2013luminous0849

Whether there is an objective of tax avoidance in stock title trust for employees

Although it is alleged that the shares held in title trust to an employee simply meet the number of promoters, it is deemed that there was a tax avoidance purpose, such as setting up a tax measure by comparing the return and payment of gift tax with the payment of capital gains tax when capital gains are issued in title trust.

Article 41-2 of the Inheritance Tax and Gift Tax Act / [Presumption of Donation of Trust Property]

2014 Dohap10080 Revocation of Disposition of Imposition of Gift Tax

MaAA

The director of the tax office

August 21, 2014

October 23, 2014

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The imposition of gift tax OOO on January 7, 2013 by the Defendant against the Plaintiff is revoked.

1. Basic facts

A. Plaintiff’s establishment of corporation and shareholder title trust

“On August 18, 198, the Plaintiff established BB Tourism Co., Ltd. (hereinafter “instant company”) with OOO, 5,000 shares issued, and accepted 50 shares in its own name among the above issued shares, and transferred 750 shares under title trust (hereinafter “EE”), respectively, to a third party KimCC and MadD, and accepted 750 shares under its own name. The Plaintiff’s name was 2,00 shares, 30 shares for the Plaintiff’s wife and person, 30 shares for the Plaintiff’s wife and person, and 200 shares for the Plaintiff’s H and franchise II.

“The instant company issued shares 15,000 shares with capital increase on June 26, 2003 (hereinafter “instant capital increase”) and allocated shares 2,250 shares (hereinafter “instant shares”) to the title trustee upon equal allocation among the shareholders, according to the equity allocation among the shareholders.” (c) The Plaintiff’s title trust (hereinafter “instant title trust”).

On November 27, 2007, the Plaintiff filed a lawsuit for confirmation of shareholders' rights against the title trustee under the jurisdiction of the court 2007 GohapOOO on November 27, 2007 on the entire shares of the instant company (the title trustee owns 3,00 shares each of 3,00 shares) held by the title trustee, including each of the instant shares, and won the entire shares of the instant company on March 21, 2008, and the said judgment became final and conclusive on May 29, 2008.

D. Defendant’s imposition of gift tax

On December 2012, the director of the Central Regional Tax Office of China conducted an investigation of changes in shares with respect to the instant company, and confirmed that the Plaintiff held title trust with respect to each of the instant shares, and notified each of the taxation data to the disposition authority so that the title trustee can determine and notify the gift tax (OOO) of each of the instant shares by calculating the value of each of the instant shares as a supplementary assessment method (OOO per share).

" Accordingly, on January 7, 2013, the defendant decided and notified the OOO of the gift tax on the donation of the instant shares through capital increase with capital increase on June 26, 2003 and at the same time designated and notified the plaintiff who is the donor as a joint taxpayer pursuant to Article 41-2 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 7010, Dec. 30, 2003; hereinafter referred to as the "former Inheritance Tax and Gift Tax Act") as the donation of title trust property under Article 41-2 of the former Inheritance Tax and Gift Tax Act."

"The plaintiff filed an appeal with the Tax Tribunal on January 23, 2013, and the Tax Tribunal rejected the plaintiff's assertion that there was no tax avoidance purpose in the title trust of the shares of this case on November 13, 2013." However, in calculating and assessing the shares of this case based on the supplementary assessment method, the tax payment notice amount was determined to be corrected by reflecting the number of shares issued by new shares in calculating the net profit and loss value in calculating the number of shares issued by new shares by supplementary assessment method."

"The defendant, on December 20, 2013, corrected gift tax on the gift of the instant shares to be reduced to OOOO on December 20, 2013, and notified the plaintiff and KimCC (hereinafter referred to as "the disposition of this case") of the disposition of imposition of OOO of gift tax imposed as of January 7, 2013" (the grounds for recognition), "No dispute exists, Gap evidence Nos. 1 through 8, Eul evidence Nos. 1 and 1, and the purport of the whole pleadings.

2. The plaintiff's assertion and relevant Acts and subordinate statutes;

Plaintiff’s assertion

① At the time of the instant company’s incorporation (amended by Act No. 5053, Dec. 29, 1995; hereinafter “former Commercial Act”) under Article 288 of the former Commercial Act (amended by Act No. 5053, Oct. 1, 1996; hereinafter “former Commercial Act”), the Plaintiff inevitably trusted 750 shares to the title trustee in order to satisfy 7 or more promoters, which are the conditions for the establishment of a corporation under Article 288 of the former Commercial Act; ② in practice at the time of the instant company’s capital increase, the Plaintiff distributed shares to the title trustee according to the existing shares ratio; ③ there was no purpose of evading dividend tax, deemed acquisition tax, corporate tax secondary liability and capital gains tax at the time of the instant company’s title trust; ④ The Plaintiff’s shares already were returned to the Plaintiff’s name, and there was no risk of avoiding dividend income tax, etc.

It is as shown in the attached Form.

3. Whether the instant disposition is lawful

(a) Facts of recognition;

1) Article 288 of the former Commercial Act was amended, and there was no limitation on the number of promoters under the Commercial Act at the time of issuing new shares, but the Plaintiff maintained the title trust state and allocated each of the instant shares to the title trustee.

"2) At the time of capital increase with consideration, the company of this case reviewed various tax issues such as gift tax, acquisition tax, transfer income tax, etc. for capital increase with the title "tax issues and measures related to the capital increase of BB tourism", and as a result, if the assessment per share of shares at the time of the acquisition by other persons, including Eddd and one other, is considerably less than the present, there was a tax measure such as "the reason that the gift tax is reported and paid because it is deemed to have been trusted than the reporting and payment of transfer income tax by transferring the shares of another person, Ed and one other," "3) The earned surplus of the company of this case in 2004 reached OO in 205, OOO in 206, 2007, OOOO in 2009, OOO in 2009, OOO in 2009, OO201, O2010, O2010.

[Ground of recognition] Facts without dispute, entry of evidence Nos. 2 and 3 (including additional number), the purport of the whole pleadings

B. Determination

Article 41-2 (1) of the former Inheritance Tax and Gift Tax Act, in case where the actual owner or the nominal owner is different from the property which requires a transfer of rights or a registration for exercise of rights, the value of the property shall be deemed to have been donated to the actual owner on the date when it is registered, etc. as the nominal owner (in case of the property requiring a transfer of rights, it refers to the date following the end of the year following the year in which the date of acquisition of ownership falls), notwithstanding Article 14 of the Framework Act on National Taxes: Provided, That the same shall not apply to cases falling under any of the following subparagraphs, and subparagraph 1 of the same

The legislative purport of Article 41-2(1) of the former Inheritance Tax and Gift Tax Act is to recognize an exception to the substance over form principle in the purport that the act of tax avoidance using the title trust system is effectively prevented, thereby realizing the tax justice. Thus, if the title trust was recognized to have been made for reasons other than the purpose of tax avoidance and it is merely a minor reduction of tax incidental to the said title trust, it cannot be readily concluded that there was such a purpose of tax avoidance in the title trust. However, in light of the legislative purport as seen above, only if the purpose of tax avoidance is not included in the purpose of the title trust, it cannot be deemed that there was a deemed donation by applying the above provision in the case where the purpose of tax avoidance is not included in the purpose of the title trust, and thus, it cannot be said that there was no purpose of tax avoidance (see, e.g., Supreme Court Decision 2013DuOOO

In addition, the burden of proof as to the absence of the purpose of tax avoidance can be proved by such means as proving that there was no purpose of tax avoidance, and that there was no purpose of tax avoidance. However, as the nominal owner who bears the burden of proof, there was a clear objective of tax avoidance to the extent that there was no purpose of tax avoidance in the title trust, and that there was no tax avoidance in the future at the time of the title trust or in the future, it should be proved to the extent that there was no doubt if it is ordinary by objective and objective evidence that there was no tax avoidance at the time of the title trust (see, e.g., Supreme Court Decision 2004DuOOO, Sept. 22, 2006).

Meanwhile, whether there was a purpose of tax avoidance or not should be determined as to whether there was a tax evasion or not after the time of title trust (see Supreme Court Decision 2003DuOOO, Jan. 27, 2005).

In light of the aforementioned legal principles, it cannot be readily concluded that the title trust of this case did not have any purpose of tax avoidance, and there is no other evidence to acknowledge it.

Therefore, the plaintiff's assertion is without merit.

① Even if it was necessary for the Plaintiff to meet the number of promoters at the time of the establishment of the instant company, even though Article 41-2(1)2 of the former Inheritance Tax and Gift Tax Act provides that, during the period from January 1, 1997 to December 31, 1998, the provision on deemed donation does not apply in cases where the shares trusted in title are converted into the actual owner’s name, the Plaintiff, during that period, did not return to the title trustee each 750 shares trusted in title to the title trustee at the time of the instant company’s capital increase without returning to the title trustee each 750 shares trusted in his/her own name. As such, there was no reason to maintain the title trust on the grounds that there was no limit on

② As seen earlier, in light of the fact that the instant company established tax measures, such as: (a) reporting and paying gift tax on title trust upon capital increase with the instant offering of new shares was more favorable than reporting and paying capital gains tax by transferring the shares; (b) the Plaintiff’s assertion that only allocated shares to the title trustee according to the existing shares ratio is difficult to believe, and that there was a purpose of evading capital gains tax, etc.

③ The earned surplus as of November 28, 20107 of the instant company reached the OOE. In view of the possibility of distributing the earned surplus, the Plaintiff’s global income tax amount, which is the global income tax avoided through the instant title trust, was derived from considerable amount when comparing all the shares of the instant company in its name with the receipt of profit dividends (see Supreme Court Decision 2012Du200, Nov. 28, 2013), was likely to reduce the burden of global income tax.

④ Even if the instant shares were not actually transferred, and there was no lack of distribution of profits by the instant corporation, thereby resulting in the actual evasion of taxes due to the title trust of the instant shares, whether there was a tax avoidance purpose should be determined at the time of title trust, and it should not be determined as to whether there was a tax evasion purpose thereafter.

4. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.