Plaintiff 1 and one other (Bae, Kim & Lee LLC, Attorneys Yu-pon, Counsel for the plaintiff-appellant)

Head of Yeongdeungpo Tax Office

October 24, 2014

1. The part exceeding KRW 529,356,210 among the disposition imposing inheritance tax of KRW 540,781,690 (including additional tax) on the Plaintiffs on November 1, 2013 shall be revoked.

2. The plaintiffs' remaining claims are dismissed.

3. Of the costs of lawsuit, 90% is assessed against the Plaintiffs, and the remainder is assessed against the Defendant.

The Defendant’s disposition of imposing inheritance tax of KRW 540,781,690 (including additional tax) against the Plaintiffs on November 1, 2013 is revoked.

1. Details of the disposition;

A. Nonparty 1 concluded four non-payment IBK Pension Insurance (hereinafter “instant insurance contract”) with the beneficiary at the time of the insured and death as indicated below, and paid 2,040,000,000 won in total of the premium as a lump sum as follows.

A person shall be appointed.

B. (1) On June 18, 2012, Nonparty 1 died, and the Plaintiffs, the spouse of Nonparty 2 and children, inherited Nonparty 1’s property.

(2) The Plaintiffs assessed the value of inherited property as KRW 1,46,23,468 on the ground that “the right under the instant insurance contract falls under Article 65(1) of the Inheritance Tax and Gift Tax Act (hereinafter “Inheritance Tax Act”) and Article 62 of the Enforcement Decree of the said Act (hereinafter “right to receive a regular payment”), and reported the amount of inherited property to the Defendant, together with other inherited property, as KRW 4,366,048,218 of the Inheritance Tax and Gift Tax Act (hereinafter “right to receive a regular payment”).

C. On November 1, 2013, the Defendant assessed the value of inherited property as KRW 2,040,000 on the ground that “the insurance premium paid by Nonparty 1 shall be considered to have been inherited,” and calculated the value of inherited property as KRW 21,597,248,667 by adding the value of inherited property to other inherited property, and additionally determined and notified the amount of KRW 540,781,69 (including additional tax) as an additional amount of KRW 540,781,69 (hereinafter “instant disposition”).

D. The Plaintiff appealed and filed an appeal on January 28, 2014, but was dismissed by the Tax Tribunal on April 14, 2014.

[Ground of recognition] Facts without dispute, Gap evidence 1, 2 (including additional number), Eul evidence 1, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiffs' assertion

In light of the fact that the insurance contract takes effect upon the conclusion of the contract, and that the insurance claim is specified only when the occurrence of the insurance accident occurs, and that the insurance contract in this case is an insurance contract to which the fixed amount is paid, the entitlement to the fixed amount occurs on the date of conclusion of the contract, the right to refund the right to the fixed amount payable upon the withdrawal or termination of the insurance contract and the entitlement to the fixed amount are incompatible rights. The plaintiffs are determined as the entitlement to the fixed amount because they did not terminate the insurance contract, and even if the entitlement to the fixed amount is determined as the entitlement to the fixed amount and did not occur, the right to refund the premium due to the cancellation or termination of the insurance contract goes against the principle of no taxation without law. Since inheritance tax is levied on the method of imposing inheritance tax, it is difficult for the plaintiffs to manipulate the tax base of inheritance tax upon the cancellation of the contract, and even if they can choose the entitlement to the fixed amount and the right to refund the premium during the period of cancellation of the insurance contract, the plaintiffs' disposal of the fixed amount is unlawful in view of the inheritance tax law and the Enforcement Rule of this case.

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact of recognition;

(1) According to the product summary, insurance policy, and terms and conditions of the instant insurance contract, the following are stipulated.

In the form of annuity payment: Standard life fund payment - among life pension contracts included in the table summary of insurance products, insurance policies, and terms and conditions of the terms and conditions: When the contract becomes effective each month or each year during the period of payment of living funds chosen by the contractor during the period of the period of payment of the pension before the commencement of the pension, a pension shall be paid if the insured is living on the relevant date of payment each year during the period of the insurance after the commencement of the pension. - Standard life fund payment: The relevant amount of living fund calculated by calculating the accumulation amount of basic pension premiums as of the commencement of the pension commencement to be the lump sum payment premium - The establishment of the 00 insurance contract calculated by multiplying the accumulated amount as of the commencement of the pension commencement by the rate of installment of the life annuity: the insurance contract shall be made with the consent of the policyholder and the insurance company before the commencement of the pension payment; the period of insurance contract after the commencement of the pension payment shall be from the date immediately before the commencement of the pension payment to the date immediately before the termination of the contract.

(2) The period of cancellation of order under the instant insurance contract, and the refund money for cancellation as of June 18, 2012, etc. are as follows.

On June 5, 2012, June 2012, 2012, the period for cancellation of order, which is June 5, 2012, June 2012, 201, included in the main sentence, is 514,304,53 won 475,826,140 won, 475,889,748 won 475,826,140 won, June 5, 2012, June 14, 2012;

[Ground of recognition] Unsatisfy, entry of Gap evidence 3 through 6 (including virtual number), the purport of the whole pleadings

D. Determination

(1) Appraisal of rights under an insurance contract

(A) Article 7(1) of the Inheritance Tax and Gift Tax Act provides that “In case of inherited property, all articles having economic value that can be converted into money with property belonging to the decedent and all rights having property value legally or in fact, shall be included.” Article 60 provides that “The value of the property on which inheritance tax is levied under this Act shall be the market value as of the date the inheritance commences. The market value means the value that is generally recognized as being established when a free transaction is made between many and unspecified persons. Where it is difficult to calculate the market value, the value assessed by the method prescribed in Articles 61 through 65 shall be deemed the market value, taking into account the type, scale, transaction circumstances, etc. of the relevant property

In addition, Article 65(1) provides that "The value of a conditional right, term of existence of which is uncertain, a right to benefit from the trust or a right to receive a periodical amount as determined by the Presidential Decree shall be appraised according to the methods as determined by the Presidential Decree based on the nature, content, and duration of the right in question," and Article 60(1)1 of the Enforcement Decree of the same Act provides that "The conditional right shall be the value assessed based on the value of the original right at the base date of appraisal in consideration of facts constituting the contents of conditions as of the base date of appraisal, certainty of conditions, and other overall circumstances," and Article 62(1)1 of the same Decree provides that "The recreation fund shall be based on the regular amount to be received in each year, based on the total amount calculated in accordance

Meanwhile, Article 14(2) of the Framework Act on National Taxes provides that “The provisions on the calculation of tax base under tax-related Acts shall apply according to the substance regardless of the name or form of the income, profit, property, act or transaction.”

(B) In light of the following circumstances, it is reasonable to view the instant insurance contract as the market price of June 4, 2012, which was in the period of cancellation of order as of the base date of appraisal; each insurance contract as of June 5, 2012, which was in the period of cancellation of order; and each insurance contract as of May 30, 2012, when the period of cancellation of order as of the base date of appraisal expires.

① Article 60(2) of the Inheritance and Gift Tax Act provides for the definition of market price under the Inheritance and Gift Tax Act as an alternative to the case where it is difficult to compute a market price pursuant to Article 60(3) of the Inheritance and Gift Tax Act, and Articles 61 through 65 of the Inheritance and Gift Tax Act provide for the method of reasonably estimating a market price. In full view of the fact that Article 60(3) of the Inheritance and Gift Tax Act provides for the method of calculating the value of the property on which the inheritance tax is levied (see Supreme Court Decision 2012Du3200, Jun. 14, 2012).

(2) In light of the fact that a contract takes effect upon the conclusion of the contract, the right to withdraw an application is the right to escape from the contractual relationship simply if the consumer makes an offer or changes his/her intention within a certain period after the contract was concluded, and the consumer has the nature of special right to cancel which is recognized as not being bound by his/her expression of intention from the already formed contract so that it does not become effective upon the conclusion of the contract, and even if it exists or can be terminated within the period of cancellation of application, he/she

③ Meanwhile, the Plaintiffs comprehensively succeeded to the rights of Nonparty 1 by inheritance. As such, the Plaintiffs acquired the right to refund the premium upon cancellation or termination of the insurance contract according to the terms and conditions of the instant insurance contract and the right to receive the installment fund, respectively.

Under Article 65(1) of the Inheritance and Gift Tax Act and Article 60 Subparag. 1 of the Enforcement Decree of the same Act, the right to refund insurance premiums constitutes conditional rights acquired when the condition of suspension, such as cancellation of order or early cancellation, is fulfilled (the right to depend on whether the validity or termination of a conditional juristic act established in a single unit is uncertain in the future, and the market value can be assessed as “the reasonable value taking into account the facts constituting the contents of the conditions as of the evaluation base date based on the value of the rights in the future, the certainty of the terms and conditions, and all other circumstances,” based on the value of the rights in the future. However, according to the terms and conditions of the insurance contract in this case, where the cancellation of order is made within 15 days, the total amount of the paid insurance premiums may be received, and if the insurance contract is terminated

On the other hand, the right to receive the periodical fund is assessed according to Article 65 of the Inheritance and Gift Tax Act and Article 62 of the Enforcement Decree of the same Act, and the market price is less than the right to refund the premium as seen above.

④ As above, even if the market price of the right to refund insurance premiums and the market price of the entitlement to insurance contracts of this case are to be evaluated in accordance with the current market price, insurance contracts are established and contract becomes effective, insurance claims can exercise rights from that time because they are merely abstract rights before the occurrence of an insured event and have been determined as specific rights due to the occurrence of an insured event (see Supreme Court Decision 2007Da19624, Nov. 13, 2008). Thus, rights of policyholders arising during the period for cancellation or termination of insurance premiums can be refunded i) abstract right to receive insurance premiums (in the case of a pension insurance, specific insurance claims shall be deemed the arrival of the payment date of insurance premiums). Since supplementary assessment methods are not applied when determining the price of insurance contracts traded by many and unspecified persons, it is reasonable to choose the method of calculating the current price of insurance contracts based on the difference between the amount of insurance contracts determined by the Ordinance of the Ministry of Strategy and Finance and Finance and the actual amount of insurance premiums to be refunded and the amount appraised by the heir under Article 26(1).

(2) The due amount of tax

(A) In a lawsuit seeking the revocation of a taxation disposition, the subject matter of adjudication is whether the tax base and tax amount notified by the tax authority exist objectively. In a case where the tax base and tax amount recognized by the disposition are excessive compared to the legitimate tax base and tax amount, the disposition of imposition is unlawful within the scope exceeding the reasonable tax base and tax amount (see Supreme Court Decision 88Nu6504, Mar. 28, 1989). Thus, the relevant

(B) Since the instant case’s health class, the insurance contract of June 4, 2012, each insurance contract of June 5, 2012, and each insurance contract of June 5, 2012, and the cancellation refund of May 30, 2012, are the value of inherited property, the instant disposition made by deeming it as the payment premium for the insurance contract of May 30, 2012 is unlawful.

Therefore, if the right under the insurance contract of May 30, 2012 is deemed to be KRW 514,304,553 as the termination refund, the legitimate tax amount is deemed to be KRW 529,356,210 as follows, and the exceeding part should be revoked in an unlawful manner.

Table (units: 21,597,248,67 21,571,571,53,220,221,537,124 7,021,537,537,537,125 tax base, 125,75,711,5431,550,5016,095 tax rate of 505 6,827,855,7716,716,815,008,047 donation tax credit of 1,496,306,7621,496,306,306,7621,306,7685,485,4868,486,486,486,486,486,486,486,486,486,486,467,57,94,294,

3. Conclusion

Therefore, the plaintiffs' claims are justified within the scope of the above recognition, and the remaining claims are dismissed as they are without merit. It is so decided as per Disposition.

[Attachment]

Judges Cho Han-chul (Presiding Judge)