Cho High Court Decision 201Do2734 (No. 24, 2012)

contribution to the donation of shares of the corporation, if the value of the shares of the corporation has increased through the donation,

The net assets equivalent to the amount obtained by deducting the corporate tax and resident tax from the value of shares by donation of shares have increased separately, so that if the value of shares of the company has increased by the difference between the total value of shares and the value of shares after donation in accordance with the Evaluation Regulations, the shares have increased by donation of shares.

2012Guhap23907 Revocation of Disposition of Imposition of Gift Tax

ChoAA and 2 others

2 others from the head of Sungbuk Tax Office

March 29, 2013

May 24, 2013

1. All of the plaintiffs' claims are dismissed.

2. The costs of lawsuit are assessed against the plaintiffs.

On May 20, 201, the head of Seongbuk North Korea Tax Office revoked the imposition of gift tax of KRW 000,00 on May 20, 201 with respect to Plaintiff Cho Jae-AA, and of KRW 000 on May 20, 201 with respect to Plaintiff Cho NamBB on May 20, 201, and the head of Gangnam-gu Tax Office’s imposition of gift tax of KRW 000 on Plaintiff Cho Nam-CC on May 25, 201.

1. Details of the disposition;

A. The plaintiffs ChoAA and ChoCC acquired 100% of the shares of the EEAC Co., Ltd., EEAB (former Co., Ltd. DDIB, DDAB, and 400,000 (45%) which were the largest shareholders of DDDEL Co., Ltd. (hereinafter referred to as "DDDL"), as the source of funds for specific bonds (securities financial bonds, small and medium enterprise restructuring claims, and amount of 00,000) which were actually closed, and later the company acquired 10% of the shares of the company of this case as the source of funds, and later 1,080,000,000 shares of the company of this case through capital increase for new use (1,40,000 shares of the company of this case) were owned by plaintiff ChoA, and 840,000 shares (35%) which were newly constructed in the course of 200,000,000 shares of the company of this case as the non-listed corporation of this case.

In liquidation of joint business, 1/3 shares of land and buildings were acquired, and all of the above parts were leased to DDD, and the type of business was changed to the real estate leasing business.

C. As of December 31, 2006, the company of this case entered approximately KRW 000, and approximately KRW 0000 in total assets as of December 31, 2006. Meanwhile, as of December 31, 2006, DDD entered approximately KRW 000 in total assets and approximately KRW 000 in sales, but as of December 31, 2006, sales have continuously increased after the hotel building was completed, and approximately KRW 000 in 200 in 200 in 2007, and approximately KRW 000 in 200 in 2000 in 2009, and approximately KRW 000 in 201 in 201.

D. On December 29, 2007, FF and their spouse KimGG, etc. (hereinafter referred to as "CF, etc.") donated the instant company the shares of DDDDDD 615,793 (FF 515,104, KimG 7,376, and other shareholders 93,313, and this was about 93.3% of the total number of the issued and outstanding DDD local shares, and hereinafter referred to as "the instant shares"). Accordingly, the instant company reported and paid KRW 000,000,000,000,000,000,000,000,000,000,000,000,00,000,00,00,00,00,00,00,00,00, won

E. On May 20, 201, the Defendants issued a gift tax of KRW 000 (including additional tax of KRW 000) on May 20, 201 with respect to Plaintiff Cho Jae-BB on the ground that the instant company’s increase in the stock value of the instant company due to the receipt of the instant shares from ChoF, etc. by the ChoF, etc., should be deemed to have been donated by the Plaintiffs, and on May 20, 201, the director of the tax office of Seongbuk North Korea imposed a gift tax of KRW 000 (including additional tax of KRW 000) on Plaintiff Cho Jae-B, and on May 25, 201, the director of the tax office of Gangnam imposed a gift tax of KRW 000 (including additional tax of KRW 000) on Plaintiff ChoCC on May 20, 201.

F. The Plaintiffs appealed and filed a petition for trial with the Tax Tribunal on July 15, 201, and the Tax Tribunal on April 24, 2012 "OO-dong 000 O-dong 00 O-dong 00 O-dong 00 and one parcel of land.

On July 3, 2006, the initial date of depreciation was to recalculated the amount of income of the instant company in 2006, and then to the effect that the instant company would fix the increased value of the shares of the instant company due to the donation of the instant shares, and to rectify the tax base and tax amount.

(g) Accordingly, the head of Sungbuk District Tax Office revised and notified the gift tax amount of Plaintiff Cho Jae-A(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(s)(1

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

A. The plaintiffs' assertion

1) The taxation of gift tax, which is scheduled to be 'full comprehensive taxation', is based on clear premise that the taxpayer, the taxpayer, and the taxpayer within the limit of the taxation system, the tax base, the taxable period, the tax rate, and other taxation requirements are stipulated to a certain extent. Therefore, the comprehensive definition of Article 2(3) of the former Act on Inheritance Tax and Gift Tax (amended by Act No. 8828, Dec. 31, 2007; hereinafter referred to as the "Act") can not be imposed on gift tax.

2) The donation of the instant shares does not constitute “the acquisition and transfer of the instant shares to the instant company,” “the exchange of the instant shares,” and “the organizational change of the legal person” under Article 42(1)3 of the Act. Thus, Article 42(1)3 of the Act cannot be applied to the donation of the instant shares.

3) Article 2(2) of the Act provides that "no gift tax shall be imposed in the event that income tax or corporate tax is imposed on a donee." The company of this case included the income accruing from the donation of the stocks of this case in its gross income and paid corporate tax thereon, and thus, re-taxation cannot be levied on such profits. In addition, the plaintiffs are found to fall under double taxation, even if they pay dividends in the case of distributing earned surplus of the company of this case, and when transferring the stocks of the company of this case, the transfer income tax is paid in the case of transferring the

4) In cases where the Act explicitly provides for the requirements, such as taxable items, scope of taxation, etc. by presenting a specific type of taxation, it shall be deemed that it set the limitation of donation under the tax law, and thus, taxation different from the content thereof shall not be permitted in principle. Therefore, in cases where a gift is made to black corporations in interpretation of Article 41(1) of the Act, gift tax may not

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Determination on the first argument

A) Introduction and purport of the complete comprehensive gift taxation

The former Inheritance Tax and Gift Tax Act (amended by Act No. 7010, Dec. 30, 2003; hereinafter referred to as the "former Act") borrowed the concept of gift under the Civil Act that "in order to clarify which act is a gift, one of the parties expresses his/her intention to confer property to the other party without compensation and the other party approves it." However, the concept of such gift does not have any way to prevent any phenomenon in which gift tax is evaded through the transfer of property beyond the form of gift under the Civil Act, and thus, the tax authorities did not include the concept of gift under the Civil Act, but rather it did not include the concept of gift under the Civil Act, but it did not include the concept of gift under the Civil Act, and the provision explaining the type of the act and the method of calculating gift tax so that gift tax can be imposed on it (Article 32 through 42 of the former Act). However, if the concept of gift tax was revised in 200, the concept of gift tax was not yet prescribed in the new law or the method of comprehensive donation.

B) Contents of the complete comprehensive gift tax

Article 2 (3) of the Inheritance Tax and Gift Tax Act (amended by Act No. 7010 of Dec. 30, 2003) stipulates that even if a tangible or intangible asset which is valuable is transferred to another person without compensation or is not used in the method of transfer, or if the other party's property value increases as a gift under tax law, all of the valuable tangible or intangible asset is transferred without compensation, or is not used in the method of transfer, regardless of the name, form, purpose, etc. of the act or transaction, the transfer or increase of value of the property that has occurred from such type of transaction is included in the concept of donation under Article 2 (3) of the Inheritance Tax and Gift Tax Act, and the content thereof is modified from the "donation of donation" to the "donation of donation."

C) Whether gift tax can be imposed by applying Article 2(3) of the Act

As such, ① In order to impose gift tax on the transfer or increase in value of various forms of gratuitous property that have not been predicted by legislators, the concept of donation has been introduced by the complete comprehensive taxation principle under Article 2(3) of the Act, ② accordingly, the existing regulations on deemed donation have been changed into the calculation regulation on the donated property, and this is, in any case, intended to enhance predictability as to whether the concept of donation is covered by the gift in an irregular manner and to suggest the method of calculating the donated property if there is a similar type of gift (limited to the cases where the existing provisions on deemed donation are listed in the relevant provisions in light of the provisions on the existing provisions, rather than the example provisions on deemed donation), and Article 2(3) of the Act has been comprehensively defined as above, and Article 2(3) of the Act includes Article 2(1) of the Act, and Article 2(3) of the Act provides that if it is possible to impose gift tax on the donated property of another person, it shall be subject to taxation under Article 28(3) of the Act and Article 21(3) of the Act, it shall be subject to all the concept of gift tax.

D) Whether an increase in the value of the Plaintiffs’ shares due to the donation of the instant shares constitutes a donation under Article 2(3) of the Act

Article 63(1)1 (c) of the Act and Article 54(1) of the Enforcement Decree of the Act have to evaluate the stocks of unlisted corporations by weighted average of the net profit and loss value and net asset value of the company. In this case, the company of this case has increased net assets equivalent to the amount calculated by subtracting the corporate tax and resident tax from the value of the stocks of this case by the ChoF et al. donated the stocks of this case to the company of this case, and the company of this case has increased separately by the difference between the value of the stocks of the company of this case owned by the plaintiffs and the value of the stocks of the company of this case after donation under the provisions of the Act. However, the ChoF, as a person with a special relationship with the plaintiffs, has increased the value of the stocks of the company of this case owned by the plaintiffs through the contribution to the donation of the stocks of this case, it constitutes "donation" under Article 2(3) of the Act. Accordingly, it is reasonable to view that the plaintiffs' benefits from the donation of this case are subject to gift tax

2) Determination on the second argument

A) Article 42 (1) 3 of the Act and Article 31-9 (2) 5 of the Enforcement Decree of the Act provide that the profits or the amount of business acquired through the capital transaction of a corporation, such as investment, reduction, merger, division, and stock conversion, transfer of business, exchange of business, change in the organization of the corporation, etc. shall be the ownership shares or the value thereof, and that, before and after the change in the value thereof, if the property in question is 30/100 or more of the value before the change in the value thereof, the difference in the value thereof shall be deemed the value of property donated to the person who acquired the profits.

Article 42 (1) 3 of the Commercial Act provides that "No. 4 of the Commercial Act provides that the corporation shall be deemed to be subject to taxation without the law, and that the transfer of its shares shall not be subject to taxation without the law." Article 42 (2) of the Commercial Act provides that "No. 5 of the Commercial Act provides that the transfer of shares shall be subject to taxation without the law, and that the transfer of shares shall be subject to taxation without the law." Article 42 (1) 3 of the Commercial Act provides that "No. 4 of the Commercial Act provides that the transfer of shares shall be subject to taxation without the law, and that the transfer of shares shall not be subject to taxation without the law, and that the transfer of shares shall be subject to taxation without the law." Article 42 (1) 3 of the Commercial Act provides that "No. 5 of the Commercial Act provides that the transfer of shares shall be subject to taxation without the requirement that the transfer of shares shall be subject to taxation with the requirement that the transfer of shares and the transfer of shares shall be subject to taxation without the change."

3) Judgment on the third argument

The double taxation generally refers to the imposition of two identical or similar taxes on the unified taxable object. The plaintiffs, and the company of this case paid corporate tax on the asset increase profits from the donation of the shares, and when the company of this case disposes of earned surplus, the dividend income shall be paid by the plaintiffs, and when the company of this case transfers the shares of the company of this case, it is argued that the plaintiffs are double taxation, and that the gift tax is imposed again on the plaintiffs, and it is examined as follows.

A) double taxation of corporate tax and gift tax

The corporate tax paid by the instant company due to the donation of the instant shares was made with respect to the value (including approximately 48 billion won) assessed in accordance with Article 63 of the Act, etc., and the gift tax imposed on the Plaintiffs due to the donation of the instant shares was made with respect to the increase in the value of the instant shares owned by the Plaintiff mold, which was anti-privately increased as the asset value of the instant company increases to the value of the instant shares. Accordingly, since the increased portion of the instant shares differs between the corporate tax paid by the instant company and the gift tax imposed on the Plaintiffs, the person to whom the income was imposed, and the taxpayer, and the calculation method of the tax base, it is difficult to deem that the tax was imposed in duplicate on the uniform taxable objects.

B) Whether dividend income tax and gift tax are double taxation

If profits accrue from the business performance of a corporation and profits accrue after paying corporate tax are distributed to the shareholders, the dividend income tax under the Income Tax Act is imposed on the shareholders. Such dividend income tax is a tax to be borne by the shareholders if the shareholders are not only the plaintiffs but also the shareholders of the corporation, and it is natural that the corporation separates the profits and shareholders' interests by recognizing the status of the company having independent personality as the subject to the ownership of the profits and losses. However, if the income subject to corporate tax is distributed to the shareholders and the income tax is imposed on the shareholders, it can be a result of double taxation of the same profits if the income subject to corporate tax is distributed to the shareholders, and if the shareholders are private individuals to adjust it, the deduction system of the dividend income tax through Gros-up (Article 56 of the Income Tax Act), and if the shareholders are a corporation, the portion of the dividend income amount from the subsidiary which is not taxed (Article 18-2 and Article 18-3 of the Income Tax Act). As seen above, the dividend income tax imposed on the shareholders of the corporation is imposed upon the Plaintiffs' profits, and there are no grounds for taxation.

C) Whether gift tax and transfer income tax are double taxation

Where a donee transfers the assets donated to him/her pursuant to Article 97(1) of the Income Tax Act and Article 163(9) of the Enforcement Decree of the same Act, the transfer income tax is calculated on the basis of the amount calculated by subtracting the transfer value from the actual transaction value as of the date of donation. Therefore, in cases where gift tax is imposed on the increase in the value of the stocks of the company of this case increased due to the donation of the stocks of this case, the increased portion is recognized as necessary expenses at the time of the transfer of the stocks, and then, the transfer income tax is not imposed on the profits of the portion thereafter. Therefore, this part of this case also does not constitute a problem of double taxation, even though the value of the stocks of the company of this case owned by the plaintiffs is increased due to the donation of the stocks of this case, and if the plaintiffs continue to hold the stocks of this case without any tax burden, the plaintiffs enjoy without compensation the profits equivalent to the increase in value of the stocks, and the firstly, the company of this case is in violation of DDEL’s second, 2, Dodel’s exercise of management right.

4) Judgment on the fourth argument

Article 41 (1) 1 of the Act provides that "where a person who has a special relationship with a stockholder of a corporation (hereinafter referred to as a "specific corporation") who has any loss, or who has suspended or closed its business, provides the specific corporation with property free of charge and gains profits from the stockholder of the specific corporation, the amount equivalent to such profits shall be deemed the value of property donated to the stockholder of the specific corporation." From Article 41 (1) 1 of the Act, the interpretation of Article 42 (1) of the Act provides that where a person who has a special relationship with the stockholder of the specific corporation who is not a specific corporation provides the specific corporation with property free of charge, the gift tax shall not be levied on the stockholder of the specific corporation. Rather, in addition to the donations under Articles 33 through 41, 41-3 through 41-5, 44 and 45, the disposal of the profits shall be deemed the value of property donated to the person who has acquired the profits, and Article 41 (1) 1 of the Act provides that the gift tax shall be imposed on the donated corporation pursuant to paragraph 2 (3) of this case.

3. Conclusion

Then, the plaintiffs' claims of this case are all dismissed as it is without merit, and it is so decided as per Disposition.