Seoul High Court Decision 2014 Daegu District Court Decision 4412 ( December 30, 2014)

It cannot be deemed that a title trust was made on the sole ground that the established capital has been deposited in the account;

It is difficult to conclude that the act of acquiring shares is based on a nominal trust solely on the circumstance that the capital was deposited in the account without any assertion or proof as to the underlying relationship or actual relationship. In light of the business details before and after the incorporation process, it is reasonable to view that the capital, spot goods, labor, etc. was invested to operate a partnership and that the shares in question were distributed according to the shares in the partnership, and therefore, it is not the shares in title trust.

Article 45-2 Presumption of Donation of Title Trust Property

2015Guhap563 Revocation of Disposition of Imposition of Gift Tax

○○ and three others

○ Head of tax office

November 24, 2015

on 19, 2016

1. The Defendant:

A. On February 6, 2014, the gift tax of KRW 37,032,00 (including additional tax) on the portion of donation to ○○○○ on September 1, 2003;

B. The amount of gift tax of KRW 37,032,00 (including additional tax) on September 1, 2003, which was imposed on Plaintiff ○○○○ on February 10, 2014; KRW 9,624,030 (including additional tax) on the donated portion on December 31, 2004; KRW 5,446,720 (including additional tax) on the donated portion on December 10, 205;

C. On February 10, 2014, the gift tax amounting to KRW 58,849,550 (including additional tax) on the donation portion on December 31, 2003, and KRW 23,852,390 (including additional tax) on the donation portion on December 10, 2005;

D. On April 9, 2014, the imposition of gift tax of KRW 182,553,760 (including additional tax) on the portion of donation on October 28, 2010 on Plaintiff ○○○○ on April 9, 201 shall be revoked entirely.

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

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. △△ Construction Co., Ltd. (hereinafter referred to as “△△ Construction”) was established on July 31, 2003 and has been engaged in ○○○○○○○○○ (○○○ dong) at ○○○○○○○○, and the Plaintiffs are currently working as the internal directors and auditors of △△ Construction. Meanwhile, Plaintiff ○○, ○○○, and ○○○ ○○, and ○○ ○ ○ ○ is a type of ○○○○, and Plaintiff ○○ ○ is an infant of ○○○.

B. The director of the regional tax office of ○○○ shall conduct a survey on the actual condition of stock change with respect to △△ Construction from October 31, 2013 to November 27, 2013. From September 1, 2003 to December 10, 2005, Plaintiff ○○○○, ○○○○, and ○○○○○○○, and 51,500 shares of △△ Construction acquired by Plaintiff ○○○○, and 14,500 shares of △△△ Construction (hereinafter collectively referred to as “instant shares”) acquired by Plaintiff ○○○○○ on October 28, 2010, and notify the Defendant that gift tax should be imposed on deeming that ○○○○ was a title trust with the Plaintiffs.

C. Accordingly, on February 6, 2014, the Defendant imposed on Plaintiff ○○○○ on September 1, 2003 KRW 47,032,00 (including additional taxes); on February 10, 2014, KRW 57,032,00 (including additional taxes); on September 1, 2003, KRW 9,624,030 (including additional taxes); on December 31, 2004, KRW 5,446,720 (including additional taxes); and on KRW 62,102,75,750 (including additional taxes); on December 10, 205, KRW 208 (including additional taxes); and on KRW 31,50,00 (including additional taxes); and on KRW 30,538,50 (including additional taxes) on each gift to Plaintiff ○○○○ on February 10, 2014, including the additional taxes on each of the gift taxes on KRW 201,5,5301,5.2015.28

D. The Plaintiffs filed an objection against the instant disposition on April 9, 2014, but △△ Director rendered a decision to dismiss it on May 23, 2014, and the Plaintiffs filed an appeal with the Tax Tribunal on August 22, 2014, but the Tax Tribunal dismissed it on December 30, 2014.

Facts having no dispute over recognition, Gap evidence 1 through 3 (including paper numbers; hereinafter the same shall apply), Eul evidence 1, 2, 4, and 6, and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) With respect to the legal fiction of title trust property, a statement of changes in stocks, etc. cannot be deemed the same as the list of shareholders. In the absence of the list of shareholders, Article 45-2(3) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 11130, Dec. 31, 201; hereinafter “former Inheritance Tax and Gift Tax Act”) which allows the determination of change of ownership based on the statement of changes in stocks, etc. to be applied from January 1, 2004. In the case of 45,000 shares transferred to the Plaintiff, ○○○○, and ○○○○○○○, and ○○○○○○, before December 31, 203, the change of ownership on the list of shareholders was not made. Therefore, even if the provision on the legal fiction of title trust cannot be applied to the above 45,00 shares, the Defendant’s disposal based on the statement of changes in stocks, etc. submitted by △△ Construction is unlawful against the principle of retroactive taxation.

2) The instant disposition is premised on the premise that ○○○ is the actual owner of the instant shares. As such, the Plaintiffs cannot be deemed the actual owner of the instant shares, since they are paid a reasonable price and acquired the instant shares, it is difficult to view ○○○ as the acquisition of the instant shares. Therefore, the instant disposition

3) Even if the Plaintiffs received the instant shares from ○○○○, the instant disposition that imposed gift tax on the total of 66,000 shares of the taxable shares at the time of the instant disposition is unlawful, since it merely is 30,000 shares subject to taxation at the time of the instant disposition.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

(c) Fact of recognition;

1) The current status of shareholders and stock changes between September 1, 2003 and October 28, 2010 of △△ Construction are as follows:

Name

Relation

(○○○)

Standard)

“03.9 1.

Establishment

‘03.12.31.

‘04.12.31.

"05.12.10

“10.10.28

Transfer

Acquisition by transfer

Transfer

Acquisition by transfer

Transfer

(Reduction of Capital)

Acquisition by transfer

Transfer

Acquisition by transfer

Consolidateds

45,000

18,000

18,000

16,500

20,000

5,000

(15,000)

5,000

14,500

0

○ ○

Punishment;

18,000

8,000

4,000

6,500

○ ○

Punishment;

13,500

8,500

5,000

○ ○

Punishment;

13,500

1,500

1,000

8,000

○ ○

Principal

18,000

18,000

Do Governor Construction

relevant

A corporation

15,000

(15,000)

○ ○

A.

14,500

(unit: State)

* Par value 10,000 won

2) On March 31, 2004, △ Construction reported corporate tax for the business year 2003 to the head of ○○ Tax Office on March 31, 2004, submitted a detailed statement of the situation of changes in stocks, etc., stating the details of changes

3) Meanwhile, ○○○ and the Plaintiffs’ arrears details confirmed by the computerized data of the National Tax Service are as follows.

same as this section.

Persons who pay in arrears;

The period of default;

Amount payable;

Jinay

○ ○

From September 30, 2003 to March 31, 2007

376,710

Partial Payment and Deferment of Liquidation

○ ○

From September 30, 2003 to April 30, 2004

72,110

Partial Payment and Deferment of Liquidation

○ ○

From February 29, 2004 to October 25, 2010

Full Payment

○ ○

From September 30, 2004 to September 30, 2010

0

Full Payment

○ ○

corresponding to this section

(unit:,000 won)

4) Before the establishment of △△△△, Plaintiff ○○ had qualifications as Mazers’ drivers, and roller drivers, engaged in road packing business using vibration rollers owned by himself. Plaintiff ○○○○ engaged in the construction business before the construction of △△△△△, while engaging in the road packing business after the construction of △△△△△. From around around 2008, Plaintiff 2 obtained each of the qualifications as roller drivers, asphalt drivers, and accelerator drivers.

5) Major developments and processes of the establishment of △△ Construction are as follows.

A) On July 31, 2003, KRW 450 million was deposited in cash with ○○○’s securities subscription account. On August 1, 2003, 450 million was remitted from the said account to ○○ as the addressee.

B) Under the real estate lease contract of ○○-dong, ○○-dong, ○○, a domicile of △△ Construction, the lessor is the lessor, and the lessee is the △△ Construction.

C) ○○○○ and Plaintiff ○○○ were promoters, who subscribed for 31,500 shares of △△ Construction on July 31, 2003. On the same day, Plaintiff ○○○ subscribed for and subscribed for 13,500 shares, and at the time of July 31, 2003, the register of shareholders of △△ Construction entered ○○○, Plaintiff ○○, and ○○○○○ into the register of shareholders in order of 18,000 shares, 13,50 shares, 13,50 shares, and 13,50 shares.

D) At the time of the establishment of △△ Construction, ○○○ was appointed as the chair’s representative director; Plaintiff ○○ was appointed as the director; Plaintiff ○○○ was appointed as the auditor; and Plaintiff ○○○ was appointed as the auditor on August 28, 2003.

On the other hand, the plaintiff ○○ was appointed as a new representative director.

6) After the establishment of △△ Construction, various construction costs, equipment rental costs, corporate expenses, and employees’ benefits were deposited and withdrawn from ○○○ Account.

Evidence, Evidence No. 4 through 8, Evidence No. 18, Evidence No. 3, 7, and 8, each of the evidences No. 3, 7, and 8, as well as the purport of the whole pleadings.

D. Determination

1) Determination on the first argument

A) The transfer of registered shares cannot be asserted against the company unless the acquisitor’s name and address are stated in the register of shareholders. As such, in a property requiring a transfer or exercise of a right, which is a requirement for deemed donation under Article 45-2(1) of the former Inheritance Tax and Gift Tax Act, which requires a transfer of ownership, from among those who are not the actual owners of shares in the register of shareholders, the actual owners and the nominal owners are different (see, e.g., Supreme Court Decision 2005Du10200, Feb. 8, 2007). As such, even if a statement on the change of shares and equity shares, which is a document submitted at the time of reporting the tax base and tax amount of corporate tax, cannot be deemed the same as the list on the register of shareholders, the transfer of shares cannot be deemed as a transfer of share, even if the statement on the change of shares and equity shares were stated and reported (see, e.g

Meanwhile, Article 45-2(3) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 7010, Oct. 30, 2003) provides that where the list of shareholders, etc. is not prepared, it shall be determined based on the statement of changes in stocks, etc. submitted to the chief of the district tax office having jurisdiction over the place of tax payment. According to Article 10 of the Addenda, the above provision applies from the portion of submission of the statement of changes in stocks, etc. after January 1

B) In the instant case, as seen earlier, the acquisition date of each of the acquisition date of Plaintiff ○○○, ○○○, and ○○○○○ on September 1, 2003 and December 31, 2003, which was the date of the amendment, was the same as the fact that it was before January 1, 2004, which was the date of enforcement of the amendment. However, the fact that △△ Construction reported corporate tax for the business year 2003, which was after the date of enforcement of the amendment, to the head of ○○ Tax Office on March 31, 2004, and submitted a detailed statement of change of stocks, etc., stating the change of shareholder’s name, can be determined based on the detailed statement of change of stocks, etc. submitted by △△△ Construction pursuant to Article 10 of the Addenda. Accordingly, this part of the Plaintiffs’ assertion on a different premise is without merit.

2) Judgment on the second argument

A) Relevant legal principles

The provision on deemed donation of trust property under Article 45-2(1) of the former Inheritance Tax and Gift Tax Act applies to cases where the actual owner and the title holder are different in the property (excluding land and buildings) which requires registration, etc. for the transfer or exercise of rights. In such cases, the fact that the title holder of the property differs from the actual owner shall be attested by the tax authority (referring to the case where the tax authority bears the burden of proof, etc.).

Meanwhile, a person registered as a shareholder in the register of shareholders is presumed to be a shareholder of the company and has the burden of proving the denial of the shareholder's rights (see, e.g., Supreme Court Decision 84Meu2082, Mar. 26, 1985). In order to claim that a shareholder in the register of shareholders was trusted and that there was a separate shareholder in the name of the nominal lender, the person must prove the nominal borrowed facts. However, even if a third party, other than a shareholder in the register of shareholders, actually paid new shares, a legal relationship based on such act can be presented such as a title trust relationship, such as a trade relationship with which one party is obligated to pay the capital, or a simple loan relationship with the acquisition price of new shares, and thus, it cannot be readily concluded that a third party merely paid the new shares under a title trust relationship based on the name of the shareholder (see, e.g., Supreme Court Decision 2007Da275757, Jul. 27, 207).

B) Whether title trust with 45,000 shares of the instant case was held

First, as to whether 4500 shares of this case acquired by ○○○○, ○○○, and ○○○○ by December 31, 2003, among the shares acquired by ○○○○○, were deposited in the account under the name of ○○○○○○○ in full as to whether 450 million shares were nominal trust, and the fact that the above Plaintiffs did not clearly explain the source of the purchase price of the shares of this case at the time of the on-site investigation of stock change was as seen earlier, but in light of the following circumstances, it is insufficient to recognize ○○○○ as nominal trust of 4500 shares out of the shares of this case only based on the facts acknowledged earlier and the evidence submitted by the Defendant, and there is no evidence to acknowledge otherwise.

① The Plaintiffs asserted that the corporate bond company borrowed and repaid 450 million won as well as 450 million won in the capital for the establishment of △△ Construction. In light of the fact that the actual amount of the established capital was deposited in KRW 450 million and immediately withdrawn the next day, the Plaintiffs appear to be the largest payment, and there is no data to exercise their rights, such as a claim for refund, against the most paid-in capital by △△ Construction.

In addition, there is no assertion or proof of the underlying relationship or actual relationship between the plaintiffs' act of acquiring shares. Thus, it is difficult to conclude that the plaintiffs' act of acquiring shares is based on the title trust solely on the fact that the established capital was deposited in the account of ○○○○.

② Rather, Plaintiff ○○ was engaged in road packaging construction business prior to the establishment of △△△△ Construction, and Plaintiff ○○○ also engaged in the Plaintiff’s construction business and engage in the road packaging construction business after the establishment of △△△ Construction.

G. In light of the fact that ○○○○○○ obtained the relevant certificate of qualification, and Plaintiff ○○○○ offered road packaging machines (vibrationls) owned by the principal during the process of the construction of △△△△, and that at the time of the establishment of △△△△△, Plaintiff ○○○ was appointed as the representative director, Plaintiff ○○○○○, and Plaintiff ○○○○ was appointed as the representative director, and that ○○○○○○○ was appointed as the representative director, and that ○○○○○○ was appointed as the representative director, it is reasonable to deem that ○○○○, Plaintiff, and ○○○○○○○ was in a partnership with each other by investing capital, goods, and labor in the process of the establishment of △△△△

③ On December 31, 2003, Plaintiff ○○○ claimed that the existing loan claims against ○○○ shall be paid KRW 15 million plus part of his own wage, and that ○○○○○ acquired KRW 1800,000 of the shares of △△△ Construction from ○○○○○. The statements made by ○○○○○○, △△ Construction Staff, and Plaintiffs-friendly relatives also correspond to this. As such, △△△ Construction is operated as a type of an enterprise, work at △△△△ Construction, work at △△△△△ Construction, and work at the road packaging construction, and is expected to have the substantial value of the shares, in light of the following: (a) in light of the fact that the scale of △△○○○○○○, and the total amount of △△△ Construction is small, and that the actual value of the shares is anticipated not to increase, it may be accepted to a certain extent.

④ Although the Defendant alleged that ○○○○ was in title trust with the Plaintiffs for the purpose of evading the high-amount delinquent tax amount, the time when the Plaintiff ○○○ and ○○○ acquired the instant shares was prior to the notice of tax investigation or national tax amount in arrears with respect to ○○○○ on July 31, 2003, and if ○○ intended tax avoidance, it seems that there was no reason to accept 18,000 shares in its name at the time of the establishment of △△△△△.

C) Whether the remaining shares of this case are title trust

Of the shares of this case, 1,500 shares acquired by Plaintiff ○○○ on December 31, 2004, 5,000 shares acquired by Plaintiff ○○○○○○○○○○○○, and 14,50 shares (total 21,00 shares) acquired on October 28, 2010 by Plaintiff ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ on December 10, 205. As seen earlier, insofar as the title trust cannot be deemed to have been held from each title trust.

D) Sub-committee

Therefore, the actual owner of the instant shares is ○○○, and the disposition of this case, based on the premise that the Plaintiffs received title trust from ○○○○, was unlawful.

3. Conclusion

Therefore, the plaintiffs' claims of this case are with merit, and it is so decided as per Disposition by admitting them.