Early High Court Decision 2015Du1265 (20150501)

Appropriateness of the disposition of imposing gift tax by applying Article 45-2 of the Inheritance Tax and Gift Tax Act to the claimant;

Since the Plaintiff is the title truster of the instant shares as aaa Shipping, and the Defendant added the same content as a preliminary disposition through a preparatory document, the disposition based on the premise that the title truster is a Aa Shipping is lawful. However, the instant disposition that applied the premium rate of 30% as the largest shareholder’s shares is unlawful.

Article 41-2 of the Inheritance Tax and Gift Tax Act (Presumption of Donation of Title Trust Property)

Suwon District Court 2015Guhap60755 ( October 14, 2017)

literature*

○ Head of tax office

December 13, 2016

oly, 2017.02

1. The Defendant’s disposition imposing gift tax of KRW 52,019,80 on the Plaintiff on December 15, 2014 in excess of KRW 33,014,80 ( KRW 23,582,00, additional tax of KRW 9,432,80) shall be revoked. 2. The Plaintiff’s remaining claims are dismissed.

3. 3/5 of the costs of lawsuit shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

The disposition of imposition of gift tax of KRW 52,019,80 against the plaintiff on December 15, 2014 by the former defendant of the Gu office shall be revoked.

1. Details of the disposition;

A. Aaa Shipping Co., Ltd. (hereinafter “aaa Shipping”) was established on February 24, 199 as a corporation for the main purpose of marine passenger and cargo transport business, etc., and the total number of outstanding shares issued was changed from 40,000 to 340,000 shares by offering new shares around June 201.

B. On December 10, 2001, the Plaintiff completed a transfer of ownership from the land purchase to the Plaintiff with respect to 15,000 shares issued by Aaa Shipping (hereinafter “instant shares”). The head of the Seoul Regional Tax Office, from September 15, 2014 to October 5 of the same year, conducted a tax investigation into a Aa Shipping, etc. As a result, the network Ubb (the confirmation of death at July 2014; hereinafter “the network”) was a de facto owner of shares issued by Aa Shipping, and was established by the deceased’s head, and notified the head of the competent tax office, including the Defendant, to impose gift tax on the Plaintiff et al., a title trustee.

Accordingly, on December 15, 2014, the Defendant imposed KRW 143,530,80 on the Plaintiff pursuant to Article 41-2 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 2002; hereinafter “former Inheritance Tax and Gift Tax Act”). At the time, the Defendant at the time assessed the value of the instant shares as net value per share calculated on the basis of the weighted average amount of net profit and loss for the last two years from the evaluation base date, and assessed the value per share of the instant shares as KRW 36,16, by adding 30% of the total number of outstanding shares of Aaa Shipping, on the premise that the title truster is the largest shareholder holding more than 50% of the total number of issued and outstanding shares of the instant shares.

D. On January 29, 2015, the Plaintiff filed an appeal with the Tax Tribunal on the grounds of objection to the imposition of the gift tax as above. In assessing the value per share of the instant shares on May 1, 2015, the Tax Tribunal’s failure to consider the dilution effect of the average value arising from capital increase by issuing new stocks is unreasonable. As prescribed by Article 29(3)1(a) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17450, Dec. 31, 2001; hereinafter “former Enforcement Decree of the Inheritance Tax and Gift Tax Act”), it is reasonable to assess the value of the instant shares based on the weighted average value of the net profit and loss per share during the latest two years, and assess the value per share as 15,719 won by applying the rate of 30% of the average value of profit and loss per share in the instant case to the Plaintiff on December 18, 2014. The Defendant dismissed the tax base and the remaining amount per share.

E. The Defendant assessed the gift value of the instant shares at KRW 235,785,00, and corrected the amount of gift tax against the Plaintiff at KRW 143,530,80 from KRW 143,530,80 to KRW 52,019,80 (hereinafter “the disposition of this case”) upon the decision of the said Tax Tribunal (hereinafter “the disposition of this case”). The facts that there is no dispute as to the grounds for recognition, Gap’s evidence Nos. 1, 7, Eul’s evidence Nos. 2, 4, 5, and 6, and the purport of the entire pleadings.

2. Summary of the parties' arguments;

A. Summary of the plaintiff's assertion

1) The actual owner of the instant shares, not the deceased, was in title trust with a view to deviating from the limitation on the acquisition of treasury shares under the Commercial Act, and it cannot be deemed that there was an objective of tax avoidance in the title trust of the instant shares. Since the Plaintiff did not know that the instant shares were in title trust in the future, it cannot be deemed that there was an agreement on the title trust.

2) As aaa Shipping was established at around 1999 and received capital increase on or around June 2001, it is difficult to seek an weighted average amount of net profit and loss per share for the last three years by the method stipulated in Article 56(1)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, since it constitutes a case in which the net profit and loss per share for the last three years has increased normally due to a temporary contingent case with capital increase for less than three years from the beginning date of the business year including the day on which three years have passed before the base date of appraisal, or from the day on which the three years have passed before the base date of appraisal, the average amount of net profit and loss per share for the last three years may not be claimed. Since there is no average value of net profit and loss per share calculated by an institution specialized in credit assessment or an accounting firm as defined in subparagraph 2, the net value per share shall not be assessed based on the net value per share. Accordingly, the net value per share should be assessed as 10 per share by applying Article 54(2) of the former Enforcement Decree of the Inheritance Tax Act.

B. Defendant’s assertion

1) The deceased has exercised the right of management by practically controlling j group affiliates, and this is because the deceased is the substantial largest shareholder of each affiliate. Based on the above enormous influence, the deceased is widely nominal trust of the shares of Aaa Shipping, one of its affiliates, and the trust of the executives and employees of the group and the trust of the religious order. Aa Shipping, around June 2001, paid the subscription money for new shares at the time of the implementation of the subscription money for new shares, to the non-funds created by Aaa Shipping, without paying the subscription money, by shareholders, is merely a borrowed shareholder. Even if the deceased is not a truster of the shares of this case, the Plaintiff is the truster of the shares of this case, and even if Aa Shipping is not a truster of the shares of this case, the disposition of this case is legitimate since it is deemed that the Plaintiff’s trust of the shares of this case to the Plaintiff is for the purpose of avoiding the burden of corporate tax.

2) In the case of a corporation for which three years have not elapsed after the commencement of business as aaa shipping, the value per share cannot be assessed as net profit and loss under Article 56(1)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act. Article 54(2) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that the value of the stock may be assessed as net asset value in certain cases. However, this is premised on the premise that the value of the stock can be assessed as net profit and loss. Thus, the value per share of the stock of this case may not be assessed as net asset value under the above provision. Accordingly, in the case of a corporation for which three years have not elapsed after the commencement of business, the value of the stock of this case shall be calculated by dividing the net profit and loss per share of the immediately preceding business year by two per share, and the sum calculated by multiplying the net profit and loss per share of the immediately preceding business year by three per share by the net profit and loss per share in accordance with the above general rule. The defendant has made such a lawful disposition.

3. Relevant statutes;

Attached Table 1 shall be as stated in the relevant statutes.

4. Determination on the legitimacy of the instant disposition

A. According to the statements in the Evidence Nos. 2, 3, 7, 10, 13 through 16, 35, and 38 of the title trustor's specific shares of this case, the prosecutor's office stated that "Cheonge Shipping was a company that has been actually engaged in prior to this date, and it is not possible to have personnel's right to make decisions on the appointment and dismissal of major officers or employees of the company, and that it was not possible to obtain the Plaintiff's approval on the facts of this case's 10-10-10-10-10-10-10-10-10-10-10-10-10-10-10-10-10-10-10-10-10-10-10-10-20-20-20-20-30-30-10-10-7,00-70-70-30-10-7.

Therefore, the defendant's assertion based on the premise that the deceased held a title trust to the plaintiff is without merit.

However, the Plaintiff is the title truster of the instant shares who is a Aa Shipping, and the Defendant also adds the same content as the conjunctive disposition through a preparatory document dated December 12, 2016. As such, under the following circumstances, the Plaintiff will examine whether the instant disposition is legitimate on the premise that the title truster of the instant shares is a Aa Shipping.

B. Whether there was no agreement on title trust

The provision on deemed donation under Article 41-2 (1) of the former Inheritance Tax and Gift Tax Act shall apply in cases where a real owner or a nominal owner makes a registration, etc. in the future under an agreement or communication with the nominal owner when the transfer or exercise of the right requires the transfer or exercise of the right, and thus, registration is not applicable in cases where the real owner or the nominal owner unilaterally makes a registration in the name of the nominal owner, regardless of the intent of the nominal owner (see, e.g., Supreme Court Decisions 84Nu748, Mar. 26, 1985; 95Nu13531, May 31, 1996). In such cases, if the tax authority proves that only the real owner is different from the nominal owner, it shall be proved that the unilateral act of the real owner was conducted in the absence of the intent of the nominal owner (see, e.g., Supreme Court Decisions 89Nu3465, Feb. 27, 190; 90Nu5023, Oct. 10, 19>

Therefore, this part of the plaintiff's assertion is without merit.

C. Whether there was no purpose of tax avoidance

1) The legislative purport of Article 41-2(1) of the former Inheritance Tax and Gift Tax Act is to effectively prevent the act of tax avoidance using the title trust system and realize the tax justice. Thus, the proviso to the same Article is applicable only where the purpose of tax avoidance is not included in the purpose of the title trust. In such a case, the burden of proving that the purpose of tax avoidance was not included in the purpose of the title trust is the one who asserts the same (see, e.g., Supreme Court Decision 2010Du24968, Mar. 28, 2013). In addition, in light of the legislative purpose of Article 41-2(1) of the former Inheritance Tax and Gift Tax Act, if it is recognized that the title trust was made for other reasons than the purpose of tax avoidance and that the reduction of taxes incidental to the said title trust took place, it cannot be readily concluded that there was "tax avoidance purpose" in such title trust, but it cannot be deemed that there was no other purpose of tax avoidance by applying the same proviso, and thus, it cannot be deemed that there was no other purpose of tax avoidance (see, 3009.

2) Since Article 341 of the former Commercial Act (amended by Act No. 10600, Apr. 14, 2011) which limits the acquisition of the shares of this case when aa shipping acquires the shares of this case, the title trust of the shares of this case by Aa Shipping to the Plaintiff, as alleged by the Plaintiff, may be deemed to have been aimed at evading the provisions on the restriction on the acquisition of its own shares of this case under the Commercial Act. However, if aa shipping sells the shares under the real name conversion of the shares of this case into the name of Aa Shipping, it would be likely that the transfer margin would be added to the corporate tax base and would be subject to the high corporate tax rate higher than the transfer income tax rate. Therefore, it can be deemed that a title trust of the shares of this case would have intended to evade the corporate tax burden.

In light of these circumstances, it is difficult to readily conclude that the Plaintiff did not have the purpose of tax avoidance solely on the basis of the Plaintiff’s assertion.

Therefore, this part of the plaintiff's assertion is without merit.

D. Method of appraising the value of the instant shares

1) Whether evaluation based on net profit and loss value is legitimate

A) Article 17-3(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. 288, Dec. 31, 2002; hereinafter referred to as the “former Enforcement Rule of the Inheritance Tax and Gift Tax Act”) provides that the net value per share shall not be calculated for the latest three years, or that it would be unreasonable to calculate the net value per share because the net value for the recent three years is abnormal. Thus, the above provision provides that the net value per share shall not be calculated on the basis of the weighted average value per share for the latest three years under Article 56(1)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, unless there are special circumstances to the contrary. 6 of the Inheritance Tax and Gift Tax Act, which is the value per share under Article 56(1)2 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 280, Dec. 1, 200).

see, e.g., Supreme Court Decision

B) According to the above facts, Aa Maritime Transportation commenced its business on February 24, 1999.

A transfer date, which is less than three years after the commencement of business as of December 10, 201, the base date for appraisal;

The plaintiff constitutes a legal entity, and the plaintiff filed a gift tax return or filed a new gift tax return within the deadline;

Specialized appraisal institution or accounting corporation shall calculate the estimated profits per share of the stock of this case in 2001.

There is no record that the Defendant used on the basis of calculating the value of donated property concerning the disposition of this case.

15,719 won per share shall be calculated on the basis of the weighted average value of net profits and losses in the preceding two years per share;

was made.

According to this, Article 17-3(1)1 of the former Enforcement Rule of the Inheritance Tax and Gift Tax Act of Aaa Shipping

because the corporation's shares are less than 3 years after the commencement of the business, the value per stock of the corporation

Based on the weighted average amount of net profit and loss for 3 years prescribed in Article 56 (1) 1 of the Enforcement Decree of the Inheritance and Gift Tax Act

section 56 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, in the light of the project period of aa shipping, etc.

1 Based on the weighted average amount of net profit and loss for the last two years per share similar to the value of subparagraph 1 of paragraph 1

There are special circumstances deemed objective and reasonable to compute the net value of each share;

shall not be deemed to exist.

Therefore, based on the weighted average value of net profit and loss per share for the last two years, the net profit and loss per share.

The disposition of this case is unlawful, and the shares of this case are complementary in accordance with the former Inheritance Tax and Gift Tax Act.

As the value cannot be assessed in an objective and reasonable manner, the value shall not be assessed in respect of such method.

The assessment of the net assets per share by applying mutatis mutandis Article 54(2) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act.

It is reasonable to calculate the value on the basis of value.

2) Whether the application of a certificate of value as the largest shareholder’s holding shares is legitimate

According to the above facts of recognition, the defendant is issued as the largest shareholder by the truster of the shares of this case.

Article 63(3) of the former Inheritance Tax and Gift Tax Act on the premise that a person holds more than 50/100 of the total number of stocks

The value of the shares of this case was assessed, however, by applying the premium rate of 30% set forth in the subsection.

In addition, the defendant cannot be deemed to be its largest shareholder by aa Shipping specified as a truster, as well as the defendant.

alone, evidence submitted by Aaa Shipping holds more than 50% of the total number of outstanding shares

There is insufficient evidence to acknowledge it and there is no other evidence to acknowledge it.

Therefore, the disposition of this case in which 30% of the shares held by the largest shareholder is applied is unlawful.

of this chapter.

E. Scope of revocation of the instant disposition

1) In a lawsuit seeking revocation of taxation, taxation is unlawful because it was erroneous in the process of calculating the amount of tax.

(2) In the case of the court below's determination, the court below

When the amount of tax to be imposed is calculated, the court shall revoke the whole amount of the taxation disposition as unlawful.

In addition, the portion exceeding the reasonable amount of tax assessment is deemed to be unlawful.

The legal portion should be revoked (see, e.g., Supreme Court Decision 97Nu19496, Sept. 29, 2000).

§ 6).

2) The title trust date of the instant shares, comprehensively taking account of the evidence No. 3 and the purport of the entire pleadings

(a) around December 10, 201, the value of net assets of Aa Shipping is 3,805,979,108 won, and at that time aa

340,000 shares of this case, as a result of the fact that the shares of this case are issued and outstanding, the shares of this case may be

1,194 won =3,805,979,108 won ¡À340,000 won, and less than KRW 11,194 in calculating the net asset value (i.e., =3,805,9,108).

the Plaintiff’s shares that the dilution effect of capital increase with respect to this value should be reflected again.

However, Article 54 (4) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act shall apply to the total issued shares in assessing the net asset value.

The number of shares is determined by the total number of shares issued as of the base date of appraisal, thereby offering new shares.

Since the dilution effect has already been reflected, the plaintiff's above assertion cannot be accepted).

3) 11,194 won per share, the value at the time of title trust of the instant shares calculated as above

Based on the basis of the calculation of legitimate amount of gift tax, 23,582,00 won for principal tax as shown in attached Table 2, and additional tax

As 9,432,800 won, the above legitimate principal tax out of the disposition of this case is 23,582,000 won and additional tax

The portion exceeding KRW 33,014,80, which is the sum of KRW 9,432,800, should be revoked as it is illegal.

5. Conclusion

Thus, the plaintiff's claim is justified within the above scope of recognition, and the remainder is accepted.