 per share at the market price of the instant shares; and (e) calculated by subtracting the acquisition amount (20,000 won per share) of the instant shares from the market price; and (e) imposed corporate tax [2,15,762,000; hereinafter referred to as X-205,2050.

D. In addition, around June 2006, the head of the OO levied capital gains tax of KRW 2,819,436,107 and securities transaction tax of KRW 94,786,701 on leO with regard to the transfer or acquisition of the instant shares.

E. On June 28, 2006, the Plaintiff dissatisfied with the instant disposition and filed a national tax appeal with the National Tax Tribunal, but was dismissed on December 14, 2006.

The facts without dispute over the basis of recognition, Gap evidence 1 through 3, Gap evidence 4, 5-1 to 5, Gap evidence 7-1, 2, Eul evidence 1, 2, and 4, and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) Article 52(2) of the Corporate Tax Act provides that the definition of the market price shall be “price applied or deemed to be applied to the sound social norms and commercial practice and the normal transaction between the persons who are not a related party.” Therefore, even if a transaction between a related party does not necessarily require any actual transaction, this price may be the market price if it is a normal transaction under sound social norms and commercial practices. On May 22, 2006, the Plaintiff sold the shares of this case to OOO for KRW 1,001,430 per share, and the amount is based on the objective appraised value of OOO accounting corporation, and even if it is thereafter appraised by OOOO of a stock company, the shares of this case are merely KRW 918,071 per share. Accordingly, the price per share shall not exceed KRW 1,01,430 per share, and otherwise, the taxation disposition of this case is unlawful.

(2) According to the proviso of Article 89(2)1 of the former Enforcement Decree of the Corporate Tax Act, in the case of unlisted stocks, the value appraised by an appraisal corporation under the Act on Publication of Land Prices and Evaluation of Land, Etc. shall not be deemed as the market price. This excessively emphasizes only the convenience of taxation by the State agencies and the identity of the tax administration, and thus, goes against the substantial tax equality principle and the substance over form principle, and the infringement of the people’s property rights is null and void.

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact of recognition;

(1) As a result, from December 26, 2006 to February 10, 2006, the Director of the Regional Tax Office conducted an investigation of changes in the stocks of affiliated corporations with the Plaintiff and the OOOO, the transferor of the instant stocks, the OO, and the OO was merely lent only the name to the Plaintiff’s major shareholder and the representative director of the OOO, and the actual owner of the instant stocks was identified as leO, and leO owned more than 50% of the shares of the OO at the time of transfer of the instant stocks.

(2) OO지방국세청은 이 사건 주식의 양도당시인 2002. 10. 15.경 OOOO는 순손익가치(1주당 246,098원)보다 순자산가치(1주당 1,655,201원)가 크다고 보았고, 윤OO는 OOOO 주식의 50% 이상을 소유하고 있는 최대주주이므로 구 상속세및증여세법 제63조 제3항에 따라 30% 할증하여 이 사건 주식을 1주당 2,151,762원{≒1,655,201원+(1,655,201X0.3)}으로 평가하였다,

(3) On April 2, 2006, the Plaintiff paid KRW 4,002,524,490 among the corporate taxes imposed upon the instant disposition, and the remainder of KRW 3,500,000,000, OOO-dong 1,119,1546,490 as security.

(4) On April 30, 2006, the Defendant notified the Plaintiff of the deferment of collection that the Plaintiff shall pay in installments the said KRW 3,500,000,000 until April 30, 2006 on October 31, 2006; November 30, 2006; and December 29, 2006, KRW 1,16,667,70, respectively.

(5) On April 12, 2006, the Plaintiff posted a notice to sell the instant shares at KRW 900,000 per share on the bulletin board and the bulletin board of the Plaintiff Company, but did not appear by the purchaser.

(6) On June 26, 2006, the Plaintiff applied for payment in kind with the above 3,500,000,000 won. However, the Defendant rejected the Plaintiff’s application for payment in kind on the ground that it does not constitute Article 32 of the Framework Act on National Taxes (Change and Supplement of Security for Tax Payment), Article 15 (Change and Supplement of Security for Tax Payment), and General Rule 32-0.1 (Reasons for Change of Security for Tax Payment) of the Framework Act

(7) 원고는 2006. 3. 30. OOOO에 이 사건 주식의 자를 요청하였고, OO회계법인은 2006. 3. 31.을 평가기준일로 하여 이 사건 주식의 양도당시가 아닌 2006+. 3. 31. 당시의 상속세 및 여세법 제63조에 따라 1주당 주식가치를 1,001,431원으로 평가하였으며, OOOO는 위 평가에 기초하여 이 사건 주식 중 6,000주를 1주당 1,001,430원에 매수하여 소각하였다. 위 1,001,431원이 세부적인 산출내역을 살펴보면, 주당 순손익가치(A) 150,880원, 주당 순자산가치(B) 1,950,707원, 1주당 평가금액 870,810원{C=(AX3)+(BX2)÷5}, 1주당 주식가치 1,001,430원{최대주주 등의 할증평가 : ≒C(CX15/100)}이다.

(8) The Plaintiff requested an OO appraisal corporation to appraise the per share value of the instant shares, and the OO appraisal corporation deemed that at October 15, 2002, the value per share of the instant shares was KRW 918,071. The said KRW 918,071 is the amount calculated by a stock appraisal corporation as stipulated in the Regulations on Appraisal of Real Estate and Appraisal of Real Estate delegated by the Act on Appraisal of Real Estate.

Facts without dispute over the basis of recognition, Gap evidence 3-1, 2. Gap evidence 4, Gap evidence 5-1 through 5, Gap evidence 8-15, Gap evidence 18-20, Gap evidence 25, and the purport of the whole pleadings.

D. Determination

(1) According to Article 15(2)1 of the Corporate Tax Act, where securities are purchased from an individual who is a person with a special relationship under Article 52(1) of the Corporate Tax Act at a price below the market price under Article 52(2) of the Corporate Tax Act, the amount equivalent to the difference between the market price and the relevant purchase price shall be deemed as the gross income. The purport of the above provision is to include the difference between the market price and the market price in the gross income for the business year in which the date of purchase falls in order to prevent inheritance or donation without tax burden from being carried out through the transfer of stocks, and to include it in the acquisition price of the relevant securities so as to be included in deductible expenses at the

In addition, Article 52 (1) of the Corporate Tax Act delegates to the Presidential Decree concerning a specially related person, and Article 87 (1) 2 of the former Enforcement Decree of the Corporate Tax Act provides that "shareholders, etc. (excluding minority shareholders, etc.) and their relatives shall be specially related persons, and as seen above, MaO constitutes a specially related person as a major shareholder.

(2) Whether it is legitimate to compute the market price of the instant stock by the method of complementary assessment

(A) According to Article 52(2) of the Corporate Tax Act, the market price refers to the prices (including rates, interest rates, rents, exchange rates, and other equivalent rates) that are, or are to be, applied to sound social norms and commercial practices and normal transactions between persons other than persons with a special relationship, and Article 52(4) of the same Act delegates matters necessary for the market price to the Presidential Decree. According to the delegation, Article 89(1) of the former Enforcement Decree of the Corporate Tax Act provides that where the pertinent corporation has, under similar circumstances to the pertinent transaction, prices continuously traded with many and unspecified persons other than persons with a special relationship or prices generally transacted with third parties who are not persons with a special relationship, such prices shall be deemed to be the market price stipulated in Article 52(2) of the Corporate Tax Act. Article 52(2) of the same Act provides that where the market price is unclear, unlisted stocks not listed on the Stock Exchange shall

(B) The method of calculating the market price of unlisted stocks according to the supplementary assessment method pursuant to Article 89(2)2 of the former Enforcement Decree of the Corporate Tax Act is limited to the case where the market price at the time of the transfer of unlisted stocks is unclear, and the tax authority bears the burden of proof in the case where

In the instant case, as seen earlier, the Plaintiff purchased the instant shares in KRW 20,000 per share, but in light of the net profit and loss per share of the OO shares at that time, and net asset value per share of the instant shares, 20,000 won cannot be deemed as the market price per share of the instant shares, and the Plaintiff does not dispute this point.

In light of the fact that the Plaintiff sold 6,000 shares among the shares of this case to the OO on May 22, 2006 at KRW 1,001,430 per share, as seen above, it is a transaction after the lapse of three years and seven months from the time of transferring the shares of this case. The above KRW 1,001,430 is not a supplementary assessment method under the former Inheritance Tax and Gift Tax Act and its Enforcement Decree, which was applied at the time of transferring the shares of this case, but a supplementary assessment method under the amended Acts and subordinate statutes, and the OO is linked to the status of the Plaintiff and its specially related parties, it is difficult to view the above KRW 1,01,430 per share as the market price of the shares of this case. There is no data to recognize the price of transactions with many and unspecified persons other than those under Article 89(1) of the former Enforcement Decree of the Corporate Tax Act or the price of transactions with a third party who is not a specially related party.

Therefore, since the stock of this case constitutes a case where the market price is unclear at the time of transfer, it is legitimate to calculate the market price of the stock of this case by the supplementary method of assessment, and there is no violation of law.

(3) Whether the proviso of Article 89(2)1 of the former Enforcement Decree of the Corporate Tax Act is invalid

According to the proviso of Article 89(2)1 of the Enforcement Decree of the Corporate Tax Act, in the case of unlisted stocks, the market price shall not be calculated based on the appraised value by an appraisal corporation. However, this is an inevitable aspect considering not only the following characteristics of unlisted stocks, i.e., minority shareholders, but also the general and ordinary transactions in the market, it is difficult to find out the appraisal method that can ensure objectivity while reflecting the appropriate value of unlisted stocks, but also it is difficult to find the appraisal method that can secure objectivity.

Therefore, it is difficult to view that the proviso of Article 89(2)1 of the former Enforcement Decree of the Corporate Tax Act is in violation of the principle of substantial taxation equality and the principle of substantial taxation, or infringes on the essential contents of property rights of the people.

3. Conclusion

Therefore, the defendant's disposition of this case is legitimate, and the plaintiff's claim seeking its revocation is dismissed as it is without merit. It is so decided as per Disposition.