Seoul Administrative Court 2006Guhap25605 ( September 14, 2007)

National High Court Decision 2004Do2145 (Law No. 18, 2006)

on the basis of the agreed actual transaction value of the exchange shares supported by objective monetary value.

Since there was an agreement between the parties to the exchange on the actual transaction value based on the price per share of the exchanged stocks, which are listed stocks, and the agreed actual transaction value is supported by objective monetary value, the transfer value of the transferred stocks shall be the sum of the agreed actual transaction value with the cash received as

Article 96 of the Income Tax Act

2011Nu27096 Revocation of Disposition of Imposing capital gains tax, etc.

XX

Head of Central Tax Office

Seoul Administrative Court Decision 2006Guhap25605 Decided September 14, 2007

Seoul High Court Decision 2007Nu27464 Decided May 14, 2008

Supreme Court Decision 2008Du9874 Decided July 28, 2011

July 6, 2012

August 31, 2012

1. The plaintiff's appeal is dismissed.

2. The plaintiff shall bear the total costs of the lawsuit after filing the appeal.

The judgment of the first instance shall be revoked. The imposition of capital gains tax of KRW 000 and securities transaction tax of KRW 000 on March 10, 200 on the Plaintiff on March 10, 204 shall be revoked.

1. Details of the disposition;

A. On October 5, 200, the Plaintiff received from O the share certificates of KRW 000 in cash and KRW 421,265 in shares of Yel Telecom Co., Ltd. (hereinafter “the instant Yel Telecom”) in return for transferring shares issued by XX. 5,883,218 (hereinafter “instant shares”) to O (hereinafter “O”).

B. The Plaintiff reported and paid KRW 000 of the capital gains tax calculated on May 31, 2001 according to the standard market price (average closing price of the month prior to October 5, 2000, which is the date of transfer) of the instant shares, based on the amount obtained by subtracting the price limit set by the Securities Business Association from the standard market price of the instant shares, inasmuch as it is impossible to verify the actual transaction price of the instant shares when filing a return on the capital gains tax for the year 2000 and the securities transaction tax for the instant shares, and reported and paid KRW 00 of the securities transaction tax on the basis of the value obtained by subtracting the price limit set by the Securities Business Association from the base price of the instant shares ( KRW 00 per share).

C. In the course of the tax investigation against the Plaintiff, the director of the Seoul Regional Tax Office: (a) deemed that the Plaintiff and theO agreed on the price per share of the instant Yel stocks at KRW 000,000; (b) calculated the transfer value of the instant stocks at KRW 000 (= cash KRW 000 + the acquisition value of the instant Yelcom stocks at KRW 000 ( KRW 421,265 per share)); and (c) notified the Defendant of the transfer income tax and securities transaction tax base and tax amount based on the actual transaction value of the instant stocks as the actual transaction value.

D. On March 10, 2004, the Defendant decided and notified KRW 000 of the transfer income tax for 2000 and the securities transaction tax for 000 of October 2000 on the ground that the Plaintiff omitted filing a return of KRW 000 and the tax base of the securities transaction tax (hereinafter referred to as “the first disposition”) according to the determination and notification of the Seoul Regional Tax Office’s transfer income tax and securities transaction tax for 2000.

E. The Plaintiff dissatisfied with the first disposition and filed an appeal with the National Tax Tribunal on June 1, 2004. The National Tax Tribunal decided on July 25, 2006 that the transfer price of the instant shares should be the market price of the relevant transferred asset, but if the market price is unknown, the transfer price should be the market price of the relevant transferred asset. However, if the market price is unknown, the transfer price can be the market price of the relevant transferred asset, and it does not seem that the price per stock of the instant Yel Telecom was fixed at KRW 00,000. Thus, the transfer price of the instant shares should be calculated based on the market price of the instant Yel Telecom shares as of July 25, 200, on the ground that the transfer price of the instant shares should be calculated based on the tax base and amount of the instant 00 won [= cash 00 won + 200 won per stock correction at the market price of the Yel Telecom Stock + 200 won per stock 40,515).

F. On May 28, 2006, the Defendant, according to the decision of the National Tax Tribunal, reduced or corrected capital gains tax of KRW 000 in the first disposition, and securities transaction tax of KRW 00 in the first disposition (hereinafter “the portion not reduced among the first disposition”), respectively, by tax item, and “the instant capital gains tax disposition and the instant securities transaction tax disposition” in the aggregate, and “each disposition of this case.”

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

2. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

1) The Plaintiff and theO did not have agreed on the transfer value of the instant shares, and there is no actual transaction value of the instant shares. Therefore, the transfer value of the instant shares, which is not the actual transaction value, should be calculated based on the standard market price under the Income Tax Act (the portion of transfer income tax) and the transfer value under the Securities Transaction Tax Act (the securities transaction tax) based on October 5, 2000, based on the standard market price under the Income Tax Act (the portion of transfer income tax) and the transfer value under the Securities Transaction Tax Act, which is based on the time of transfer, which is not at the time of transfer, was calculated based on the market price of the instant Yel stocks, not at the time of transfer. This is unlawful against the principle of no taxation without law.

2) As seen above, the National Tax Tribunal ruled that there is no actual transaction price at the time of the transfer of stocks in this case, and the Defendant rendered a correction of reduction accordingly, so the reason for each disposition in this case should be deemed to have been changed to the premise that there is no actual transaction price. Nevertheless, the Defendant’s assertion that there exists another actual transaction price goes beyond the reason for the disposition in this case, and thus, cannot be permitted under the substantive law or under the Civil Procedure Act.

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact of recognition;

1) Domestic and foreign eight corporations and the Plaintiff (hereinafter referred to as “transferor”) hold approximately 47.85% (74,93,052 shares; hereinafter referred to as “transferor’s shares”) out of the shares issued by MP.com, a KOSDAQ-registered company (hereinafter referred to as “SP.com”), and they held management rights for P.com, and subsequently transferred shares owned by the transferor from March 6, 2000 to O in a lump sum with O. The negotiation was concluded on June 6, 200, and the subsidiary agreement was concluded on July 25, 200, respectively.

2) The agreed terms and conditions on June 6, 200 between the transferor andO on the payment of 30% of cash in return for the transfer of shares of XX seacom and 70% of the Yelcom shares [the Plaintiff, △△△ Construction Co., Ltd., △△△ Construction Co., Ltd., △△△ Group, △△△ Group, which are merged with the △△ Development Co., Ltd. on July 30, 2001] sell the shares of XX seacom at KRW 00 per share, with the price of the shares of Y Yelcom at KRW 00,000 per share, and the share swap rate at KRW 1:9.75, and the seller who selected the conditions under which 20% of cash and 80% of the promissory note are paid at KRW 100 per share, signed by the seller and the vice president of the Plaintiff and the O, representing the transferor, respectively, at KRW 500 per share.

3) 그 후 2000. 6. 8. 원고와 △△그룹측이 ◇◇ 그룹과 ▽▽ 그룹으로부터 경영권에 대한 보상명목으로 000원에 해당하는 YY텔레콤 주식 76,923주를 넘겨받기로 하였고(000원 ÷ 76,923주 ≒ 000원), ◇◇ 그룹과 ▽▽ 그룹은 양 그룹에 배정된 매수대가(현금, 약속어음 및 YY텔레콤 주식)를 지급수단별로 각각 합산하여 매도주식의 비율대로 양 그룹 간에 재배분하기로 하였으며, 양도인들 측에서 작성한 계약서 초안 부록 2.1에 의하면, 이 사건 주식을 양도하고 현금 000원과 YY텔레콤 주식 444,773.1152주를 취득하는 것으로 되어 있다(을 제6호증의 1, 2).

4) 양도인들과 OO 사이에 2000. 6. 15. 체결된 주식구매계약의 내용은, 기존에 합의된 계약 중 양도인들에게 배정된 YY텔레콤 주식 중 1주 미만의 주식(총 4.9795주)을 주당 000원으로 계산한 현금(총 000원)으로 하여 양도인들에 배 정된 현금에 추가하는 것 이외에 변동된 계약내용은 없었다. 위 계약에 의하면, OO가 양도인들에게 양도인들 소유 주식의 양수대가로 현금 합계 000원(25%), 약속어음 합계 000원(35%), YY텔레콤 주식 합계 3,024,397주(40%)를 지급하고, 양도인들 소유 주식을 양수하는 것이었으며, 원고의 경우 이 사건 주식을 양도하고, 그 대가로 현금 000원[= 000원 + 000원(≒ 0.1152 x 390.000원)]의 지급과 YY텔레콤 주식 444,773주를 양도받는 것이었다.

5) On July 25, 200, the content of the subsidiary agreement as of July 25, 200 provides that the ratio of the transfer price of shares owned by the transferor to the Yel Telecom shares (40%) and the ratio of cash, etc. (60%) is as is, however, the ratio of the amount to be paid with a promissory note out of cash, and the number of Yel telecom shares to be paid to the shareholders, domestic law, is partly adjusted. Examining the details of partial adjustment, as a result of negotiations withO on the claim for damages from O in accordance with the result of asset loss, such as the 00 PCS subscribers number, etc., the total amount of damages shall be 00 won, and 00 won among them shall be deducted from the promissory note, and the remaining 00 won shall be deducted from the total amount of 80,770 shares to the domestic shareholders, and the number of domestic shareholders shall be 108,700 shares to be acquired from the total number of Yelel number of shares to be paid to the domestic shareholders (1700.185 percent 28.15 28

6) The transferor was paid the transfer price of the shares owned by the transferor on July 26, 200 according to the contract dated 25, 2000 by O on July 26, 200, but the Plaintiff was paid the transfer price as of October 5, 200. The details of the number of shares transferred, won, US dollars, promissory notes, and Yel Telecom number by transferor of shares owned by the transferor are as listed below.

(The following table omitted):

7) The trading price per stock in the KOSDAQ market of the instant stocks was KRW 000 on July 25, 200 and KRW 000 on July 26, 200 on the stock exchange of Yelcom. The trading price per stock on the Yelcom Stock Exchange was KRW 00 on June 5, 200, KRW 00 on June 15, 200, KRW 000 on June 15, 200, and KRW 000 on July 25, 200, and KRW 00 on July 26, 200.

8) According to the letter of answer (No. 11-1) prepared by the Seoul Regional Tax Office after investigating POC with the vice president of PO at the time of the investigation of tax offenses against POB on January 6, 2004, sexualA stated to the effect that, although it stated that no separate agreement was made on June 15, 200, other than the stock purchase agreement, if the agreed price is known, the appropriateness of the purchase price may occur, and that the agreed price shall not be determined to have an effect on the market and the agreed price shall not be announced. The actual transaction price by PP.com prepared by the investigating public official (the actual transaction price of P. 1-1 attached to B, June 6, 200, June 8, 200, June 15, 200, and July 200, 2005, the transaction price of shares shall be the same as the transaction price agreed upon, and the transaction price of shares shall not be the same as the transaction price agreed upon.

9) According to the letter of answer prepared by the Seoul Regional Tax Office in the course of investigating the Plaintiff in connection with the transfer of shares owned by the transferor (No. 10 No. 10-1), the Plaintiff stated that the Plaintiff participated only once in the final negotiation at the RR hotel from June 6, 200 to June 8, 200, and that the Plaintiff participated in the negotiations at the last stage of the negotiations on the reasons directly participated in the final negotiation. From June 6, 2000 to the O and △△ Group, the Plaintiff stated that the Plaintiff was 00 won per share of 00 won per share, after evaluating 00 won per share of 00 won per share, and agreed that the share exchange rate of the shares held by the Plaintiff was 19:75, and that the Plaintiff was 60.0 of the shares held by the Plaintiff and 10.65 of the shares held by the Plaintiff, as the transferor’s 20-60-60-600-60-60-700-7.

10) On November 10, 200, the O paid fees to MM in relation to the transfer of shares owned by the transferor. Among them, the success fees were 000 won. This is the amount calculated when the transferor calculates the purchase price of shares owned by the transferor as a approximately 000 won, and the amount is based on the premise that the Yelcom shares were traded by evaluating Yelcom shares as 00 won per share (No. 12 evidence).

[Reasons for Recognition] Facts without dispute, Eul evidence Nos. 4 through 8; Eul evidence Nos. 9; Eul evidence Nos. 10 and 11; Eul evidence Nos. 1, 2; Eul evidence No. 12; the purport of the whole pleadings

D. Determination

1) Determination on the assertion relating to the binding force of the ruling

A) The adjudication under Article 37 of the former Administrative Appeals Act and Article 80 of the Framework Act on National Taxes (wholly amended by Act No. 9968, Jan. 25, 2010) are bound by the relevant administrative agency with respect to the recognition and judgment of facts constituting the order of adjudication and its premise regarding the relevant disposition, so it is not prohibited to take the same disposition again on the ground that the relevant disposition is unlawful and that it is identical in basic facts in relation to the relevant disposition (see Supreme Court Decision 2002Du3201, Apr. 25, 2003). In accordance with the binding force of the adjudication, the Defendant issued a reduction and correction on the initial disposition. The scope of the binding force of the adjudication is limited to the relevant administrative agency, and it does not affect the binding force of the court or third party. In this case, the Defendant’s assertion that the actual transaction price exists was erroneous, and thus, it does not require the same disposition again, but is unlawful for the court to seek revocation and correction of the actual transaction price.

B) In addition, the purport of the decision of the National Tax Tribunal is that “the disposal authority calculates the value per share of Yelcom stocks in determining the market price, the transfer price, payment method, payment rate, and the number of Yelcom stocks to be paid in lieu of cash, etc. in each stage in the process of concluding the instant stock purchase contract, and finally decided on July 25, 200, as the transferor andO continued to change the transfer price, payment rate, the number of Yelcom stocks to be paid in lieu of cash, etc., it is not that “the transfer price should be calculated based on the market price of Yelcom stocks at the time of July 25, 2000, rather than that there is no actual transaction price related to the transfer of the instant stocks” (see evidence 2 of this case. Moreover, it cannot be seen that the National Tax Tribunal explicitly rejected the Plaintiff’s claim that there was no actual transaction price related to the transfer of the instant stocks (see, e.g., the first decision and the change of the actual transaction price from the time of the instant stock).

C) Ultimately, we cannot accept this part of the Plaintiff’s assertion on a different premise.

2) Determination as to the time of transfer of the instant shares

A) As to the time of stock transfer, Article 162 (1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 17032 of Dec. 29, 2000; hereinafter referred to as the "former Enforcement Decree of the Income Tax Act") provides that "the date the price of the relevant asset is liquidated" as a matter of principle, so the time of stock transfer should, in principle, be deemed as the date the price of stock transfer is liquidated.

B) Examining the instant case, as seen in the above facts of recognition, the Plaintiff received 000 won in cash fromO on October 5, 2000 as the price for the transfer of the instant shares, and received the share certificates for the instant Yelcom stocks. Therefore, the time for the transfer of the instant shares should be deemed not on July 25, 2000 but on October 5, 200.

C) Therefore, the Plaintiff’s assertion that the time of transfer of the instant shares was October 5, 200 is with merit.

3) Determination as to the legitimacy of the disposition of the transfer income tax in this case) and Article 96 (2) of the former Income Tax Act (amended by Act No. 6292 of Dec. 29, 2000) provide that "transfer value of assets under subparagraphs 3 through 5 of Article 94 shall be based on the actual transaction value at the time of transfer of the relevant assets." The actual transaction value, which is the basis for calculating transfer margin, is not the general market value that reflects the objective exchange value, but the actual transaction price itself or at the time of the transaction, refers to the amount that is actually agreed in return for payment (see, e.g., Supreme Court Decision 97Nu629, Feb. 29, 199).

B) Whether there exists an agreed actual transaction price

According to the above facts and the purport of the whole evidence and arguments as seen above, the price of Yel Telecom stocks used in the first exchange ratio, the price of 00 won to be paid by foreign shareholders to Korean shareholders, 76,923 shares of Yel Telecom, the price used in converting 4.9795 shares of Yel Telecom into 000 won in cash, the price used in converting 4.9795 shares of Yel Telecom into Yel Telecom stocks, and the price used in converting 000 won to Yel Telecom shares as a result of the loss of assets of O, and the price used in converting 00 won to Yel Telecom shares is equal to 00 won per share. Such content was agreed between OO and the Plaintiff, etc., and even in case of the number of Yel stocks to be paid by O on July 25, 200, it can be acknowledged as Yel stock price per share based on 00 won per share.

① In addition, the Plaintiff and genderA stated that the actual transaction price agreed upon with the actual transaction price agreed upon by each transferor of shares of XX. (2) In relation to the negotiations on the transfer of shares owned by the transferor, the Plaintiff, who is the forfeited right of the △ Group, directly participated in the negotiations between June 6, 200 and June 8, 200 in the course of the negotiations on the transfer of shares. The terms and conditions of the agreement were finally agreed upon in the negotiations. At that time, the agreed terms and conditions of the agreement were 00 won for each share price of the instant shares and 000 won for each share price of the Yel, 00 won for each share price of the instant shares, 00 won for each share price of the Yel, and 1 (the instant shares): 9.75 (the instant Yel shares).

Therefore, regarding the transfer of the instant shares, it can be seen that there was an agreement on the actual transaction price based on the value per share of Yel Telecom stocks between the exchange parties.

C) Whether the agreed actual transaction price is supported by objective monetary value

위에서 든 각 증거와 을 제13호증의 기재 및 변론 전체의 취지를 종합하여 인정 되는 다음과 같은 사정, 즉 ① 원고 등 양도인들과 OO 사이에 2000. 6. 6. 거래 건 협상이 타결되었는데, 위 협상 타결 바로 전날인 2000. 6. 5. YY텔레콤 주식의 증권거래소에서의 1주당 거래가액은 000원으로 합의된 실지거래가액과 거의 일치하는 점, ② 상장주식과 같이 시가 파악이 용이한 경우에는 교환당사자가 증권거래소 거래가액과 같은 객관적인 시장가격을 반영하여 교환계약을 체결하는 것이 경험칙이나 사회통념에 부합하는 점, ③ YY텔레콤 주식 1주에 대하여 합의된 실지거래 가액 000원은 그 무렵 증권거래소 거래가액과 근소한 차이를 보이고 있는 점{원고 등 양도인들과 OO 사이에 최종협상은 2000. 6. 6. - 2000. 6. 8.에 이루어졌는데, 그 무렵 YY텔레콤 주식의 증권거래소에서의 1주당 거래가액은 평균 000원 [≒ (2000. 6. 5.자 000원 + 2000. 6. 7.자 000원 + 2000. 6. 8.자 000원) ÷ 3]임을 알 수 있다}, ① 원고 등 양도인들과 OO 사이에 이루어진 위 최종협상 기간 전이나 위 최종협상 기간 이후의 YY텔레콤 주식의 증권거래소에서의 1주당 거래가액은 000원 내지 000원으로 합의된 실지거래가액보다 약간 높게 형성되어 있으나(적어도 낮지는 않다) 큰 차이는 보이지 아니하는 점 등에 비추어 보면, 위와 같이 합의된 실지거래가액은 객관적 금전가치에 의하여 뒷받침되고 있다고 봄이 상당 하다.

D) Justifiable amount of capital gains tax

If the actual transaction value of the shares of this case is calculated based on the actual transaction value of Yel Telecom shares, which is the agreed actual transaction value as above, the transfer value of the shares of this case is 000 won (=cash 000 won in cash + KRW 000 won in stock value of Yel Telecom x 421,265 per share). Thus, the transfer value of the shares of this case is 000 won. However, as seen earlier, the defendant calculated the transfer value of the shares of this case on the basis of the lower Yel Telecom shares per share value of 000 won, and calculated the transfer value of the shares of this case on the basis of the lower Yel Telecom. Accordingly, it is reasonable to view that the disposition of this case is a legitimate disposition within the reasonable tax amount. Accordingly, this part of the plaintiff's assertion on a different premise is without merit.

3) Relevant provisions and legal principles concerning the legality of the disposition of the securities transaction tax of this case

According to Article 7 subparag. 3 of the former Securities Transaction Tax Act (amended by Act No. 6302 of Dec. 29, 2000) and Article 4 subparag. 1 of the former Enforcement Decree of the Securities Transaction Tax Act (amended by Presidential Decree No. 17040 of Dec. 29, 2000), where stocks listed on the Stock Exchange are transferred without going through the Stock Exchange, the transfer value of relevant stocks shall be the tax base; however, where the transfer value is unknown or the value is lower than the value assessed by multiplying the transaction quantity of the relevant stocks, etc. at the market price of the stocks publicly announced by the Stock Exchange on the transaction day immediately before the transfer date by the transaction day (hereinafter referred to as the "transfer value assessment method"), the transfer value shall be the tax base.

In addition, the actual transfer value, which is the basis for calculating the securities transaction tax, refers to the amount of actual agreement at the time of transaction rather than the market price that reflects the objective exchange value. As such, if the transaction is a value exchange based on which the monetary value of the object of exchange is determined by objective monetary value such as the appraisal value or the market price, and entails the settlement procedure on the difference between different values based on which the transaction is based, it shall be deemed that the actual transfer value is confirmed unless there are other circumstances to deem that the transaction is not a provisional exchange (see, e.g., Supreme Court Decisions 98Du19841, Nov. 26, 199; 2009Du19465, Feb. 10, 201). If the value of the object of exchange is determined by objective monetary value and received a settlement amount based on such value, the actual transfer value shall be the value calculated by combining the actual transfer value.

B) Whether the agreed transaction value exists and whether the agreed transaction value is supported by objective monetary value.

According to the above, with regard to the transfer of the instant shares, there was an agreement between the parties to the exchange on the transaction value based on the value per share of Yel Telecom, and it is reasonable to view that the agreed transaction value is supported by objective monetary value.

Therefore, the plaintiff is deemed to have determined 00 won per share of Yel Telecom stocks acquired through exchange by objective monetary value and received the settlement amount based thereon.

C. Justifiable amount of securities transaction tax

As above, the value of the agreed transaction becomes the actual transfer value. This is based on the value per share of Yel Telecom stocks at a price of 000 won per share, and is greater than the value [the value based on the amount calculated by subtracting 15 percent from the closing price at the Stock Exchange of Yel Telecom Stocks on July 25, 2000, the date of transfer prior to the date of transfer] according to the method of appraisal, so the actual transfer should be calculated according to the amount of the actual transfer.

Of the first disposition, the securities transaction tax portion is based on the value per share of Yel Telecom Stocks, and it is reasonable to view that the disposition of this case, which is the remaining part of the reduced portion, is a legitimate disposition within the reasonable tax amount. Therefore, the Plaintiff’s assertion on this different premise is without merit.

3. Conclusion

If so, the plaintiff's claim shall be dismissed in its entirety due to the lack of any ground, and the judgment of the court of first instance is justifiable. The plaintiff's appeal is dismissed due to the lack of reason.