Gwangju District Court-2016-Gu Partnership-12035 ( July 20, 2017)

The purpose and object of the investigation are different with respect to the financing of shares, and it does not constitute a duplicate investigation.

On the other hand, the investigation of this case concerning the source of funds of the stocks acquired in this case does not constitute a duplicate investigation on the grounds that the purpose of the investigation and the subject matter of investigation are different.

Inheritance Tax and Gift Tax Act Article 45 (Legal Fiction of Title Trust Donation)

The revocation of disposition imposing gift tax on Gwangju High Court 2017Nu4597

○○○ 1

○ Head of tax office

July 5, 2018

August 23, 2018

1. The plaintiffs' appeal is dismissed.

2. The costs of appeal are assessed against the Plaintiffs.

the Gu Office's place of service and place of service

The decision of the first instance court is revoked. The defendant's imposition of gift tax of KRW 1,475,90,600 (including additional tax) against the plaintiff AA on January 13, 2016 (hereinafter referred to as "disposition of this case") and the notification of the designation of a joint and several taxpayer for gift tax (hereinafter referred to as "disposition of this case") against the plaintiff B shall be revoked in all of them.

1. Details of the disposition;

A. The details of Plaintiff AA and BB’s financial transactions were opened on February 1, 2012 in the name of Plaintiff A and 1) the Securities Exchange Account (179-107-******) was transferred from Plaintiff BB’s 00 bank accounts (139-121-*******) to Plaintiff AA’s securities Exchange Account from February 3, 2012 to May 9, 2012 (hereinafter “the issues of this case”).

2) The Plaintiff AA purchased 335,770 shares (hereinafter “instant shares”) of △△△, a corporation that is a KOSDAQ-listed corporation (hereinafter “△△△”) from February 3, 2012 to July 26, 2012 through 49 times through the key securities account (4230-******-11) in its name.

3) On November 20, 2012, the 00 investment securities account (8012***-01) in the name of Plaintiff AA (802****-01) and the seal of the application for opening of the account is affixed to the column on which Plaintiff AA’s seal is affixed, not to Plaintiff AA’s seal, but to the stamp of CCC AD, which is an employee of △△ Construction operated by Plaintiff BB.

2012. 11. 22. 이 사건 주식이 원고 AAA 명의의 키움증권계좌에서 00투자증권계좌로 대체출고 되었고, 2014. 12. 5. 원고 AAA 명의의 △△증권계좌(506-*****-82)가개설되고3) 이 사건 주식이 △△투자증권계좌에서 ▲▲증권계좌로 이체되었다.

4) From February 4, 2015 to June 30, 2015, Plaintiff AA transferred KRW 330,000 of the instant shares to KRW 3,178,03,00 among the instant shares, and KRW 2,159,031,687 of the said transfer proceeds was transferred from the account under Plaintiff AA’s name to the account under Plaintiff BB’s name on October 8, 2015.

B. The defendant's tax investigation and each disposition of this case

1) From September 19, 2014 to December 5, 2014 (the period of suspension of investigation: from October 24, 2014 to November 30, 2014), the Defendant conducted a personal integrated investigation (subject to investigation: 2009 to 2011) and related persons (E), CCC, and DD (hereinafter referred to as “prior tax investigation”) on Plaintiff BB on the ground that there is insufficient income return and funding sources from Plaintiff BB, the Defendant imposed taxation on Plaintiff BB and related persons under the prior title of Plaintiff BB.

2) Thereafter, on April 9, 2015, the Defendant requested Plaintiff AA to explain the source of the funds so that the source of the funds to acquire the instant shares is unclear. However, Plaintiff AA did not comply with the above request for submission on the ground of temporary illness treatment, etc. due to old age. Accordingly, around May 2015, the Defendant converted Plaintiff A’s written confirmation into the on-site investigation with respect to Plaintiff AA and entered or sealed Plaintiff BB’s address, telephone number, and telephone number on the said request for opening of the account from August 27, 2015 to October 30, 2015.

3) The written application for the opening of the above account is written or sealed by the Plaintiff AA’s writing signature and seal.

4) The Plaintiff BB’s children.

5) The spouse of CCC, who is an employee of master land construction operated by Plaintiff BB.

AA's financing status investigation (the period of investigation: from 2009 to 2012) (hereinafter referred to as "tax investigation of this case") was conducted.

6) As a result of the instant tax investigation, the Defendant determined Plaintiff AB as the title truster of the instant shares on the ground that the source of the Plaintiff AA’s share acquisition fund was Plaintiff BB, and determined Plaintiff AA as the title truster of the instant shares, and made each of the instant dispositions against the Plaintiffs.

(c) Procedures of the previous trial;

The Plaintiffs filed an appeal with the Tax Tribunal on February 17, 2016, but dismissed on June 10, 2016.

was received.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 9, 10, 18, Eul evidence Nos. 1, 6, 9, 10 through 13, 19 through 21 (including each number; hereinafter the same shall apply) and the purport of the whole pleadings

2. The plaintiff's assertion

A. Illegality of the instant tax investigation

1) ① During the preceding tax investigation, the Defendant requested Plaintiff BB to submit a statement of transaction of 00 bank accounts (which is the source of the instant stock acquisition fund) and received from Plaintiff BB. As long as the transfer of the key amount of the instant issue amount to Plaintiff BB was made within the period subject to the prior tax investigation, the said statement of transaction included the contents related to the transfer of the instant issue amount. Therefore, at the time of the prior tax investigation, the Defendant was sufficiently aware that Plaintiff BB acquired the instant shares in the name of Plaintiff AA. Nevertheless, the Defendant’s act of conducting the instant tax investigation with respect to Plaintiff A after the prior tax investigation constitutes abuse of the right to conduct tax investigation as a duplicate tax investigation. ② The instant tax investigation was conducted without the grounds for designating the subject of tax investigation under Article 81-6(3) of the Framework Act on National Taxes. ③ The instant prior notice procedure was lacking

2) Therefore, the instant tax investigation is unlawful, and each of the instant dispositions based thereon is also unlawful.

B. Absence of title trust relation

In full view of the following circumstances, each of the dispositions in this case based on the premise that the title trust relationship exists is unlawful, since there was no title trust relationship between the Plaintiffs as to the instant shares.

1) On October 31, 2007, Plaintiff AA traded shares from its neighbors, and **** on the recommendation of purchase of shares from its neighbors, and around February 3, 2012, Plaintiff AB provided Plaintiff BB as collateral and purchased the shares of this case by borrowing the key amount of the issue in this case, and CCC drafted a sales contract with the meaning of a loan certificate with the intent of processing the plaintiffs’ practice.

2) On August 21, 2014, Plaintiff AA decided to repay the key amount of the instant shares, the price of the instant shares was lower than the time of acquisition of the instant shares, and thus, did not have to be disposed of, and even if the share price was temporarily high, it was difficult to dispose of the instant shares at a short time, as it was difficult for Plaintiff AA to keep the instant shares for a long time.

3) The reason why CCC applied for the establishment of a securities-linked account in the name of Plaintiff AA and affixed the seal of CCC’s children c c in the column where the said application was affixed is merely that CCC was conducted for convenience in the process of processing the Plaintiffs’ practical work.

4) The △△ Investment Securities account in the Plaintiff AA’s name is merely a permit to open the instant shares to increase the number of earlycars’ performance upon the Plaintiff BB’s request from the Plaintiff BB, and bB is an expert in share transactions, etc., and thus, the instant shares are temporarily managed.

5) As Plaintiff BB urged to pay the instant amount, Plaintiff AA sold the instant shares from February 4, 2015 to June 30, 2015, and transferred KRW 2,159,031,687 to Plaintiff BB on October 8, 2015. Moreover, the gains accrued from the sale of the instant shares were paid capital gains tax and local income tax for the instant stock transaction, and the remaining amount was freely withdrawn and used or kept.

6) The amount of KRW 50 million deposited in the securities-linked account in the name of the Plaintiff AA on February 3, 2012 is deposited in the process of collecting the money transaction price between Plaintiff AA’s wife and DD.

7) On August 4, 2014, Plaintiff AB agreed to sell the instant land offered as security on February 3, 2012 to Plaintiff BB for the partial repayment of the loan amount to Plaintiff BB, and to sell KRW 6.5 million to Plaintiff BB on August 4, 2014, Plaintiff AB agreed to pay KRW 1.90 million of transfer income tax and KRW 1.9 million of local income tax to be originally borne by Plaintiff AB, and the remainder of KRW 440,986,313 of income from the loan amount to Plaintiff BB.

C. Non-existence of tax avoidance purpose

Even if a title trust agreement exists between the Plaintiffs, insofar as Plaintiff BB is a major shareholder of △△△ex, and Plaintiff AA is a specially related person of Plaintiff BB and paid all transfer income tax on the instant stocks, it should be deemed that the Plaintiffs did not have any purpose of tax avoidance. Therefore, it constitutes a case where deemed donation of title trust property cannot be made in accordance with the proviso of Article 45-2(1)1 of the Inheritance Tax and Gift Tax Act.

3. Determination

(a) Relevant statutes;

It is as shown in the attached Form.

B. Whether the instant tax investigation is lawful

1) Whether it is an illegal duplicate tax investigation

A) As a form of an administrative investigation to realize the State’s right to impose taxes, a tax investigation is an inquiry to determine or correct the tax base and amount of national taxes, and is an act to inspect or investigate account books, documents and other articles or to order the submission thereof. In the case of a tax investigation for which the tax authority’s right to inquire and investigate for a disposition, a taxpayer or a person, etc. who is deemed to have a transaction with the taxpayer (hereinafter “taxpayer, etc.”) bears the legal duty to answer questions for tax officials to collect the tax data and to allow them to undergo an inspection. Meanwhile, a repeated tax investigation for the same tax item and taxable period is likely to seriously infringe not only on taxpayers’ freedom of business or legal stability, but also lead to the abuse of their right to impose taxes, and thus, it is necessary to be prohibited except in exceptional cases that

In addition, whether an investigation by a tax official constitutes "tax investigation prohibited from re-audit" should be determined individually in a specific case by comprehensively taking into account the purpose and details of the investigation, the subject, method, and contents of the investigation, data acquired through the investigation, the scale and period of the investigation, etc. (see, e.g., Supreme Court Decisions 2014Du8360, Mar. 16, 2017; 2016Du64043, Apr. 13, 2017; 2017Du4255, Oct. 26, 2017).

B) Examining the aforementioned evidence and the overall purport of oral argument in full view of the following facts and circumstances, it cannot be deemed that the Defendant’s tax investigation of Plaintiff AA, which served as the basis of each of the dispositions of this case, constitutes a duplicate tax investigation conducted again after the completion of a prior tax investigation. Thus, the Plaintiff’s assertion on a different premise is without merit.

① In the process of a prior tax investigation, there is no question or investigation by the Defendant on the Plaintiff AA or on the change of the shares of the △△△△ Group owned by the Plaintiff AA. In addition, the Defendant appears to have requested and provided the Plaintiff BB with a statement of transaction in the account in the name of the Plaintiff BB, which is the source of acquiring the shares of this case, during the prior tax investigation process, and the submission of the remainder of the Plaintiffs’ assertion is insufficient to recognize the facts, and there is no other evidence to find otherwise. Even if the Defendant was provided with the transaction statement of the above △ Bank account from the Plaintiff BB, it is not the Defendant submitted the said transaction statement from the Plaintiff BB, and even if it was reviewed, Article 3 subparag. 2 (f) of the Regulations on the Conduct of Tax Investigations (amended by National Tax Service Directive No. 2105, Jun. 30, 2015) regarding the provision of taxation information to the Plaintiff’s account under the name of the Plaintiff BB or the submission of taxation information under the Act.

6) The “request for the provision of gold transaction information” does not constitute asking questions to taxpayers or their interested persons, or inspecting, investigating, or ordering them to submit their account books, etc., rather than asking questions to taxpayers or their interested persons, and does not infringe upon taxpayers’ obligations or their freedom of business. As such, the substance of the request cannot be deemed the same as the request for the submission of data on taxpayers, etc., and thus, it cannot be deemed as a tax investigation under the Framework Act on National Taxes, etc. (see, e.g., Supreme Court Decision 2017Du4255, Oct. 26, 2017).

② Even if there was an investigation conducted with respect to Plaintiff AA in the process of a prior tax investigation, Article 81-4(2)2 of the Framework Act on National Taxes grants re-audit when it is necessary to investigate the other party to the transaction. In order to determine whether Plaintiff BB has title trust with the Plaintiff AB, it may be deemed that the re-audit is permitted pursuant to Article 81-4(2)2 of the Framework Act on National Taxes, as long as it is inevitable to confirm the transaction details of Plaintiff BB’s counterpart to the transaction of the instant shares.

③ There is no circumstance to deem that the investigation of the instant case was conducted with respect to Plaintiff BB or the investigation of books, documents, and articles.

④ The Defendant, separate from the prior tax investigation, found that the acquisition fund of the instant shares acquired by the Plaintiff AA based on objective and reasonable data, based on the objective and reasonable data conducted in around 2015, was considerably exceeded the total amount of deposit and reported income of the financial institution, which is the source of funds held at the time of its acquisition, and that the Plaintiff’s early crime was not properly clarified as to the source of the difference.

⑤ On the other hand, the instant tax investigation pertains to whether there was a title trust or gift between Plaintiff BB and CCC, DD, and EE, and on the other hand, the instant tax investigation differs from the purpose of the investigation and the act of investigation.

2) Whether the selection of a taxpayer is lawful

A) Article 81-6(4) of the Framework Act on National Taxes provides that "a tax official may conduct a detailed investigation to determine the tax base and amount for the items of taxation for which tax base and amount of tax are fixed through the investigation by the tax authority." The gift tax is an item of taxation for which the tax base and amount of tax are fixed through the investigation by the tax authority, and constitutes an investigation under

B) Furthermore, in full view of the following facts and circumstances acknowledged by Gap evidence 18, Eul evidence 18, Eul evidence 3, 11, and 19 through 21, and the purport of the entire pleadings, it is reasonable to deem that the instant tax investigation ground constitutes a case where there is evident evidence to acknowledge a suspicion of omissions or errors in the contents of the report.

① Around January 26, 2015, the Defendant found that the acquisition value of the instant shares acquired by the Plaintiff AA was 2,698,000,000 won (the estimated amount by applying the closing price at the par value on December 30, 2012) of the shares acquired by the Plaintiff AA as the capital source of the Plaintiff AA (i.e., KRW 164,000,000 (i., financial institution’s deposit amount of KRW 130,000,000 as of December 31, 208 + KRW 34,000,000,000 in total of the reported income in the year of 209-200,000,000 won in total) was considerably exceeded the amount of KRW 164,00,000 in total, 200, 2005, 2005, 2005, 305, 2015.

② As above, the fact that there is a difference between the acquisition value of the instant shares and the capital cost of the Plaintiff AA at the time of the acquisition of the instant shares, either KRW 2,553,00,000 (as 93% of the acquisition value) or KRW 2,53% of the acquisition value), suggesting that the Plaintiff AA would have obtained title trust of the instant shares, i.e., the content of return on Plaintiff AA’s gift tax, and that such probability is likely to be omitted or erroneous. Such probability appears to be based on the data that the Defendant provided pursuant to Article 6 of the Taxation Data Act and the amount of income reported by the Plaintiff early criminal.

3) Whether the prior notice procedure has been violated

In full view of Article 81-7(1) of the former Framework Act on National Taxes (amended by Act No. 1520, Dec. 19, 2017) and Article 63-6 of the Enforcement Decree of the same Act, where a tax official investigates account books, documents, and other articles for the purpose of the investigation on national taxes, he/she shall be exempted from the duty of prior notification if the taxpayer subject to the investigation is notified in writing ten days prior to the investigation but it is deemed that the purpose of the investigation can not be achieved due to the destruction of evidence, etc. if the prior notification is made. As seen earlier, the Plaintiff’s tax investigation of this case was initiated based on evident material to prove the omission or error in the report, even if there were a considerable amount of suspicion of omission in the report of this case, there was no objective supporting material, and in light of the circumstances where Plaintiff AA’s passive response to the Defendant’s request for explanation, etc., the purpose of the investigation cannot be achieved due to the destruction of evidence, etc., and thus, the Plaintiff’s prior notification cannot be deemed unlawful.

B. Existence of title trust

In full view of the following facts and circumstances revealed by comprehensively taking account of the evidence mentioned above, Gap evidence and Eul evidence Nos. 3 through 8, Eul evidence Nos. 2 through 5, 7, 8, and 9 and the overall purport of the pleadings, it is reasonable to view that the funds transaction related to the acquisition of the shares of this case between the plaintiffs pursuant to a title trust agreement among the plaintiffs. The evidence submitted by the plaintiffs alone is insufficient to recognize the facts opposing the above facts, and since there is no other evidence to support this, this part of the plaintiffs' assertion is without merit.

1) Plaintiff BB is one of the major shareholders of △△△ex, and the Plaintiffs are between the two parties, respectively.

2) The Plaintiff AA did not have any special income at the time of the acquisition of the instant shares, and there was no large amount of stock transaction before and after the instant stock transaction.

3) The Plaintiffs offered the instant land as security in the process of borrowing the key amount of the instant land from Plaintiff BB, and prepared a sales contract (No. 3; hereinafter referred to as “the sales contract of February 3, 2012”) on February 3, 2012. The Plaintiffs asserted that the amount of the instant land would be due for borrowing on August 21, 2014, which is indicated as the date of payment of remainder on the said contract. However, even if Plaintiff B’s initial tax investigation stated that the amount of the instant land was sold to Plaintiff BB and received as security, it is not consistent with the Plaintiffs’ statement to the effect that the amount of the instant land would be difficult to accept as security, on the other hand, for the reasons that the amount of the instant land would be KRW 20,000,000,000,000,000 to KRW 30,000,000,000,000,000,00.

4) Since the acquisition of the instant shares, Plaintiff AA only kept the instant shares without trading them for a long time. The sale of the instant shares and there was no individual use of the instant shares until the price is repaid to Plaintiff Kim Jong-ho.

5) The △△ Bank Securities-Linked Account in the name of Plaintiff AA and the Key Securities Account were prepared and opened by the CCC, which is an employee of Plaintiff BB, and the CCC’s stamp is affixed on the application. Meanwhile, the △△ Investment Securities Account in the name of Plaintiff AA and another account, which is an employee of Plaintiff BB, also the △△ Investment Securities Account in the name of Plaintiff AA, is also established after indicating the name and contact address and contact address of Plaintiff BB as the address and contact address of Plaintiff BB, not Plaintiff AA, and the Plaintiff AA failed to properly grasp matters related to the said account at the time of the instant tax investigation.

6) In light of the relationship between Plaintiff BB and Plaintiff BB as well as the trust relationship with Plaintiff AA, Plaintiff AA merely asserted that the CCC was entrusted with the management of the account related to the instant shares, but there is no evidence to prove it. Rather, in light of the relationship between Plaintiff BB and CCC as a result of the prior investigation, the instant shares-related account in the name of Plaintiff AA appears to have been managed by Plaintiff BB upon the direction of Plaintiff BB.

7) While Plaintiff AA asserted that DD’s money transaction price was recovered between Plaintiff A’s spouse AA and DD with respect to KRW 50,000,000 deposited in △△ Bank’s securities linked account in the Plaintiff’s name on February 3, 2012, Plaintiff AA stated that DD was not in the process of the instant tax investigation, there was no evidence to acknowledge it, and that there was no previous monetary transaction details, and that CCC’s agent was written in the deposit application form with the above KRW 50,000,000, the above assertion by the Plaintiffs is no more reliable.

8) The account of △△ Securities used by Plaintiff AA to sell the instant shares was opened close to the end of the period of the preceding tax investigation. Since long, the instant shares were sold within a short time, and KRW 2,159,031,687, which was part of the amount secured by Plaintiff AA from the sales price of the instant shares, was transferred to Plaintiff B during the tax investigation period.

(c) the existence of the purpose of tax avoidance;

1) The main sentence of Article 45-2(1) of the Inheritance Tax and Gift Tax Act provides, “where the actual owner and the title holder are different from the property (excluding land and buildings; hereafter the same shall apply in this Article) which requires a registration, etc. for a transfer or exercise of the right, the value of the property shall be deemed to have been donated to the actual owner on the day following the year when the actual owner registers, etc. as the title holder notwithstanding the provisions of Article 14 of the Framework Act on National Taxes (where the property is subject to a transfer of title, it refers to the day after the end of the year following the year in which the date of acquisition of ownership falls).”

There is no exception in the case of ‘not'.

The legislative intent of Article 45-2(1) of the 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, if the title trust was recognized to have been made for reasons other than the purpose of tax avoidance, and only a minor tax reduction incidental to the said title trust arises, it cannot be readily concluded that there was a "purpose of tax avoidance". However, in light of the above legislative intent, only if the purpose of the title trust is not included in the purpose of tax avoidance, it is impossible to determine that there was an intention of tax avoidance by applying the proviso of the above provision, and thus, it cannot be said that there was no other purpose of tax avoidance. Whether there was an intention of tax avoidance is determined as at the time of the title trust. In addition, it is not determined as at the time of tax avoidance, and it is not determined as 100 if there was no other objective or objective purpose of tax avoidance, 201, 201, 300, 10, 201, 206, 2010, 206, etc.

2) According to Article 94 of the Income Tax Act, Article 157(4)1 and 2 of the former Enforcement Decree of the same Act (amended by Presidential Decree No. 26982, Feb. 17, 2016) and Article 1-2(1)2 of the Enforcement Decree of the Framework Act on National Taxes, where the stocks of a corporation owned by a shareholder of a KOSDAQ-listed corporation and his/her related parties are at least 4/100 of the total amount of stocks of the relevant corporation or at least 4 billion won in total, the relevant shareholder is a major shareholder of the relevant corporation and the income accrued by the shareholder from transfer of stocks of the relevant corporation is subject to capital gains tax

3) According to the evidence revealed earlier, Plaintiff BB held the shares of this case from December 2010 to December 2012, 7,806,370,000 or more △△△△△△△△△△ (Evidence 11), and Plaintiff BB may have a special relationship with Plaintiff AA as a sales agent. As such, even if Plaintiff BB transferred the shares in the name of Plaintiff AA, it appears that it could not be exempt from the obligation to pay capital gains tax.

4) However, as seen earlier, Plaintiff BB made a statement to the effect that, in the event that the shares are distributed in the name of another trustee in the future or the shares held are reduced in nature, Plaintiff BB could avoid the liability to pay capital gains tax by concealing the special relationship between Plaintiff A and himself/herself as the actual shareholders of the shares in this case. In fact, according to the overall purport of evidence Nos. 6, 9, 10, and Nos. 12, 13, and 16, Plaintiff BB made a statement to the effect that, in the preceding tax investigation process, Plaintiff BB stated that “If the shares held exceed 5% of the total shares, the shares held in the preceding tax investigation process are owned in excess of 5% of the total shares, the number of shares held in CCC’s securities account is divided and managed separately.” ② Following the preceding tax investigation, the Defendant included the marriage by marriage within the fourth degree from Plaintiff BB transferred KRW 4,96,000 to CCC in 209 to 2013.

According to the above facts, the Plaintiff BB and the CCC respectively acknowledged the title trust in the process of prior tax investigation and paid the above gift tax, etc. <3, Feb. 30, 2015 after the Defendant’s written confirmation on the source of the acquisition fund of the instant shares, most of the instant shares were sold from February 2015 to May 30, 2015, and the instant tax investigation on the same issue was conducted on September 30, 2015, it can be recognized that the Defendant received KRW 63,324,173 from the transfer income tax and paid KRW 573,50,468 from the date of reporting the transfer of the instant shares to the Defendant on September 30, 2015. According to the above facts, it is difficult to deem that there was no objective or objective evidence to prove that there was no objective or objective purpose of tax evasion in the future as to the Plaintiff BB’s title trust to the Plaintiff AB.

4. Conclusion

Therefore, all of the plaintiffs' claims shall be dismissed as it is without merit, and the judgment of the court of first instance is just in its conclusion, and it is so decided as per Disposition by the court below.