Changwon District Court-2011-Gu Partnership-2819 ( October 17, 2012)

Article 41-3(6) of the former Inheritance Tax and Gift Tax Act also applies to new stocks

Article 41-3 (6) of the former Inheritance Tax and Gift Tax Act shall be interpreted as applicable not only to the new stocks received from the relevant corporation on the basis of the stocks received or acquired with compensation by the largest shareholder, etc.

Gift of profits from listing, etc. of stocks or equities under Article 41-3 of the Inheritance Tax and Gift Tax Act.

Busan High Court 2012Nu983 Revocation of Disposition of Imposition of Gift Tax

AA

The Director of the Z Tax Office

Changwon District Court Decision 2011Guhap2819 decided October 17, 2012

on 05 09 October 2013

on 13, 2013

1. The plaintiff's appeal and the defendant's appeal are all dismissed.

2. The costs of appeal shall be borne by each party.

3. Paragraph 1 of the text of the judgment of the court of first instance, and KRW 29,647,800, which the Defendant reported to the Plaintiff on July 7, 2010.

"The part exceeding 21,00,000 won in the imposition disposition shall be revoked." "The part exceeding 19,650,374 won in the imposition disposition of gift tax imposed on the plaintiff on July 1, 2010 shall be revoked, and the part exceeding 19,650,374 won in the imposition disposition of gift tax imposed on the plaintiff on July 1, 2010 shall be corrected to 2/3 "," respectively, the purport of the claim, and the purport of appeal."

1. Purport of claim

The portion exceeding KRW 61,178,00,00, among the disposition of imposition of gift tax of KRW 82,178,00,00 against the Defendant on July 1, 201 (the statement in the claim of the complaint on July 7, 2010 referred to as "the clerical error of July 1, 201") and the amount exceeding KRW 61,178,00,000, which was imposed on the Defendant.

Pursuant to the imposition disposition of tax 28,298,174, the portion exceeding 19,650,374 won shall be revoked.

2. Purport of appeal

A. Plaintiff: The part against the Plaintiff falling under the order to revoke under the judgment of the first instance court shall be revoked. The part exceeding KRW 61,178,000 of the disposition imposing gift tax on the Plaintiff on July 1, 2010 exceeds KRW 82,178,000 shall be revoked.

B. Defendant: The part against the Defendant in the judgment of the first instance is revoked, and the Plaintiff’s claim corresponding to the revoked part is dismissed.

1. Details of the disposition;

A. The Plaintiff was an employee of the AAA (hereinafter referred to as “AA”). On December 8, 2004, the Plaintiff acquired 3,000 shares issued by the AAAA (hereinafter referred to as “the initial shares acquired”) by a commercial company at the time of issuance, from the reduction that falls under the largest shareholder, etc. under Article 41-3(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010; hereinafter referred to as “former Inheritance Tax and Gift Tax Act”).

(B) On December 22, 2005, the Plaintiff acquired KRW 500 per share of 750 (hereinafter “instant paid new shares”) from the capital increase issued by AA on December 22, 2005, at KRW 5,000 per share (hereinafter “instant paid new shares”). AAA made a par value split at KRW 500 per share on July 1, 2007, and thereafter listed on January 25, 2008, and the Plaintiff’s shares were increased to KRW 37,50 per share due to face value split at the KOSDAQ market, and the Plaintiff’s shares were increased to KRW 37,500 per share due to face value split (However, in this case, to be stated as the number before

D. The Busan Regional Tax Office conducted an integrated tax-free investigation with respect to AA from August 10, 2009 to September 30, 2009, imposed gift tax of KRW 61,178,890,000 and additional tax of KRW 19,650,374 on the Plaintiff as the first transferee-stocks listed at KRW 385,890,000, and did not impose gift tax on the profits arising from the listing of the instant shares.

(E) On January 25, 2010, the Board of Audit and Inspection issued a request to audit the business affairs of Busan Regional Tax Office for taxation of KRW 105,00,000 on the profits accrued from the listing of the instant new stocks for consideration. On July 1, 2010, the Defendant rendered a disposition to correct and determine the amount of KRW 82,178,00,00, including the profits accrued from the listing of the instant new stocks for consideration, to the Plaintiff on July 1, 2010, the amount of KRW 82,178,00,000, and the amount of additional tax on gift tax to KRW 8,647,80,00, including the profits accrued from the listing of the instant new stocks for consideration, and the tax Tribunal dismissed the said request for adjudication on September 17, 2010.

[In the absence of dispute with recognition, Gap evidence 1, 2, Eul evidence 1, and 2

2. Whether the instant disposition is lawful or not. The Plaintiff’s assertion is as follows.

1) Article 41-3(6) of the former Inheritance Tax and Gift Tax Act applies only to the shares that are donated or acquired by the largest shareholder, etc., and it should be interpreted that it does not apply to the paid new shares. Therefore, it is unlawful to impose gift tax on the Plaintiff on the shares that were acquired by the Plaintiff based on the initial shares that were acquired by the Plaintiff based on the shares that were acquired by the Plaintiff from the reduction.

2) Under Article 41-3(1) and (6) of the former Inheritance Tax and Gift Tax Act, the legislative purpose of Article 41-3(6) of the former Inheritance Tax and Gift Tax Act is to be fulfilled in an excessive way that imposes marginal profits on the stocks whose capital increase has been increased for consideration. Thus, it violates the principle of excessive prohibition under the Constitution by impairing the propriety of means, the least extent of damage, and the balance of the legal interests. ② The value of donated stocks can be known at least five years after the date of donation from the initial largest shareholder, and the amount of gift tax can be known. Thus, the legal stability and predictability of the taxpayer are infringed, the amount of gift tax is violated, and the value of donated stocks is calculated by calculating the profits from listing, and the amount of gift tax is calculated by deeming the value of donated stocks to be included in the calculation of the value of donated stocks at the price after listing, and the method of imposing gift tax retroactively after calculating the value of donated stocks at the price after listing is contrary to the requirement of taxation, and the amount of gift tax is imposed at the same time as the first 6th shareholder stocks issued.

3) The Defendant is conducting a tax investigation on AA on August 10, 2009. The imposition of gift tax on the listed marginal profits of the instant new stocks was made according to the opinion of the Board of Audit and Inspection after being pointed out by the Board of Audit and Inspection on January 25, 2010, and whether to impose gift tax on the listed marginal profits of the issued stocks constitutes a conflict of views under tax law among the tax authorities. In addition, since the Plaintiff cannot expect the new acquisition and payment of gift tax with the knowledge that the listed marginal profits of the issued stocks of this case are subject to taxation from the beginning, it cannot be expected that the Plaintiff would be aware that the listed marginal profits of the issued stocks of this case are subject to taxation, and therefore, there is a justifiable reason for the Plaintiff’s nonperformance of duty to report and pay taxes

Even if there is no justifiable reason for domestic affairs, and the defendant notified the wrong tax investigation result on August 10, 2009, which is not subject to taxation. Since the plaintiff's failure to pay gift tax on the listing marginal profits of new stocks of this case was due to the defendant's notice of wrong tax investigation result, the part of the additional payment for erroneous payment that occurred after August 10, 2009 among the disposition of this case is illegal.

B. Relevant statutes

Attached Form 1 is as shown in the relevant Acts and subordinate statutes.

C. Determination as to the Plaintiff’s assertion No. 2-A. 1

1) The inheritance tax and gift tax amended by Act No. 7010 on December 30, 2003, and the amended gift tax before amendment.

In addition to the general gift that is premised on the contract between the parties as a taxable object, in addition to the general gift that is based on the premise of the contract between the parties, the problem of not imposing tax on the new type that is not listed above is that, even if the type of taxation is not listed on a daily basis, the gift tax can be imposed if it falls under the de facto gratuitous transfer of property, and the complete universalism has been introduced such as converting the regulation on deemed donation into the example

Accordingly, Article 2 (3) of the same Act was newly established in a case where it is deemed that the gift tax has been unjustly reduced by the direct or indirect method of transferring the tangible or intangible property, regardless of the name, form, purpose, etc. of the act or transaction, to another person without compensation (including the case of transfer at a remarkably low price), or by the contribution, including the increase of the property value of another person by the contribution, and the indirect method via a third party, or by the method of two or more acts or transactions, it is deemed that the party has directly traded or that the provisions of paragraph (3) shall apply by deeming that the act or transaction is one of the continuous acts or transactions.

2) The legislative intent of Article 41-3 of the former Inheritance Tax and Gift Tax Act is to include the profits increased by the listing of stocks in order to prevent changes in the amount of high-amount assets and transfer of stocks to a related party, such as children, etc., for the purpose of obtaining enormous market value marginal profits arising from the listing of the securities market by using internal information that the largest shareholder, etc. did not disclose on the business management, and to impose an increase in the amount of profits per se by taking advantage of the profits increased by the listing of stocks as taxable objects by imposing taxation on the listed marginal profits.

In addition, Article 41-3(6) of the former Inheritance Tax and Gift Tax Act is a provision newly established on December 18, 2002 by amendment, and the reason for the amendment is that Article 41-3 of the former Inheritance Tax and Gift Tax Act is subject to taxation, and it is intended to add the case where it can be abused as a means of tax avoidance because it is excluded from taxation even if the same economic effect is identical. In other words, the largest shareholder recognized as having a status to use non-disclosure information as a means of tax avoidance even if he/she directly donates or transfers his/her shares to the specially related person, even if he/she does not directly donate or transfer his/her shares (this part is added to the object of taxation by amending Article 41-3(1) of the former Inheritance Tax and Gift Tax Act when the amendment is made to the specially related person by allowing him/her to issue new shares through the exercise of management right so that the imposition of gift tax can be avoided even if the specially related person obtains the listing marginal profits, so it is intended to be added as a means of tax avoidance.

3) Comprehensively taking account of the following circumstances, it is reasonable to interpret that Article 41-3(6) of the former Inheritance Tax and Gift Tax Act does not apply only to the number of free new stocks that are given by the relevant corporation on the basis of the stocks donated or acquired at a cost by the largest shareholder, etc. of a related party

(1) In applying the provisions of Article 41-3(6) of the former Inheritance Tax and Gift Tax Act, the acquisition of stocks shall include new stocks acquired and allocated by the corporation to increase its capital (including the amount of investments). As such, it shall be applied regardless of whether new stocks are shares with or without compensation, or by the third party allocation method in the case of new stocks for consideration.

② The gift tax is imposed with regard to the transfer of listed gains under the former Inheritance Tax and Gift Tax Act, although the same applies to the capital increase and the capital increase are different in the payment of the acquisition price, and the listing gains arising from each capital increase are transferred to the specially related person.

③ In light of the fact that since the amendment on December 30, 2003, the so-called complete comprehensive taxation was declared, and that Article 41-3(6) of the former Inheritance Tax and Gift Tax Act should be interpreted in line with the purport of the amendment above, it is reasonable to interpret that the above provision is reasonable to impose gift tax on a specially related person by evaluating as having been donated all gains from the listing of new stocks issued by the corporation from the largest shareholder, etc. on the basis of the stocks donated by the largest shareholder, etc. or acquired funds from the largest shareholder, etc. and acquired from the largest shareholder, etc.

(4) If the interpretation that Article 41-3 (6) of the former Inheritance Tax and Gift Tax Act applies only to new stocks without compensation is made, the person interested in the case may be exempted from the imposition of gift tax on capital increase with consideration at a significantly low price.

⑤ Since the language and text of Article 41-3(6) of the former Inheritance Tax and Gift Tax Act includes the fact that the issuer of new shares is a corporation (the fact that shares are acquired from a corporation), it is reasonable to deem that the same provision cannot be applied to the case where it is applicable from the largest shareholder under paragraph (1) of the same Article.

(6) Article 31-6(5) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act and Article 10-4(1) of the former Enforcement Rule of the Inheritance Tax and Gift Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 74, Apr. 23, 2009; hereinafter the same) provide that the total amount of net profit and loss per share shall be the amount of net profit and loss calculated pursuant to Article 56(3) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act for the evaluation of unlisted stocks for the evaluation of unlisted stocks. In calculating the listing marginal profit of stocks directly donated by the largest shareholder, even if the stocks issued to the relevant corporation were issued during the period from the date of increase to the date of listing, and thus, the calculation of net profit and loss per share is the same. In light of the same, it cannot be deemed that Article 31(6) through (5) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act does not require the issuance of stocks acquired as the evidence under Article 41-3(6) of the former Enforcement Decree of the Inheritance Tax Act.

B. Determination on the part of the Plaintiff’s assertion

1) As seen earlier, Article 41-3 of the former Inheritance Tax and Gift Tax Act provides that, in cases where a special related person, such as the largest shareholder, etc., donates the listed stocks to a related person prior to listing, or transfers them for a fee, etc., the taxable object is not only the stocks itself but also the stocks that the largest shareholder has increased, and are transferred for a fee, as well as the stocks that are transferred for a fee. Even if new stocks are acquired for a fee by a special related person who has paid the price for new stocks, the price is only the price for the stocks themselves, but not the price for the listed marginal profits. Where a special related person, etc., such as the largest shareholder, etc., obtains the listed marginal profits above the standard prescribed in the Enforcement Decree of the Inheritance Tax and Gift Tax Act, the substance of taxation on the listed marginal profits is the same as if it were received directly from the largest shareholder, or where it was received through capital increase or capital increase

Article 41-3(1) of the former Inheritance Tax and Gift Tax Act limits the scope of the donee to the related parties such as the largest shareholder who is in the position to use information that is not open to the public regarding the company's business management, etc. The scope of the donee is limited to the scope of the listing marginal profit which is subject to taxation shall meet or exceed the standard prescribed in Article 31-6 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, and the above provision limits the scope of the donee to five years in consideration of the reality that the period of two to three years is required in preparation for listing

Therefore, Article 41-3(6) of the former Inheritance Tax and Gift Tax Act provides that the same shall include new shares received on the grounds of the same Article.

It is not against the principle of excessive prohibition or the principle of equality.

2) The taxation requirements under Article 41-3 of the former Inheritance Tax and Gift Tax Act include ① a person having a special relationship with the largest shareholder, etc. of the unlisted corporation, who donates or acquires stocks for consideration or receives new stocks from the largest shareholder, etc., and ② the stocks concerned shall be listed within five years from the date of donation or acquisition, and ③ a person with a special relationship shall obtain profits above the standard prescribed in Article 31-6 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act due to an increase in the value of stocks under the listing. Therefore, all taxation requirements are satisfied when profits are acquired from the listing of stocks. Article 41-3(2) of the former Inheritance Tax and Gift Tax Act provides that the listed gains shall be calculated on the basis of the settlement base date at the time of the listing date, so it is possible to predict the value of donated property at the time of meeting the taxation requirements and the amount of

Article 41-3(1) of the former Inheritance Tax and Gift Tax Act provides that a gift tax shall be imposed by calculating the profits acquired by the listing under Article 31-6 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act. However, Article 41-3(3) of the former Inheritance Tax and Gift Tax Act provides that a gift tax base and tax amount shall be calculated by adding this profit to the taxable amount of gift tax on the initial taxable amount of gift tax, and that it shall be calculated by adding it to the taxable amount of gift tax on the initial taxable amount of gift tax, and that the same shall not apply to the case where the stock price decreases as well as to the case where the stock price drops. Therefore, Article 41-3(6) of the former Inheritance Tax and Gift Tax Act cannot be said to contravene the detailed principle of requirements and Article 41-3(3) of the former Inheritance Tax and Gift Tax Act because Article 41-3(3) of the former Inheritance Tax and Gift Tax Act is subject to the taxation of profits acquired by the listing, and it can only be assessed after the listing has been made after the listing.

We cannot see that it is contrary.

4) Therefore, Article 41-3(6) of the former Inheritance Tax and Gift Tax Act cannot be deemed as unconstitutional in violation of the Constitution against the principle of excessive prohibition, the clear statement of taxation requirements, the principle of tax equality and the principle of ability to respond. Accordingly, this part of the Plaintiff’s assertion is without merit.

C. Determination as to the Plaintiff’s assertion No. 2-A. 3

1) Under the tax law, where a taxpayer violates various obligations, such as filing a return and tax payment, without justifiable grounds, as prescribed by individual tax-related Acts and subordinate statutes, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, where there are justifiable grounds for not being able to prove that the taxpayer was not aware of such obligations, or where it is unreasonable to expect him/her to fulfill his/her obligations, etc. (see, e.g., Supreme Court Decision 2003Du4089, Apr. 15, 2005). The imposition of additional tax may be exempted (see, e.g., Supreme Court Decision 2003Du4089, Apr. 15, 2005). The tax-related law, which is subject to regulation, is technically difficult to interpret because it does not constitute a violation of the tax-related Acts and subordinate statutes, and even if so, it does not constitute a violation of the tax-related Acts and subordinate statutes, 205Du294, supra.

B. If it is apparent that such a reason does not constitute a case where there is a justifiable reason (see Supreme Court Decision 2003Du10350, Sept. 24, 2004).

2) In light of each of the above facts, the Busan regional tax office's official in charge of tax investigation can recognize the fact that the gift tax is not imposed on the price of the new stocks of this case by taking the same view as the Plaintiff after undergoing a careful legal examination on whether the listing gains of the new stocks of this case at the time of the above tax investigation should be imposed on the Plaintiff, while the Plaintiff was aware that the new stocks of this case were acquired at the time of the initial acquisition, and the gift tax was imposed on the Plaintiff on the profits arising from the listing of the new stocks of this case, and the Plaintiff did not impose gift tax on the profits arising from the listing of the original acquired stocks of this case. In addition, the Busan regional tax office's official in charge of tax investigation cannot be deemed to have violated the relevant Acts and subordinate statutes because it is unreasonable to believe that the Plaintiff, the taxpayer, in light of the above facts, has no duty to pay taxes on the listed stocks of this case by trust of the Busan regional tax office, and it cannot be deemed that there is no justifiable reason to believe that there is a conflict between the above other tax office's legal interpretation.

3) Therefore, among the disposition in this case, the first imposition of 19,650,374 won is illegal, and the plaintiff's assertion is with merit.

3. Conclusion

"If so, the plaintiff's claim in this case is reasonable within the above recognized scope, and the claim for payment of money must be rejected without any reason. Since the judgment of the court of first instance is just, the plaintiff and the defendant's appeal shall be dismissed in the same conclusion, and the part of the judgment of the court of first instance which exceeds 21,00,000 won in the disposition of gift tax of 29,647,800 won against the plaintiff on July 7, 2010 is revoked, "the part of the disposition of the court of first instance exceeding 28,298,174 won in the disposition of imposition of penalty tax of 19,650,374 won which the defendant issued to the plaintiff on July 1, 2010 is clearly erroneous in the disposition of 19,650,374 won, and 1/3 of the disposition of the court of first instance among the disposition of imposition of penalty tax of 29,647,374 won shall be revoked."