The legitimacy of the assertion that the taxation of stock title trust was a means to meet the number of promoters

It is not sufficient to recognize that the title trust of shares satisfies the requirements of promoters in relation to the establishment of the instant company, and that there was no tax to be avoided at the time of the title trust or in the future due to the said title trust, and there is no other evidence to acknowledge it otherwise.

Article 41-2 (Presumption of Donation of Title Trust Property)

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

Each disposition of imposition of gift tax of KRW 3,500,00 on November 10, 2006 by the Defendant against the Plaintiff on November 10, 2006 and KRW 45,938,190 on the gift tax of KRW 2002 shall be revoked.

1. Details of the disposition;

A. On February 3, 2001, ○○○ established the Korea Railroad Co., Ltd. (hereinafter “instant company”) with the main purpose of Do and retail business such as steel, etc., and acquired 3,000 shares out of the total 30,000 shares of the instant company under the name of the Plaintiff. On September 26, 2002, the instant company offered new shares with capital increase and additionally issued 30,000 shares under the name of the Plaintiff at the time of additional issuance (hereinafter “the instant shares”).

B. The Defendant applied Article 41-2(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 2002; hereinafter “former Act”) on the ground that ○○○○ entrusted the Plaintiff with the title of KRW 3,000 on February 3, 2001 and KRW 45,938,190 on September 26, 202, to the Plaintiff on November 10, 2006 (hereinafter “instant disposition”).

C. On February 8, 2007, the plaintiff appealed to the National Tax Tribunal. However, the National Tax Tribunal dismissed the plaintiff's appeal on September 27, 2007.

[Grounds for Recognition] Facts without dispute, Gap 2-4 evidence, Eul 1-2 evidence (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) ○○○ unilaterally stolen the Plaintiff’s name and completed the transfer of title to the instant shares, and there was no agreement between the Plaintiff and ○○○○ on title trust.

(2) Even if the fact of title trust is acknowledged, it is merely for the collection of the number of promoters required under the Commercial Act, and it cannot be said that there existed any specific tax avoidance purpose. ○○○ has been owned more than 60% of the shares of the company since the time of title trust, and is liable for secondary tax liability as an oligopolistic shareholder. Since the establishment of the instant company, it did not have avoided the comprehensive income tax arising from the dividend since it did not pay dividends once until now.

(b) Related statutes;

former Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 2002; hereinafter referred to as the "former Act")

Article 41-2 (Presumption of Donation of Title Trust Property)

(1) In case where the actual owner and the nominal owner are different with respect to the property (excluding the land and buildings; hereafter in this Article the same shall apply), which requires a registration, etc. for the transfer or exercise of rights, the value of the property shall be deemed to have been donated by the actual owner on the date when it is registered, etc. to the nominal owner, notwithstanding the provisions of Article 14 of the Framework Act on National Taxes:

1. Where assets are registered, etc. in the name of another person without the purpose of tax avoidance;

2. Where, among the stocks or equity shares (hereafter in this Article, referred to as "stocks, etc"), with respect to the stocks, etc. which are entered in the register of stockholders or the register of members in the name of another person or are transferred to another person pursuant to a trust or agreement prior to January 1, 1997, the titles of the real owner are converted to that of the real owner during the period not later than December 31, 1998 (hereafter in this Article, referred to as the "suspension period"): Provided, That the same shall not apply to the cases where the titles of the person in a special relationship with the stockholders (including investors) of the corporation which issued the relevant stocks

(2) Where property is registered, etc. in the name of another person or the name of stocks, etc. is not converted into the name of the actual owner during the grace period under paragraph (1) 2, it shall be presumed that there exists an objective

(3) The provisions of paragraph (1) 2 shall apply only to a case where a person who has converted stocks, etc. into a title of actual owner submits the contents of conversion to the corporation which issued the relevant stocks or to the head office or head office of the invested corporation, as prescribed by the Presidential Decree

(4) Paragraph (1) shall not apply to registration, etc. of the fact that is a trust property under the Trust Business Act or the Securities Investment Trust Business Act, and to cases where a nonresident registers under his/her legal representative or administrator.

(5) The term "taxes" in paragraphs (1) 1 and (2) means the national tax and local tax as provided in subparagraphs 1 and 7 of Article 2 of the Framework Act on National Taxes and the customs as provided in the Customs Act.

(6) The scope of persons in special relationship under paragraph (1) 2 shall be prescribed by Presidential Decree.

former Commercial Act (amended by Act No. 6488 of July 24, 2001)

§ 288. Promoters

Three or more promoters shall be required for the incorporation of a stock company.

Commercial Act

Article 288 (Promoters)

In establishing a stock company, promoters shall prepare the articles of incorporation.

(c) Fact of recognition;

(i)personal relations;

(A) The Plaintiff was registered as an auditor of the instant company from the time of its incorporation to March 31, 2007, as the ○○○○○○, the representative director of the instant company.

(B) The ○○○○○ was a steering car of the instant company, and served as an agent for the instant company from the time of its incorporation to 2005. The ○○ was the Plaintiff’s omission and served as the head of the instant company from the time of its incorporation to 2004.

(C) At the time of the incorporation of the instant company, ○○○ does not have kinship with ○○○.

(D) At the time of the incorporation of the instant company, ○○○, ○○○, and ○○○ was written as promoters in its articles of incorporation.

(2) Details of stock change of the instant company

(A) At the time of incorporation of the instant company, the Plaintiff, among the total 30,000 shares, was registered as 3,000 shares (10%) of the Plaintiff, ○○○○○ 18,00 shares (60%) of 6,000 shares (20%) and 3,000 shares (10%) of the instant company.

(B) On September 26, 2002, the instant company offered new shares with capital increase and issued 30,000 additional shares. After capital increase, the shareholders’ list was registered as follows: (a) the existing shareholders subscribed new shares in proportion to the existing shares; (b) ○○○○ 36,000 shares (60%); (c) ○○ 6,000 shares (10%); (d) ○○ 6,000 shares (10%); and (e) ○ ○ 6,000 shares (10 shares). However, among the existing shareholders, ○ ○○ refused to accept the above new shares; and (e) ○ ○ ○ ○ received the above 6,00 shares (10%) in the name of ○○ ○○.

(3) Financial status, etc. of the instant company

(A) The annual earned surplus of the instant company is as follows.

Year

Surplus

Year

Surplus

201

142,289,163

205

1,741,960,602

202

419,678,104

206

2,047,83,289

2003

734,939,624

2007

2,323,524, 374

204

1,291,617,913

(b)However, the instant company has not paid dividends once since its incorporation until now.

(4) Other

(A) After the instant disposition, the Plaintiff did not file a complaint with ○○○ by forging a document, etc.

(B) As to the process of acquiring shares in the name of the Plaintiff, etc., ○○○ stated that at the time of the tax investigation related to the disposition of the instant case, the Plaintiff borrowed money from the Plaintiff and acquired the instant shares in the name of the Plaintiff for the purpose of security, but only when it reaches this court, the Plaintiff acquired shares in the name of the Plaintiff

(C) At the time of 2002 ○○○’s global income tax rate reaches 36%, the highest tax rate.

[Ground of recognition] Facts without dispute, Gap 1-3, 7 evidence, Eul 3-13 evidence (including each number), part of witness ○○○'s testimony, the purport of the whole pleadings

D. Determination

(1) Whether a title trust was made

The provision on deemed donation of Article 41-2(1) of the former Act, etc. shall apply in cases where a real owner or a nominal owner makes registration, etc. in the future of the nominal owner by agreement or communication with respect to property requiring registration, etc. for the transfer or exercise of rights. Therefore, in cases where a real owner and a nominal owner unilaterally makes registration, etc. in the name of the nominal owner regardless of the intent of the nominal owner, it shall not apply. In such cases, the tax authority must only prove that the real owner is different from the nominal owner, and the burden of proving that the registration, etc. of the nominal owner was made in the unilateral act of the real owner regardless of the intent of the nominal owner should be borne by the nominal owner who asserts it (see

In light of the following circumstances, it is difficult to readily believe that the Plaintiff, etc. did not notify the Plaintiff, etc. of the fact that the Plaintiff borrowed money or received collateral from the Plaintiff or the Plaintiff, etc. in the name of the Plaintiff, etc. on the ground that it was not easy to believe that the Plaintiff was registered as an auditor since the incorporation of the instant company, and ○○○ and ○○○ that was registered as a shareholder of the instant company other than the Plaintiff, worked as an agent and a head of the instant company from the time of new stocks acquisition until the time of new stocks acquisition, and the Plaintiff did not take any follow-up measures, such as filing a complaint, against the Plaintiff even after the instant disposition was taken. In light of the above, it is insufficient to recognize that ○○○ unilaterally, regardless of the Plaintiff’s intent, solely based on the evidence submitted by the Plaintiff, did not recognize that ○○ completed the transfer of ownership in the name of the Plaintiff as to the instant stocks in the name of the Plaintiff.

ii)whether there has been any objective of evading taxes;

Article 41-2(1) of the former Act provides for an exception to the principle of substantial taxation by effectively preventing the act of tax avoidance using the degree of nominal trust and realizing the tax justice. Thus, if the title trust was recognized as having been conducted for any reason other than the purpose of tax avoidance and only a minor reduction of tax incidental to such title trust takes place, such title trust cannot be deemed as having the purpose of tax avoidance provided for in the proviso of Article 41-2(1) of the former Act, and in such a case, the burden of proving that there was no purpose of tax avoidance is against the person claiming it (see, e.g., Supreme Court Decision 2004Du7733, May 12, 2006). However, the burden of proving that there was no purpose of tax avoidance, other than the purpose of tax avoidance, can be proved by the method of proving that there was no other purpose of tax avoidance (see, e.g., Supreme Court Decision 2004Du7733, May 12, 2006).

As to the instant case, the Ministry of Health and Welfare alleged that ○○○○ was to acquire shares in the Plaintiff’s name in order to satisfy the requirements of promoters in establishing the instant company. However, this is not only a new assertion made in this law but also difficult to believe that there was a statement made at the time of tax investigation. ○○ does not require three promoters to be a shareholder, or there was no objection to the incorporation of the instant company. Although ○○○ did not have to be different from the promoters, it does not require three promoters to acquire the instant shares in the Plaintiff’s name until the date of the establishment of the instant company, the requirements were mitigated by the amendment of the Commercial Act. In addition, ○○○ refused the acquisition of new shares at the time of offering new shares by capital increase of ○○ upon the instant company, and ○○○○ did not have any specific purpose to establish the Plaintiff’s global income tax evasion rate in the name of ○○○○○ company’s global income tax evasion rate, the Plaintiff’s global income tax evasion rate did not necessarily have to have any effect on the Plaintiff’s global income tax evasion rate.

(3) Sub-decisions

Therefore, the instant disposition under the provision on deemed donation under Article 41-2(1) of the former Act is lawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is justified and it is decided as per Disposition by admitting it.